Posted September 15, 2011
The Ontario election is underway, and all of the major political parties have now put forward proposals to change the tuition or student aid systems to enhance the affordability and accessibility of post-secondary education. Since different tuition and student aid plans have been announced, there has been a lot of misinformation concerning how exactly the proposals will affect students, with a number of commentators publishing inaccurate speculation.
This blog is meant to provide a more accurate description of the parties’ proposals. In the months leading up to the campaign, we have been working with all of the major parties on their commitments to post-secondary education. We have gathered the following details through discussions with representatives from each party. We will update the blog if any additional information or proposals become available. If you have any questions about the proposals, please feel free to comment below or contact us directly and we will do our best to get an answer for you.
ONTARIO LIBERAL PARTY
Announcement: Announced with the party platform Forward. Together. on September 5th
Summary: Reduce tuition fees for most full-time college and university undergraduate students with a new grant worth 30% of average tuition fees
Who’s eligible? Students are eligible for the new grant if they meet the following criteria:
- Dependent (out of high school for less than 4 years);
- A Canadian Citizen, Permanent Resident, or Protected Person;
- An Ontario resident (student or parent resided in Ontario for 12 consecutive months prior to beginning study);
- A full-time student (minimum 60 per cent course load as defined by the institution);
- In satisfactory academic standing (can gain grant back if student returns to satisfactory standing);
- Studying toward a college or undergraduate credential, excluding second-entry professional programs (medicine, law, dentistry, optometry, etc.);
- From a family with a combined parental income before taxes of less than $160,000 (about five out of six students).
How much is it worth? The grant will be worth 30% of average tuition fees and will increase accordingly each year as tuition rises. For first-entry undergraduate programs, the average is currently around $5,400 – so the grant will be $1,600 for all university students this year (regardless of institution or program). For college programs, the average is currently around $2,400 – so the grant will be worth $730 for all college students. For a four-year undergraduate program, the total grant would be worth $6,400. In total, the program is expected to cost $420 million in its first year.
When will it start? The party is promising to implement the new grant for January if elected. So each eligible student will have half of the grant made available in January 2012 – meaning $800 for university students and $365 for college students. The full amount would then be available in September 2012.
How will it work? Like many platform announcements, some of the details regarding how the tuition grant will be implemented are unclear. What has been clarified is that the grant will come off of students’ tuition bills automatically without a separate process. Due to the party’s desire to have this grant be accessible to all eligible students (not just those who apply to OSAP), it will be necessary for universities and colleges to know each student’s family income and dependency status. It is unclear exactly how this will be implemented, but it is likely that the current university and college application systems would be used.
For students who receive money from the Ontario Student Assistance Program (OSAP), the new tuition grant will not result in a reduction in financial assistance from what students are already receiving. Because the $1,600 is a grant, not an outright tuition reduction (although it functions much the same way) OSAP funding and provincial and federal education tax credits will not be affected. That is no student will have reduced OSAP eligibility or receive fewer tax credits as a result of the new tuition grant.
Currently, all OSAP assistance above $7,300 is automatically converted to a non-repayable grant through a program called the Ontario Student Opportunities Grant (OSOG). This grant is in place to ensure that students with high assessed need are not saddled with unreasonable debt. The party has committed to keeping the OSOG cap at $7,300. While some have speculated that that the new tuition grant will simply replace OSOG funds for the students with the highest need (thereby giving no additional aid to those students), the party has indicated that the grant will be in addition to any OSOG grant a student receives. That is that the grant will convert the first part of a student’s loan to a grant, reducing student debt (like other provincial grants). For instance, if a student receives the maximum OSAP package of $12,240, they will only need to pay back $5,700, because beyond the $4,940 OSOG grant, an additional $1,600 would be covered by the new tuition grant. This example assumes that the student was not eligible for any other grant programs offered by the province.
What will happen with tuition fees? Those students eligible for the new grant will see a reduction in their fees. Thereafter, tuition fees will continue to increase, as it will for students ineligible for the grant. The Ontario Liberal Party has announced its intention to continue regulating fee increases to no more than 5% annually as it does now, but has not publicly declared the percentage increase that will be allowed.
ONTARIO PC PARTY
Announcement: Contained within the party platform changebook released on May 29th; clarification of proposal announced on August 22nd
Summary: Reduce the parental contribution expectations for Ontario Student Loans to increase availability of grants and loans, primarily for middle-class families
Who’s eligible? Students eligible for the Ontario Student Assistance Program (OSAP)
How much is it worth? The impact of the change on each student will depend on their individual circumstances and family income. The change will increase the assessed need for most students. For any student currently receiving the maximum OSAP funding ($12,240 for a two-term academic year), the change will not result in any new assistance. However those currently receiving less than the maximum assistance will see an increase in aid. It will also open up OSAP eligibility to more students.
For example, a student studying in an arts or science undergraduate program from a family with an annual income below $60,000 already is typically eligible for the maximum provincial assistance and will not see a benefit with this change. The same student from a family making $85,000 would receive an additional $2,500 in grants under the proposed changes. If this student’s family made $100,000, he or she would receive approximately $300 more in loans and $1,000 more in grants. Finally, the same student from a family earning $120,000 would probably receive no additional aid.
