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Future of Canada's Student Aid System Called into Question

July 24, 2006 (Toronto, Ontario) - On the eve of a Premiers' Conference where post-secondary education is expected to be a major theme, a new report by the Educational Policy Institute suggests that rising interest rates and planned aid reductions are about to cause an $800-million financial hole the country's student financial aid programs.

"This report should act as a wake-up call to governments and policymakers," said report co-author Sean Junor. "Governments can not continue to sleepwalk towards universality. Student aid programs that specifically target youth from low-income backgrounds are seriously at risk."


The paper, entitled: Student Aid Time Bomb: The Coming Crisis in Canada's Financial Aid System, identified three main problems engulfing Canada's student aid system:


  • Increased Program Costs, caused by rising interest rates and looser student loan eligibility criteria, could together drive up program costs by roughly $450 million.
  • The Canada Millennium Scholarship Foundation, which provides $350 million per year in grants, is slated to wind down activities in 2009. There has yet to be any indication that the Government of Canada intends to replace this money.
  • Increased Government use of Educational tax credits and tuition freezes/reductions have spread money thinly but to little effect. This has substantially increased costs while leaving little left over for important targeted loans and grants programs.


"For the past six years, Tory, Liberal and New Democratic governments across the country have used student assistance as a way to buy middle-class votes, instead of as a means to provide opportunity to those who are less fortunate " said co-author Alex Usher, Vice-President of the Educational Policy Institute. "Unfortunately, governments may now claim the cupboard is bare when it comes time to saving the programs that matter the most."


The report also outlines the possibility that the Government of Canada may abandon the field of student financial assistance as part of a general program of "rebalancing". While this may or may not be a good thing for students, the report stresses that who delivers aid is ultimately of less importance than how much aid is delivered, and urges policymakers to remain focused on fixing the programs' collective $800-million hole rather than be distracted by federal-provincial issues.


The Educational Policy Institute (EPI) is a non-partisan, non-governmental organization. With offices in Virginia Beach, VA, Toronto, ON, and Melbourne, Australia, EPI is a collective association of researchers and policy analysts from around the world dedicated to the mission of enhancing our knowledge of critical barriers facing students and families throughout the educational pipeline.

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The report is available at:
Mr. Junor and Mr. Usher may be contacted at: 416 848-0237.