The federal government is set to lower student loan interest rates and make the six-month grace period following graduation interest-free, according to its 2019 budget released March 19. The budget also provides financial support for students who are on parental leave, increases job placement availabilities for students, and provides additional funds to attract more foreign students to Canada.

Student loans

The federal government has reduced the floating student loan interest rate to the prime rate, from its current 2.5 per cent over prime. The fixed interest rate will be reduced to prime plus two per cent from the current prime plus five per cent. Most student loan recipients use the floating interest rate, which fluctuates, as opposed to the fixed interest rate, which remains constant for the duration of the loan. The prime rate refers to the annual interest rate that major financial institutions set.

These cuts are expected to cost the federal government $1.7 billion over the next five years. The budget predicts that the average student will consequently save approximately $2,000 over the period of their loan.

Currently, during the grace period, Ontario students who use the Ontario Student Assistance Program (OSAP) are not charged the one per cent over prime interest rates for the provincial portion of their loans, but the federal portion of loans begin accumulating interest immediately following graduation.

The Ontario Progressive Conservatives’ OSAP reconfigurations earlier this year eliminated the interest-free grace period for the provincial portion of student loans. This means that the statuses of the federal and provincial portions of OSAP loans have effectively swapped. Perhaps ironically, one of the stated reasons the Ontario government made changes to OSAP was to “align Ontario’s repayment terms with that of the federal government… to reduce complexity for students.”

The federal government is also set to implement interest- and payment-free leave for students using OSAP who are on temporary leave from university due to medical or parental reasons, including mental health leave. These can be used in six-month periods for up to 18 months total.

Additionally, the budget proposes increases in compensation to provinces and territories by $20 million over five years. This compensation will be used to supplement provincial student aid systems, like OSAP.

The federal government is also set to invest $15 million to support students with loans who have disabilities or are in “vulnerable financial or life situations.”

Other changes

Sweeping changes are in store for job- and volunteer-seekers. Initiatives to create 15,000 service placements, connect 90,000 young people with jobs, add 84,000 new work placements by 2023–2024, and provide five years of support to 1,000 entrepreneurs will cost the federal government a total of $1.2 billion.  

The federal government has also proposed an additional investment of $37.4 million over five years to expand parental leave coverage for postsecondary students and postdoctoral fellows. It also expands coverage from six months to 12. The budget notes that these expansions “will further improve equity and inclusion in research.”

Over five years, $147.9 million of the budget will also be used to develop a new International Education Strategy. Part of these funds will go toward developing “an outbound student mobility program” for students who pursue studies or work abroad, while the other part will “ensure that top-tier foreign students continue to choose Canada as their education destination of choice.”

University of Toronto President Meric Gertler praised the announced expansion of master’s and doctoral scholarship awards and mobility programs. “These investments in experiential learning are investments in Canada’s future,” he said.

“The investments are good news because they will drive economic growth by giving Canadians the skills they need to succeed. They will enhance the success of U of T graduates and others across the country who are entering the labour force.”

Three days after U of T welcomed students back from the winter holidays, Vice-President and Provost Cheryl Regehr presented her assessor’s report to Governing Council’s Planning and Budget Committee (PBC). Within her 17-odd minute report, Regehr cited an excerpt of the provincial government’s ominous 2018 Ontario Economic Outlook and Fiscal Review: “The fiscal hole is deep. The road ahead is not an easy one, and it will require difficult decisions. Everyone in Ontario will be required to make sacrifices, without exception.”

This was the extent of the information available to the university at the time, and Regehr would proceed to speculate on the ramifications of the then-unknown — yet still expected — string of provincial government changes to postsecondary education finances. In response to a question from a committee member, Regehr cited the 2008 financial crisis as an example of how the university had responded to large-scale revenue losses in the past. During that period, the university lost $62 million — $73 million today when accounting for inflation. Could the government’s changes really be as impactful on the university as a global financial crisis?

With uncertainty in the air, Regehr summarized what the committee needed to know: “We anticipate that this will be difficult for us and we still need to find out how difficult.”

