The Explainer: Student loans

Do you know where to start after you graduate?

The Explainer: Student loans

In every U of T student’s life, there comes a point when the good times must end. It is at this point that student loan debt becomes a reality.

In school, student loans may seem to not be an urgent concern, with more immediate problems at hand, such as academic performance and the living expenses, taking precedence. However, post-academic finances are a subject worth tackling sooner rather than later, as 77 per cent of Canadian graduates regret their student debt decisions.

Different homes, different loans

The most important factor to consider when looking to pay off student loans is where that funding came from in the first place. While domestic loan-takers almost always take federal funding via the National Student Loan Service Centre (NSLSC), the provincial portion could come from a number of agencies, depending on their home province.

This is a distinction without a difference for students from Ontario, British Columbia, Saskatchewan, New Brunswick, and Newfoundland and Labrador, as the relevant provincial agencies cooperate with the NSLSC to consolidate loan payment. However, the Government of Yukon Territory does not offer its own student loan program to students. Likewise, the Government of Québec does not offer its own student loan service, but instead guarantees student loans taken from private companies.

Students from the remaining provinces and territories will have to pay two separate student loan providers: both the NSLSC for the federal portion of their loan, and the relevant provincial agency.

International students and students who have borrowed from private lenders need to verify details of their repayment with their respective loan providers.

Students who received funding from U of T via the University of Toronto Advance Planning for Students financial aid program do not need to repay them, as funding is provided through grants.

Using the National Student Loan Service Centre

The federal government and the Government of Ontario have agreed to handle all loan repayment through the federal NSLSC, the provider that handles loan repayment for students receiving aid from the Ontario Student Assistance Program (OSAP).

Although many students may have already registered with the NSLSC when first applying for a loan, a recent complete overhaul of their login system has required all existing users to re-register through the new system.

Registrants have two methods of access to choose from. Creating a GCKey login will allow users to access other Government of Canada online programs with the same credentials, username, and password, used to access the NSLSC. Alternatively, the SecureKey Sign-In Partner system allows one to log in with the same information they use to access online services at certain eligible financial institutions.

Registration can be done in under 20 minutes, and only requires a Social Insurance Number.

Interest and Repayment Plans

The ideal scenario for any student is paying the entirety of their debt — seen in the “Amount Owing” section of the NSLSC website’s “Loan Summary” — immediately after leaving their studies, and before any interest accrues.

While this may be feasible for people with smaller loans or significant savings, the majority of former students will have to deal with interest accruing as they partially pay their debt on a monthly basis. Payees have two types of interest rate: fixed or variable.

Both rates rely on the NSLSC’s prime rate. As the name implies, a prime rate is the interest rate at which a financial institution lends money to its favoured borrowers.

The NSLSC calculates its prime rate by taking BMO, CIBC, Scotiabank, RBC, and TD Canada Trust’s prime rates, discarding the highest and lowest values, then averaging the remaining three.

Note that this is different from the Bank of Canada’s key interest rate, which is sometimes called “the prime rate.”

A variable interest rate, also referred to as a floating interest rate, is subject to change depending on the economy.

For example, the NSLSC currently has set their variable rate to the prime rate plus 2.5 per cent. This resulted in an interest rate of 6.2 per cent on federal student loan monthly payments for most of last year when the prime rate was 3.7 per cent. However, the aforementioned banks raised their prime interest rates to 3.95 per cent last October, resulting in a 6.45 per cent variable interest rate since then.

Alternatively, a fixed interest rate accrues higher interest immediately, but stays at the same rate no matter the state of the economy.

The current NSLSC fixed interest rate is the prime rate plus five per cent. Following the example above, someone who chose a fixed interest rate before last October would have originally paid interest at a higher rate of 8.7 per cent, but their payments would still include only 8.7 per cent today, unaffected by the fluctuations from the banks.

It is important to note that the NSLSC will use the floating rate by default until a payee specifically ‘locks in’ a fixed rate through the website.

Despite some provinces and territories handling provincial student loan payments through the NSLSC, the option between two rates may only be given for the federal portion of one’s student loan.

For example, OSAP accrues at a floating rate of the prime rate plus one per cent, whether the federal portion takes fixed or floating rates.

The NSLSC defaults to planning monthly payments for 114 months — the average payment time in Canada — but the time frames vary, as can be seen on their loan payment estimator.

