Christine Neill is an associate professor of economics at Wilfrid Laurier University; Alex Usher is president of Higher Education Strategy Associates.
Ontario's new budget has drawn praise for offering free tuition for students from low-income families. But, in fact, many low-income students already receive more in grants than they pay in tuition. The genius of the government's move is that it isn't about bold new investments (there is no new money for students), it's about changing perceptions through simplification.
Ontario already spends a lot on aid to students, so much that when combined with federal aid, a large number of students pay nothing to go to college or university. But the money is spread over many separate programs, which cost the provincial government about $1.3-billion a year. The Ontario Student Aid Program website lists 24 different programs, which also complicates communication with students.
Ontario also spends $332-million a year on a system of tax credits which return about $500, on average, to full-time students in the province. Because the money is given as a non-refundable tax credit, it gets to students or their families well after they have paid for their education, making it less useful than it could be. And because it is buried in the tax system, students often don't realize they are getting it, and they rarely know how much it's worth.
As a result, Ontario has long had a system that looks pricey but is actually quite inexpensive. Between federal and provincial tax credits, grants and loan remissions, a substantial portion of students currently pay nothing for their education, or close to it. For almost a decade now, first-year students from Ontario families with less than $50,000 in income have received more in aid than they paid in tuition, but few understood this because the money was coming from many different sources.
In its budget, the government got rid of the various separate money channels, and put the money into a single new grant which is available to students earlier in the school year so they can use it for tuition fees. That's it. No new money, just a reallocation. Some students (particularly those from families with incomes of between $50,000 and $100,000) will be better off. Others, most likely part-time and graduate students, will be slightly worse off as a result of losing tax credits but not receiving extra aid.
If there isn't any new money to speak of, what's the fuss? Isn't a dollar a dollar? Not really. Studies have shown that how you give students money does make a difference. Partly, it's a matter of timing. If postsecondary students don't know exactly how much aid they can get well before they enroll, they might mistakenly think they can't afford to keep studying. But it's also partly a matter of framing. Telling students they need to pay only $500 for a year of studies seems to have a different effect than telling them they have to pay $6,000 and, oh by the way, here's a bunch of awards totalling $5,500.
Having a generous student-aid system matters, and it matters more if it is transparent and easily understood. Ontario's changes represent a vast leap toward a simpler student financial-aid system, which will widen access without putting additional burdens on taxpayers. The question now is, what are the all those other provinces waiting for?