A week afterward, the provincial government announced its sweeping changes, including a 10 per cent cut to domestic tuition, Ontario Student Assistance Program (OSAP) reforms, and the option for students to opt out of “non-essential” incidental fees. U of T’s recently released budget and long-range budget guideline proposals highlight the effects of these changes: a $65 million reduction compared to this year, and an $88 million reduction in revenue from original 2019–2020 projections.

The budget is an annual report that determines how operating revenue and expenditure is broadly managed across the university, while the accompanying long-range budget guidelines are the university’s projections for each of the next five academic years. The budget is balanced, meaning that revenue and expenditures are equal.

By the time the PBC convened again on February 27 to discuss and recommend the proposed 2019–2020 budget, much had changed.

Tuition

With the tuition changes taken into account, the university’s budgeted 2019–2020 operating revenue is $2.77 billion, approximately 3.5 per cent more than this year’s $2.68 billion operating revenue, but 1.7 per cent less than the previously projected $2.81 billion. Tuition and student fees constitute 62.7 per cent, or over $1.7 billion, of the budgeted revenue.

While the provincial government noted that everyone was required “to make sacrifices,” the university’s divisions are facing vastly different levels of sacrifice due to government changes. According to Vice-President Operations Scott Mabury, some divisions are facing a nine per cent decrease in operating revenues, while other divisions will see an 18 per cent increase. Divisions facing greater decreases to tuition revenue are, as expected, ones that are predominantly populated by domestic students. The second entry programs of medicine and dentistry, for example, will be more significantly impacted by the tuition cuts, as 98.7 and 99.3 per cent of their respective undergraduate intake this year pay domestic tuition rates.

According to the budget, academic divisions’ management of revenue losses will include “some combination of changes to faculty and staff hiring plans, deferral of capital projects, service reductions, and operating cost efficiencies.” The university will also allocate portions of its University Fund to support divisions most affected by the changes. Ten per cent of each division’s revenues are allocated to the fund, which then redistributes resources based on need. For example, in 2019–2020, the Arts & Science division will see an approximate net loss of $12.9 million from the fund, while the Dentistry division will receive approximately net $9.5 million.

While domestic tuition in 2020–2021 will be frozen at 2019–2020 levels, the long-range budget plan assumes a return to the three per cent year-on-year domestic tuition increase cap after this period.

Residence costs do not fall under the university’s tuition group and are instead considered cost-recovery ancillary fees, meaning that they are unaffected by the government’s changes.

Operating grants

The bulk of U of T’s remaining revenue comes from provincial operating grants, which will constitute 24.1 per cent of the overall 2019–2020 revenue. The provincial government has indicated that there will be no cuts to operating grants, although it has not formally committed to this position. The university’s core operating grant is $578.2 million per year. It also receives a graduate expansion grant, which is expected to increase from $11 million to $14.3 million in 2019–2020. Operating grant revenue is expected to rise by more than $10 million over five years, although the province has yet to approve these plans. The timeline for approval is unclear.

U of T’s dependence on operating grants has decreased over the years. When the  current budget model was established in 2006–2007, 45 per cent of the operating revenue came from operating grants. The university estimates that this will continue to decrease to 21 per cent of its operating revenue in 2023–2024. Mabury said that this is “almost perfectly matched” by the increased dependence on international student tuition, from seven per cent in 2006–2007 to 34 per cent in 2019–2020 and 38 per cent in 2023–2024.

As part of its existing Strategic Mandate Agreement (SMA) with the previous Liberal provincial government, the university must decrease domestic undergraduate seats by 1,800 students through 2020. Due to the terms of the SMA, the core operating grant is not expected to decrease despite decreases to domestic enrolment.

Expenditures

Fifty-nine per cent of the university’s 2019–2020 expenditures are set to cover academic faculty and staff compensation. This equates to $1.6 billion, of which $905 million goes to academic compensation and $720 million to staff compensation. Academic compensation refers to faculty, instructors, librarians, and teaching assistants, while staff compensation goes to administrative staff. U of T is planning to hire 51 additional faculty next year, although the budget notes that some of these hires may be delayed due to the revenue loss.