Repayment assistance and tax credits

It is reasonable to assume that recent graduates may not have the means to support monthly payments while first establishing their careers, and a number of tools exist to provide financial support.

The Repayment Assistance Plan (RAP) is primary among these, accessible on the NSLSC website. Dependent on family income, RAP applicants may be eligible to reduce their monthly payments, or eliminate them entirely. However, this does not mean that the debt is eliminated.

Specific sections of RAP cater to those with permanent and severe permanent disabilities.

After five years on RAP, or 10 years after graduation, eligible RAP applicants may also receive debt forgiveness, where the federal and provincial governments pay off portions of the loan themselves.

Even those who are ineligible for RAP can receive debt relief in the form of tax credits. Line 319 of a Canadian tax return allows the declaration of interest paid on a student loan in that year. Eligible tax credits will be deducted from the payee’s required tax payment for that year.

This is a non-refundable tax credit, meaning that a declaration will never result in ‘cash back’ to the payee, only a deduction from what is owed. However, interest declarations can be made on payments up to five years in the past, so the Canada Revenue Agency recommends carrying the declaration forward to future years, if one does not expect to owe much tax for the current year.

Are you sure

you’re leaving already?

While many undergraduates enter the workforce as soon as possible after graduation, many others move on to graduate or second-entry undergraduate programs.

In general, full-time students do not have to pay off any student loans, but there is a time limit attached to this: the maximum amount of time a student is allowed to stay enrolled in school payment-free is 340 weeks. This is increased to 400 weeks for students in a doctoral program.

Regardless, once out of full-time school for good, recent graduates have a six month “grace period” after graduation where payments are not expected by the NSLSC. At present, interest accrues on the federal portion of the student loan during this period.

The grace period for provincial loans varies by province or territory. Ontario graduates in the class of 2019 and older have a period of six months as well, and additionally do not accrue interest on their loans during this period.

Recent budget changes to interest rates and the grace period

Recent provincial and federal budgetary changes mean that precise figures will differ for graduates of the class of 2020 and beyond.

Chief among these changes are those to the federal interest rates after November 1. As previously mentioned, the current NSLSC floating interest rate is the prime rate plus 2.5 per cent; this will decrease to only the prime rate. Likewise, the fixed rate is decreasing to the prime rate plus two per cent, down from the prime rate plus five per cent. Provincial and territorial loans remain unaffected by the change in the federal budget.

The federal grace period of OSAP recipients will ‘switch’ with their provincial grace period. While both periods remain at six months, interest on the federal portion of the loan will no longer accrue during this period, while interest will now accrue on the provincial portion.

Finally, more support is being put in place for individuals who may have difficulty repaying their federal loans. The government will provide expanded assistance to RAP applicants with permanent and severe permanent disabilities by broadening the definition of “severe permanent disabilities” and removing restrictions on recipients.

For anyone who has been forced to lapse in their payments, federal debts may now be rehabilitated, and improve one’s financial standing.

This is accomplished by adding the existing interest to the remaining original loan amount and making two payments on the new amount.

The faces of Ford’s OSAP cuts

Three members of the U of T community share their stories

The faces of Ford’s OSAP cuts

Back in January, Ontario Premier Doug Ford announced large-scale changes to the Ontario Student Assistance Program (OSAP). Notably, there were significant changes to grant-to-loan ratios, the defining guidelines of independent students, and the scrapping of the free tuition program for low-income students. The Varsity spoke to three members of the U of T community about the personal implication of these changes.

“Education is about liberation.”

Yasmin Owis, a first-year PhD student and research assistant at the Ontario Institute for Studies in Education at U of T, was confirmed to receive thousands of dollars worth of funding through OSAP in June. Two months later, her funding was recalculated to zero.

Thinking back on the completion of her first two degrees, Owis wrote that she had relied completely on OSAP to be able to afford her education. Without it, she wouldn’t have been able to get this far.

Although as a full-time PhD student she receives a funding package from the university that covers tuition, the amount she receives doesn’t account for all the soaring costs of housing, food, and transportation that come with living in Toronto.

“I’m taking on extra work in an already stressful first year of doctoral studies to cover the funding I lost from OSAP and applying to as many scholarships, grants, and bursaries as I can,” Owis wrote in an email to The Varsity.

Among students and families impacted by the Ford adminstration’s drastic slash of OSAP funding, Owis’ story stands as one of thousands.

