The federal government is the single largest source of funding for public financial aid for post-secondary students in Canada. Financial aid policy has a major impact on the areas of accessibility and affordability of post-secondary education (PSE) in Canada. This paper aims to examine the impacts of those programs, such as student loans, student grants, tax credits and scholarships on the areas of access and affordability.
While other dimensions of accessibility do have an important impact, such as provincial policies and non-financial motivations like family education, they are outside the scope of federal financial aid advocacy and are variables that the federal government cannot directly affect. This paper does not examine the other federal areas of responsibility in PSE either, such as support for First Nations students which depends on agreements between the federal government and Canada’s First Nations communities, nor military colleges which are dependant on Canada’s national defense priorities. This paper offers a set of recommendations to be directed at the federal government for ways in which financial aid can be improved.
The Canadian Alliance of Student Associations (CASA) supports a system of financial aid that uses the most progressive and effective policies to support equal access to higher education for all students regardless of background, without burdening any student with debt that they have difficulty repaying.
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CASA believes in the importance of an accessible and affordable education. As such, it is important to define what precisely is meant by both “accessibility” and “affordability” in terms of the goals of this paper.
When we think of accessibility, we are thinking of those who can attend PSE. The key principle of accessibility is measured by a lack of barriers to education and a broad representation of the Canadian population in post-secondary institutions.
Because of the high number of students, it should be expected that members of every social group and economic class be represented in higher education, in numbers that are reflective of their total size. Furthermore, there should be as little bias as possible in terms of the choice of programs, and the level of education achieved by these groups.
Affordability, on the other hand, measures the real financial burden of education, both during and after attending a post-secondary institution. The most frequently discussed metric relating to this principle is student debt, that is, the total amount of money owing at the end of one’s studies. This metric alone, however, does not always reveal the full extent of affordability.
Another important measure of affordability is the burden of repayment, often measured by the debt-to-income ratio. High levels of debt are a problem, but they are less of a problem for students earning higher incomes after graduation than for students earning lower incomes. The burden depends on repayment options available, interest rates, and loan forgiveness. Government debt that can be reduced and forgiven is less onerous than private debts that can force students into bankruptcy.
RETURN ON INVESTMENT
Improving the accessibility and affordability of PSE requires a major public expenditure. This social priority is a profitable investment, however. The return on investment for individuals and society in education is significant, both in financial and social terms. As a financial investment, public spending on education returns profits at a rate between 9-12%, both for individuals and society . In an era when economic growth rates are ranging between 2-3% , education is not just a positive social program, rather, it is a good investment toward Canada’s economic future.
Ultimately, this paper seeks to recommend public policy changes at the federal level that will increase the accessibility and affordability of PSE in Canada. This will be examined in terms of the ideal changes to the financial aid system, to ensure that those financial aid programs with the greatest impact have sufficient resources to meet their goals.
We will first tackle the issue b y examining the value of pursuing a post-secondary education, thus providing clear justification for public spending in PSE. We will then look at the gaps and shortcomings of PSE funding policy. Finally, in light of the costs and challenges related to attending higher education, we will provide a detailed analysis as to the policy changes required in the areas of repayable and non-repayable aid, in order to make for a more affordable and accessible PSE system in Canada.