Overall student aid expenditure in 2019–2020 is set to $247.1 million, compared to the planned $233.6 million, which is also up from this year’s $224 million expenditure. The bulk of this increase comes from academic divisions, which have increased student aid expenditure to $119.2 million, $19.4 million more than originally planned. Due to the government easing domestic tuition costs, demand for the university’s program for needs-based aid to OSAP-eligible undergraduate students, the University of Toronto Advance Planning for Students, is set to decrease. U of T has accordingly decreased its funding to $39.9 million, a $6.9 million cut from its original 2019–2020 plans.

The Budget Report 2019-20 and Long Range Budget Guidelines 2019-20 to 2023-24 were unanimously recommended by the PBC on February 27. The budget still needs to be recommended by the Academic Board, Business Board, and Executive Committee before Governing Council votes to approve it on April 4.

A University of Toronto Students’ Union (UTSU) committee has recommended that the UTSU terminate its decade-old agreement with the University of Toronto Mississauga Students’ Union (UTMSU). The recommendation was announced at the UTSU’s Board of Directors meeting on August 15 and came after months of negotiations between the two student unions.

Following the August 15 meeting, an emergency UTSU board meeting was called on August 22 to discuss the UTSU’s 2018–2019 Operating Budget, which included large increases in areas such as office supplies and transportation. The jump in these line items was attributed to the upcoming opening of the Student Commons, which was recently delayed from Fall 2018 to January 2019.

The board meetings also saw some tension between board members and executives, with directors questioning late executive reports. In an unusual move, the board also voted down a motion presented by the executives, which proposed moving up the date of September by-elections.

Termination of UTMSU agreement

Since 2008, the UTSU and the UTMSU have been in an Associate Membership Agreement (AMA) that has linked the two groups in areas of governance and services. All UTM students belong to both unions, and the UTSU remits a portion of fees paid by those students back to the UTMSU.

Talks began in January 2018 to renegotiate the AMA, but they have apparently broken down since the UTSU’s Ad Hoc Negotiations Committee has formally recommended that the AMA “be terminated, contingent on expected negotiation results,” according to UTSU President Anne Boucher.

A termination of the agreement would mean a huge restructuring of how both unions function, changing everything from the makeup of their boards to the services that they provide. For instance, the UTMSU would be allowed to conduct its own advocacy work, which the current AMA does not permit.

2018–2019 budget

The August 22 emergency meeting was called to discuss the budget because the documents were released “too late for people to be able to review it in time,” according to UTSU Vice-President University Affairs Joshua Grondin. The budget wasn’t released until a few hours before the meeting by Vice-President Internal Tyler Biswurm.

Notable increases include office supplies, which went up from $1,500 to $10,000, as well as a doubling in the budget for transportation from $5,000 to $10,000.

Biswurm said that the increase in office supplies reflect one-time costs due to the imminent move to the Student Commons building.

For transportation, Biswurm explained that the uptick was to fix mistakes in last year’s budget, which underestimated the cost of transportation and resulted in overspending by $2,483.25.

According to Biswurm, the discrepancy also happened because “transportation expenses that should have been charged to the Transportation account were mistakenly categorized” into the wrong accounts, such as for events and conferences.

Excerpt from UTSU 2018–2019 Operating Budget, released August 15, 2018. (Click to Expand)

Tension at board meeting

In a rare turn of events, a motion failed at the August 15 board meeting. The motion was to move the notice of the UTSU’s by-elections from September 20 to September 6.

Boucher explained that the motion “would have allowed students more time to consider running in the UTSU by-elections.” The positions available for running include those in Kinesiology, Theology, and Law, along with possible positions available due to the resignation of members.

But board members “pointed out that [September 6] may be too early for students to properly consider candidacy, and suggested the election period range be shortened in lieu,” wrote Boucher in a statement.

Innis College Director Lucas Granger wrote to The Varsity that he voted against the motion because releasing the by-elections notice “on the first day of classes leaves first-years specifically in the dark,” since the notice may be crowded out by other back-to-school announcements.

Also brought to issue at the meeting were the many missing Executive Reports, which is a summary of the month that each UTSU executive is mandated to present at board meetings.

