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federal election 2015

This week, Liberal Leader Justin Trudeau promised more grant funding for low-income students, including exempting graduates from repaying their student loans until their earnings reach $25,000 while Ottawa covers the interest. The NDP announced its own postsecondary strategy a week earlier, also promising more grant money as well as phasing out, over seven years, interest on students loans. This follows a September announcement by Conservative Leader Stephen Harper, in which he vowed to double government grants for middle- and low-income families who contribute to RESPs, the registered education savings plan.

These promises have merit, especially when targeted at lower-income students who are increasingly at risk of a widening skills gap in a skill-driven economy, and whose rates of participation in college and university are still lower relative to their wealthier peers.

Will more money help bridge the gap? Not on its own.

For starters, increasing grants for RESPs won't reach many low-income kids who need it most.

The take-up rate among high-income families is about four times the rate of poorer households, according to the Omega Foundation, an organization that works to increase savings and financial literacy. On top of that, about 68 per cent of qualifying children still don't get the Canada Learning Bond (CLB) – which offers up to $2,000 in annual grants to help low-income families save for postsecondary education, but unlike the RESP doesn't require personal contributions.

According to the Omega Foundation, unclaimed CLB grants amount to more than $3-billion in potential money that should be accruing even marginal interest for poor kids in this country.

How do we fix that?

The first step is ensuring people know they exist: Low-income families are less likely to be aware of RESPs, according to the surveys, or understand how they work.

A 2014 analysis by University of Kansas researchers on what the United States could learn from Canadian education savings plans said one of the issues is that the programs have no automatic enrolment, and create what can be onerous hurdles for the most disadvantaged families.

In an Oklahoma experiment, when an opt-out approach was tried for an education saving program, only one family of 1,000 chose to decline the plan.

The successful Early College Planning Initiative in Boston offers a workshop to parents so they can fill out the paperwork for a savings plan, and gave them $50 toward starting it.

Here in Canada, various non-profits are focused on increasing awareness of government educations grants among poorer families – an education campaign and direct targeting of families has been successful on a local level. The Omega Foundation recently created the Smart Saver website, to streamline the application process. But certainly more can be done to spread the word via schools, or at several points when families interact with government services, such as health care or social assistance, or around tax-refund time.

In the 2008 election, the Conservatives committed $150-million to allow charities and native band councils to open RESPs on behalf of low-income children – but that never happened. (When asked about it, a party spokesperson pointed to other grants and tuition support for disadvantaged students applying to college or university.)

Students with an RESP are significantly more likely to enroll in postsecondary education than those with nothing saved. But this isn't just about money in the bank – it's also about valuing education. Research by University of Ottawa professor Ross Finnie has suggested that attitudes and circumstances at home – parental education in particular – may play an even larger role than cost in ultimately influencing which kids further their education after high school.

Changing those attitudes also requires helping poor students stay on track at school to keep their options open. "Improving the life chances of young people from disadvantaged backgrounds would require addressing those factors, rather than continuing to focus solely on financial barriers," Finnie argues.

So announcing new programs is a good step.

But if there's no guarantee that the money goes to the families who need it most, and no support so that disadvantaged students are in a position to actually qualify for grants at the end of high school, politicians shouldn't get a pass.

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