Posts tagged with opportunity.
Will Ontario students face a debt increase?
With apologies to readers across the country, this column focuses on the province of Ontario. As post-secondary education is a provincial jurisdiction, many columns will focus on the province with the largest number of universities and students.
The Ontario government's books are severely in the red and the government is desperately looking to stop the hemorrhaging. One of the areas causing the government concern is the potential for record numbers of students to receive large student loans that qualify them for debt-relief under the Ontario Student Opportunity Grant.
Every full-time student receiving a student loan greater than $7,000 does not have to repay the portion of their loan above that amount. In other words, a student receiving the maximum assistance available from OSAP received $11,200 for their eight-month study period - $4,200 of that money was considered a grant, so only $7,000 needs to be repaid. The grant ceiling is often referred to as the "debt cap."
Even during better economic times, the costs of the program were already high. The Ontario government estimates the cost of the OSOG program for 2008/09 at $298 million for 85,000 students.
If the number of students with assessed need over $7,000 in 2009/10 exceeds 85,000, the cost of the program will exceed its budget.
The government is faced with a choice: they can accept the cost overrun or they must change OSOG eligibility. Considering the McGuinty government has already broken its student assistance promises by cutting back the Textbook and Technology Grant this year, it is not unreasonable to expect the Ontario government to decrease eligibility for OSOG grants.
The question is how the government would disqualify students from the grant. Sources who are following this issue are telling me a proposal from last year is back on the table. Last fall, the Ontario government considered decreasing the number of eligible students receiving OSOG by increasing the debt cap to $8,000 without increasing the total financial assistance package. The result: an increase of $1,000 in debt for each of Ontario's neediest students.
This idea is one of many being considered by civil servants within the Ontario government as the province wrestles with an expected $24.7-billion budget deficit this year.
This potential change does offer an opportunity for the Ontario government to reform its archaic financial aid system and enter the 21st century, or at least make it to the late 20th century.
The first place to start is the method of calculating the OSOG.
Presently, the Ontario government uses a set dollar figure as the threshold. This is known as a hard debt cap. The fundamental flaw with a hard debt cap is that it will not respond to changing economic conditions; the exact reason that the Ontario government faces a potential dilemma at the present time.
If the Ontario government continues to operate OSOG with a higher hard debt cap, there is a good possibility the program will be under budget in a few years. The challenge facing the program right now is the large number of middle-class and upper-middle-class families suffering significant drops in income due to the recession. Once the economic recovery is felt by the middle class, these families will likely once again receive loan amounts below the debt cap and no longer qualify for OSOG grants. This would result in the neediest students receiving less aid than prior to the recession and the government pocketing the difference.
For a better system, the Ontario government doesn't have to look far for a model to emulate; they only have to look next door. Manitoba's OSOG equivalent, the Manitoba Bursary, is calculated based on the funds budgeted and the number of students qualifying for the grant.
As provincial governments across the country look to control spending, they must be mindful to make sure today's cuts don't continue to hurt the lowest socio-economic groups long after the end of this recession.
Both the Ontario Undergraduate Student Alliance and the Canadian Federation of Students - Ontario are lobbying the government to at least maintain the present debt cap. Both would like to see increased student financial aid. While I wish both luck with these goals, they would be wise to have a back-up plan to ensure today's budget freezes don't translate into tomorrow's budget cuts.
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JOEY COLEMAN