Reports from Biswurm, Vice-President Equity Ammara Wasim, and Vice-President External Affairs Yuli Liu were all missing. Biswurm also did not submit his June Executive Report.

When asked by Granger why his reports were missing, Biswurm responded, “It has mostly to do with the fact that I’m bad at scheduling.”

Biswurm explained that he dedicated more time to writing the operating budget and apologized for not having his reports up.

“I figured if you want me I can give a verbal report but there is no written version. It’s not written at all; I would not be able to submit it now.”

The absence of reports was also raised by Academic Director of Social Sciences Joshua Bowman, who said at the meeting, “I’m concerned with the fact that I’m unaware of what the Vice-President Equity is doing, due to the fact that the Executive Report was not submitted.” Wasim responded that it was “done on time,” but her assistant did not submit it to Biswurm.

Bowman later wrote to The Varsity, “We as students consistently have to work with deadlines when handing in essays or submitting projects. Our elected Executive should be no exception, especially when acting on our behalf.”

In other business, the UTSU continues to leave two student positions on the CIUT 89.5 FM Board of Directors unfulfilled. CIUT is U of T’s campus radio station, and its board reserves two seats for UTSU appointees, which have been vacant since March 4.

This vacancy came after then-appointees, Boucher and former UTSU executive Stuart Norton, resigned, citing “antagony, intimidation, and dismissal” in response to their criticism of the CIUT’s handling of a “sexual harassment complaint” by CIUT host Jamaias DaCosta against a co-host. They also accused CIUT of an “undemocratic” elections process.

Justifying the continued vacation of the student positions, Boucher said that the voices of new appointees “were not something that [the CIUT] wanted to hear,” and she would not “feel comfortable sending a student into that situation.”

The University of Toronto released their proposed budget for the upcoming 2018–2019 fiscal year, which featured increased funding in financial aid, research opportunities, and graduate programs. The budget reports a total budgeted operating revenue of $2.676 billion, 8.2 per cent higher than the 2017–2018 budget.

Expenses in the proposed budget include large-scale building projects on all three campuses, including an increase in spending toward the total deferred maintenance liability, an increase in student aid, and grants and diversity initiatives.

$224 million is budgeted toward student aid for the 2018–2019 fiscal year. This figure is expected to grow to $260 million over five years. The increase in spending on financial aid can be attributed to the university’s policy on student financial support. The statement principle outlines that, “No student offered admission to a program at the University of Toronto should be unable to enter or complete the program due to lack of financial means”.

The proposed budget also aims to fund diversity and equity initiatives. A total of $3 million over a course of three years will be allocated to coordinate access programs for students from underrepresented groups on campus. Similarly, $3 million over a course of three years will be set aside to fund postdoctoral fellowships for individuals from underrepresented groups. In turn, this will diversify the amount of minority scholars across the country.

Deferred maintenance has been a critical issue, costing the university $549 million in liabilities this year. Of that $549 million cost, UTSG accounts for $478 million with an increase of $4 million compared to last year. UTSC and UTM campuses saw decreases of $2 million and $4 million, respectively. $18 million has been allotted for deferred maintenance repairs, specifically at the St. George campus, while $2.5 million are set aside for the UTM and UTSC campus in their respective budgets.

OSAP                                                                                                          

Changes in the Ontario Student Assistance Program (OSAP) were also included in the report. The program was changed to include free tuition for students from low and middle-income families, 30 per cent off tuition grants, and opportunity-based grants for students to reduce loan debt. 55 per cent of U of T students receive OSAP payments.

Funding for the University of Toronto Advanced Planning for Students program (UTAPS) is also projected to increase by an additional $13 million over the planning period. UTAPS gives grants to OSAP eligible students based on financial need.

Revenues

Much of the university’s operating revenue is obtained through provincial operating grants, tuition, and various student fees. Tuition and grant revenue for 2018–2019 is projected to be $2.336 billion, a 2.5 per cent increase compared to the $2.279 billion projected last year. Similarly, large endowments from the university’s greater community have also contributed over $2.38 billion to the operating revenue.

