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A 10% Tuition Cut, but Who Benefits?

Ontario cuts domestic student tuition by 10 percent while scaling back aid spending. Colleges won't be made whole, and students who got grants covering their full tuition will receive a portion of their aid in loans.

January 18, 2019
 
Ontario’s minister for training, colleges and universities, Merrilee Fullerton, announces changes to tuition rates and student aid programs Thursday.

The Ontario government announced Thursday it would cut tuition fees for domestic students at all public colleges and universities across the province by 10 percent and reduce student aid spending, raising concerns both about the hit universities will take to their bottom lines and the impact of the changes on low-income students, who will no longer be eligible for free tuition.

According to the CBC, low-income students who previously could qualify for a grant covering the full cost of tuition will now receive a loan for a portion of their funding. An online calculator for estimating eligibility under the Ontario Student Aid Program shows that a student with a family income of 50,000 Canadian dollars ($37,659) or less would be eligible for about a 50-50 mix of loans versus grants, while students from higher-earning families would receive a higher proportion of funding in loans.

In a news release, Ontario’s Progressive Conservative government said it wants to target funding to students who need it most, reducing the family income threshold a student must fall under in order to be eligible for grants and increasing the share of grants going to families with incomes of less than 50,000 Canadian dollars from 76 to 82 percent.

Alex Usher, a Toronto-based higher education consultant and frequent commentator on Canadian higher education, said on Twitter that the changes include some he has advocated for, such as not wasting money on grants for high-income students. But he said the problem is that some low-income students are worse off as a result of these changes while students whose families make 170,000 Canadian dollars or more are better off.

Ontario’s minister for training, colleges and universities, Merrilee Fullerton, said in a news conference Thursday that the previous Liberal government had put the OSAP program "on an unsustainable path." She cited a December report from the Office of the Auditor General of Ontario that found the cost of OSAP rose substantially after the government introduced changes in 2017-18 that increased the share of aid that took the form of grants versus loans. The audit found that the cost of aid, mostly in the form of nonrenewable grants, disbursed in the 2017-18 academic year increased 25 percent over the previous year while enrollments rose 2 percent.

Fullerton said the government would restore the program to its 2016-17 levels "to ensure that it is both sustainable and available for the students of today, tomorrow, and generations to come."

Another change announced by Fullerton Thursday will allow students to opt out of paying certain ancillary fees. Fullerton said that while certain "essential" fees covering things such as health and safety programs and mental health counseling would continue to be mandatory, students could choose to opt out of others. “Starting in September, students will be able to choose which programs and organizations they want to support and be more empowered and informed about their own finances through our Student Choice Initiative,” she said.

Fullerton did not reference specific examples of programs that students might opt out of. However, in response to a question from a reporter about whether a student could opt out of paying for a program supporting LGBTQ students, she said there will be some leeway for institutions to determine which fees are essential.

Over all, Fullerton framed the changes as intended to put money back in the pockets of students and their families.

“This first-of-its-kind, across-the-board tuition reduction will see Ontario students receive a 10 percent savings in their education,” she said. “This reduction means significant savings for students and their families. And for a student attending an Ontario college, they will see a savings of on average of 340 [Canadian dollars] depending on the program,” she said.

Fullerton said the total value of tuition relief to students and families across the province equates to 450 million Canadian dollars. Asked if colleges and universities would be reimbursed by the provincial government for the lost tuition, she said she had confidence universities would adapt and find other sources of revenue. She estimated that the lost tuition revenue will account for between 2 and 4 percent of most institutions’ operating budgets.

“Universities are autonomous, colleges are relatively independent, and they have funding from other sources and revenues from other sources. And I fully anticipate that they are capable and able to make adjustments,” Fullerton said. She said that there will be no reduction to state operating grants for institutions.

Universities protested, however, that without being made whole, the cuts to tuition will negatively affect their teaching. The situation is parallel to state legislatures in the U.S. freezing tuition rates and not making up for the difference in tuition revenue with increases in appropriations -- though in this case Ontario actually reduced tuition rates, as opposed to merely freezing them in place.

“Ontario universities share the government’s goal of ensuring that all students who qualify should be able to access a postsecondary opportunity,” David Lindsay, the president and CEO of the Council of Ontario Universities, said in a statement. “However, today’s announcement, cutting domestic tuition fees by 10 percent, will reduce universities’ revenue by 360 million [Canadian dollars] -- and negatively affect their ability to provide the best possible learning experience for students, partner with their communities and help deliver economic and social benefits to the people of Ontario.”

Lindsay added, “The current financial situation faced by universities should be viewed in the context of over 16 years of decreased funding. Since 2002-3, operating grants per student, when adjusted for inflation, have decreased by 10.6 percent, which in turn has required universities to fund a greater proportion of their operating costs through tuition fees.”

Mitzie Hunter, a member of Ontario's provincial parliament from the Liberal Party and a former minister of advanced education and skills development for Ontario, issued a statement criticizing the policy of the Progressive Conservative government, led by the premier, Doug Ford. “Doug Ford is slashing funding to universities and colleges while adding debt to students across the province -- it’s completely unacceptable,” she said.

“Only Doug Ford would introduce a student aid plan that will help the wealthiest students at the expense of those who need help the most. The Ford government tuition cut will benefit only the wealthiest and the government. Because tuition fees will be lowered, the government will be spending less money on tuition fees through OSAP. Needy students will see next to no benefits because under the previous program they were already being provided for. Wealthy students, who never qualified for OSAP in the first place, are being given a 10 percent tuition cut even though they can afford it the most.”

The Canadian Federations of Students-Ontario also issued a statement condemning what it described as “a reckless plan for postsecondary education in the province, leaving students in Ontario worse off.”

“The Doug Ford government has attempted to spin this announcement as a 10 percent reduction in tuition fees when in reality Ford’s plan will increase out-of-pocket costs for students, diminish the quality of education students receive and undermine crucial student supports on campus,” said Nour Alideeb, the chairperson of the student federation. “The reality of loans-based financial aid programs is that students from low-income families pay more for their education in the long run. This announcement will make life harder for students and their families.”

The student federation also raised concerns that the Student Choice Initiative will encourage students to opt out of paying dues to student unions, which the group described as "important and independent organizations that advocate for students’ best interests and provide cost-savings services."

The Ontario Undergraduate Student Alliance, an entity representing a group of student associations across Ontario, also issued a statement expressing concern about the impact of the "opt-out" provisions on student organizations.

"Student representation, the autonomy of student governments, student media outlets, and services like health and dental plans, clubs systems, student-led programming, transit passes, and peer-support services, could be at risk," the alliance said. "Most student unions’ services, funded through student fees, reduce university and student reliance on government funding. Student unions fill in gaps in programming and services where universities cannot or will not."

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