The party is proposing to pay for this change in part by eliminating the 75 Ontario Trillium Scholarships for international PhD students, which costs the government $2 million and universities $1 million each year.
When will it start? No date has been specified. The earliest the changes could be implemented is for the 2012-13 academic year.
How will it work? OSAP is comprised of two loans: one from the federal government and one from the Ontario government. Both programs use different formulas to assess financial need. For students who are considered dependent (single and less than four years out of high school), a portion of your family’s income is considered in determining how much financial assistance you need. The contribution expectation varies based on income, with higher income families expected to contribute more to the cost of education than lower income families. Under the current formulas, the Ontario Student Loans Program expects a higher proportion of parents’ discretionary income to go toward the cost of their child’s education than the federal Canada Student Loans Program.
The proposal from the Ontario PC Party is to harmonize Ontario’s parental contribution formula with the federal government’s formula. This will result in lower parental contribution expectations, which will increase the amount of OSAP loans and grants that middle-income families receive. The students who will benefit the most are those that are already received the maximum assistance from the federal Canada Student Loans Program ($7,140) but are not receiving any aid from the Ontario Student Loans Program. By harmonizing the parental contributions, these students will be eligible for more provincial aid, most of which will be non-repayable since all aid above $7,300 is converted to a grant.
What will happen with tuition fees? The framework that regulates tuition fee increases to no more than 5% annually expires at the end of this academic year (2011-12). The Ontario PC Party has not announced its intentions to extend or amend this framework, but have ruled out the idea of a tuition freeze.
ONTARIO NDP
Announcement: Announced on September 15th
Summary: Freeze tuition fees for the next four years and eliminate provincial interest on Ontario Student Loans.
Who’s eligible? All non-international students will be eligible for the tuition freeze. All OSAP recipients, in addition to anyone currently paying back Ontario Student Loans, will be eligible for the interest relief.
How much is it worth? Under the current tuition regulation, average tuition fees are allowed to increase by no more than 5% annually. If this regulation had continued, the average undergraduate student would have faced an increase of $330 in 2012-13, while the average college student would have had their fees increase by $120. As a result of the freeze, that increase will not take place. Over the course of the four-year freeze, the value of the freeze would be worth $1,430 for the average undergraduate student and $520 for the average college student.
The value to each student of the proposed interest relief will depend on the provincial debt that has been accumulated. The party has said that removing provincial interest from OSAP loans will save the average student $60 per year on an average total (federal and provincial) debt of $25,000. If a graduate took the full ten-year amortization period to repay their provincial loans, this interest relief could be worth up to $600.
When will it start? The 2012-13 academic year
How will it work? Currently, tuition in Ontario is regulated by a government framework that prohibits institutions from raising their overall average tuition fees by more than 5%. Due to the fact that both colleges and universities rely on increasing tuition revenue to meet rising costs, any freeze is typically met with some increase to per-student funding from the government. We estimate that approximately $150 million in additional funds would need to be provided next year to universities and colleges to make up for all lost revenue tuition increases create. Based on the figures that the party has made public, it does not appear the proposal will fully compensate the freeze.
OSAP is comprised of two loans: one from the federal government and one from the Ontario government. These loans are interest-free while students are studying. After graduation, each loan carries separate interest rates on outstanding amounts. The provincial portion (the Ontario Student Loan) carries an interest rate of prime + 1%. The party is proposing to pay to have this interest eliminated for all those currently paying loans back. The elimination of interest would only apply to the provincial portion of a student loan, meaning that students with OSAP would still have to pay interest on the federal loan (approximately 60% of OSAP).
GREEN PARTY OF ONTARIO
Announcement: Contained within the party platform It’s Time released on May 25th
Summary: Fund a tuition freeze for the 2012-13 school year, and index all further increases in tuition to the rate of inflation
Who’s eligible? All non-international students will be eligible for the tuition freeze and continued regulation
How much is it worth? Under the current tuition regulation, average tuition fees are allowed to increase by no more than 5% annually. If this regulation had continued, the average university student would have faced an increase of $330 in 2012-13, while the average college student would have had their fees increase by $120. As a result of the freeze, that increase will not take place. Regulation to the rate of inflation thereafter would likely result in an average of 2% increases annually.
When will it start? The 2012-13 academic year
How will it work? Currently, tuition in Ontario is regulated by a government framework that prohibits institutions from raising their overall average tuition fees by more than 5%. Due to the fact that both colleges and universities rely on increasing tuition revenue to meet rising costs, any freeze is typically met with some increase to per-student funding from the government. We estimate that approximately $150 million in additional funds would need to be provided to universities and colleges to make up for all lost revenue tuition increases create. This is what the party means when they promise to “freeze tuition while maintaining university and college budgets.” It is unclear whether the inflationary tuition increases past 2012-13 will be accompanied with increased operating funding for institutions.
-Sam Andrey and Chris Martin
Executive Director and Director of Research