This year, a maximum three per cent increase will be added to tuition for Arts & Science students. Tuition fees for graduate and professional program students may also be increased by a maximum of five per cent. The university has also proposed to align tuition fees for international PhD students with the domestic rate.

The university recently signed a new Strategic Mandate Agreement (SMA2) with the province of Ontario. The agreement aims to re-establish the university’s leadership role in research and innovation in Ontario. SMA2 aims to include funding for 631 new master’s student spaces and 198 new doctoral student spaces by fall 2019.

Governing Council will vote on the $2.68 billion proposed operating budget for the 2018–2019 fiscal year on April 5

On February 27, the Liberal government announced the federal budget, which includes a $3.2 billion investment in scientific research over the next five years.

A fund of $1.7 billion will go toward research granting councils — the Natural Sciences and Engineering Research Council, the Canadian Institutes of Health Research, and the Social Sciences and Humanities Research Council — and $1.3 billion will be used to fund overhead expenses like research infrastructure, laboratories, and supplies.

Additionally, the budget proposes the formation of a new tri-council fund that will spearhead research that is internationally and interdisciplinarily based.

This large investment was driven considerably by the Naylor Report, Canada’s Fundamental Science Review, led by U of T President Emeritus David Naylor and commissioned by Science Minister Kirsty Duncan in 2016. The Naylor Report outlined 35 recommendations for the government to implement in order to better support scientific endeavors, including a $1.3 billion increase for research granting councils by 2022.

Though Budget 2018 does not meet all criteria outlined by the Naylor Report, it is evident that the government listened to scientists and took note of the Support the Report campaign led by U of T last year.

“The government did send a very positive signal to the scientific community, and provided for increased and longer-term stability to research funding going forward,” said Bryan Stewart, Vice-Principal of Research at UTM. “This is very welcome news.”

According to Finance Minister Bill Morneau, this investment is the single largest in investigator-led fundamental research in Canadian history. Morneau also said that the investment will help spur new industries and careers in Canada.

“Federal research grants have a huge impact on any individual researcher’s ability to supervise and train students of all levels,” said Stewart. “Any uptick in research funding will allow for more student research opportunities, and unfortunately, any downturn in research funding has the opposite effect.”

Additionally, the government plans to invest $210 million over five years in the Canada Research Chairs (CRC) Program. This CRC investment also aims to support talented early-career researchers and diversify its nominees to include more female researchers and researchers from underrepresented groups.

Only 28 per cent of Research Chairs at major universities are women, and they are typically at the bottom of CRC’s funding tiers. The budget aims to address federal sector gender pay inequity through proactive legislation. On average, a woman earns $0.87 for every dollar a man earns.

The budget also addresses inclusivity: $25 million has been allotted to support Indigenous research and researchers from minority groups so that they are better represented.

“Fundamental research explores the basis for why things are, and applied research tends to focus on how to use fundamental knowledge to make things work,” explained Ulrich Krull, the Principal of UTM. “Economic impact is largely tied to success in making things work, but this has no traction unless there is understanding of what needs to be done and there are skilled people available to creatively solve problems.”

While the reaction to the scientific funding allocation of this budget has been overwhelmingly positive, some have criticized the government’s inattention to the slow return on investment correlated with fundamental research, calling the investment an unwise way to spend tax dollars.

Funding for the Climate Change and Atmospheric Research program has not been renewed and will end this year. This lack of funding will halt progress on research in the Arctic.

Despite concerns and a few gaps, Canada’s scientific community has rejoiced over the budget and that the government listened to the community’s concerns over lagging research and funding for investigator-led fundamental research.

“Overall, this budget sends a clear signal that the federal government understands that universities have a unique positioning to drive social, economic and cultural growth,” said Krull.

ON February 25, the 2016 Ontario budget was released; one of its priorities focused on satiating the insistent requests from student groups -— free tuition for students from low-income backgrounds. But when the government offers you a free lunch, it pays to be skeptical.

While this budget takes steps toward more equitable financing for post-secondary education in Ontario, our province still has a long way to go before university education is equally accessible.

Not free for everyone

The budget provides most college and university students whose family income is less than $50,000 a year with enough grant funding to cover their entire tuition. The government stipulates that no student will receive less funding under the new plan than they would have received from the pre-existing 30% Off Tuition Grant.

This commitment certainly signals progress; however, it is not free, and it does not provide enough funding to cover degrees with higher-than-average costs.

The government estimates average undergraduate university tuition costs $6,160, while Statistics Canada averages it at around $7,868. As a result, there is a $1,700 shortfall.

This is because the government calculated average cost of tuition based solely on arts and science degrees, which doesn’t fully account for more expensive degrees, such as those in commerce, engineering, or computer science. This appears to be poor planning on the part of the government, as careers that stem from some of the more technical degrees flow into some of the least saturated job sectors in Ontario.

The plan will come at “roughly no cost” to the government, meaning that the funds used to offer finance tuition represent no increase to public funding invested in higher education but merely a redistribution of existing resources.

Streamlined funding

The Ontario Student Grant (OSG) will consolidate all other grant programs currently operating under Ontario Student Assistance Program (OSAP), while tuition and education tax credits will be discontinued and reallocated to pay for the OSG. This is predicated on the assumption that “[g]rants are more effective than tax credits at targeting financial support to students with the greatest needs and providing support upfront,” which seems to reign true.

A deeper look into the student assistance system, however, reveals troubling possibilities for some students that are not addressed within the new structure. Co-op students and students who work are likely going to pay tax on income that was not previously taxable. While this will not restrict all students that fall into this category, it is worth noting that some students with higher incomes seek them out because they do not qualify for other forms of government support.

Financial need will continue to be largely based on family income under the new system. While we can be fairly confident that students coming from low-income families are in need of assistance, it is less clear that all students from high income families do not need assistance.

To the government’s credit, some attempt has been made in the budget to rectify this problem. Parental and spousal income will be less of a determining factor when assessing students’ financial need than it has in the past. Grants will also be available to mature students as eligibility will no longer be tied to the number of years a student has been out of high school.

For some students who, despite these provisions, rely on income other than government grants and loans to fund their education, this budget is not expected to deliver much relief. Students should view this as an omission on the part of the government and should lament the fact that students whose need is not easily quantifiable are likely to be left behind.

Student debt goes unaddressed

There is no mention in the budget of debt forgiveness, something that student groups such as the Canadian Federation of Students and the Ontario Undergraduate Student Alliance have been calling for for a long time. Student debt in Canada is high; grads are routinely saddled with more than $20,000 to pay back as they enter the workforce. There is a six-month grace period after graduation during which students do not have to make payments, a provision that will be carried over in this budget.

It is worth noting that, while the government must start somewhere to increase the accessibility of post-secondary education, this plan creates a sizeable disparity in terms of incurred debt between low-income students entering post-secondary education in 2017 and those graduating in the same year. The class starting university in 2017 will be better supported than it otherwise would have been, but nothing has been done to address the mass of university graduates who are currently under-employed and struggling to pay off debt.

Tuition increases

The proposed reforms of student assistance will come into effect at the same time that the government’s existing Tuition Fee Framework expires — the current system restricts institutions from increasing domestic undergraduate tuition fees by more than three per cent per year. There is no commitment in the budget to renew this cap, nor has the government committed to extending the cap beyond 2017.

Last week, Minister of Training, Colleges and Universities Reza Moridi stated that the OSG would be tied to inflation and tuition increases. The fact that this is not written in the budget, however, is deeply concerning. If there is no policy or mechanism to adjust the grant in keeping with changing tuition, then the grants will become less effective each successive year.

These tuition fee caps matter to U of T students. In the 2016–2017 fee schedule released February 11, domestic tuition fees are set to rise by the maximum amount yet again. If the government is to commit to the goals they have outlined in this budget, they must not congratulate themselves too quickly. The effectiveness of their plan is contingent upon many other policies, chiefly tuition regulation.

The Ontario government’s overhaul of the existing student assistance programs, while not free, makes significant improvements to equitable access to university education in this province — changes that in many ways are well worth their price tag. The priorities now become ensuring that changes like these reach the students who need assistance most and maintaing an effective system in the face of a changing funding landscape.