For many postsecondary students across Ontario entering the new school year, the prospect of funding their education has become an anxiety-driven scramble for financial security before their fees are due.

This anxiety began metastasizing in January, alongside Ford’s announcement. The previous Liberal government had implemented a program that offered affordable tuition to students whose families earn less than $50,000 a year. Coming into power early last year, Ford’s administration disagreed with the sustainability of such a program.

Their response was cutting postsecondary tuition by 10 per cent, reducing the qualifying threshold for funding from $175,000 to $140,000, and requiring students under the $50,000 threshold to take on loans in addition to grants.

“It pulls focus away from academics and completing your degree to the best of your ability,” Owis wrote.

Compared to others, Owis believes that she is one of the lucky ones. Many of her friends that are without funding packages are taking out lines of credit, moving back in with their parents, and balancing three jobs with their course load.

The mental costs of such a workload can be stark.

“If you’re someone like me, who has both mental and physical health barriers, OSAP cuts [mean] that I have less funds for medication and mental health services that [are] not covered by my health insurance,” wrote Owis. “Those who already face challenges [with] affording education are not spared.”

“Despite having worked two jobs — both full time — this summer, the money I saved won’t even help.”

Morgan Murray, a third-year student double majoring in English and Cinema Studies, with a minor in Creative Expression and Society at U of T, has been commuting from Cobourg to the downtown campus for the entirety of her undergraduate studies. She wrote to The Varsity that she and her parents agreed on the commute to cut down on costs, but now, even that won’t be enough.

“A major part of that decision was because I wanted to put all my energy into my studies and extracurriculars, rather than working [a job] after class or on weekends,” wrote Murray.

As she now faces losing thousands of dollars in OSAP funding, the mounting costs that she didn’t anticipate are another pile of responsibilities slammed on top of her textbooks. Her summer funds will be funnelled to her basic amenities, like transportation, food, and textbooks. Any potential for a layer of comfortable cushioning in her financial situation has all but dissipated.

“As I’ve become more educated from university, whether it’s from my classes or the life lessons learned in between, it is very apparent that many people in government are not concerned about their citizens being educated,” wrote Murray. “If they did, they would find ways to benefit the lives of students and help make an accessible way for all to attend, regardless of their background or family income.”

As a result of the OSAP changes, many postsecondary students find themselves in a ‘catch-22’ situation. With less support from the government, students need to compensate by dedicating more time to pursue scholarships or potential jobs.

However, the more time spent on these activities, the less time students have to focus on their courses, which detracts from their ability to achieve a higher GPA. This then lowers their chances to receive merit-based assistance like scholarships that would alleviate their need to work a job, which swallows up time and perpetuates the cycle.

“It seems the only thing you can do is work harder than before,” Murray wrote. “It’s going to be difficult to not constantly worry about finances, but just taking it one day at a time is the best way to get through this.”

“The next step is to definitely fight back.”

“My heart sank when Ford [made the] cuts.”

Ananya Banerjee, Assistant Professor and Interim Program Director at the Dalla Lana School of Public Health, has seen firsthand how the drop in OSAP funding has impacted many of her students.

“I had a number of our top applicants email me when they received an offer and saw the tuition cost of our program. Many simply said they couldn’t afford to enter our program as they didn’t get the OSAP amount [that] they needed,” Banerjee wrote to The Varsity.

Some applicants asked to be switched to part-time students so they could work on the side. “I noticed a high proportion of these top applicants were racialized and from low-income families,” wrote Banerjee. “Fewer individuals from marginalized communities will be entering our post-secondary education system, and those that do will spiral into severe debt in order to afford it, leading to a rise in mental health issues.”

Worries over losing a grip on postsecondary opportunities is shared amongst many. While the Ford government’s OSAP cuts impact different students in very different ways, one sentiment remains the same across each and every subject: a growing fear of the unknown.

“We have to commit as an academic institution to build a barrier-free and accessible education system until we have a change in government,” wrote Banerjee. “If we don’t, we are going to lose the brightest students who rightfully deserve to [be] part of the University of Toronto.”

“Our education is now a privilege.”

OSAP changes threaten equitable access to education

Ford’s policies exacerbate the burden placed on students who rely on financial aid

OSAP changes threaten equitable access to education

In mid-June, the Ontario Student Assistance Program (OSAP) became the top trending topic on Twitter in the GTA. Many students shared how the changes that the Progressive Conservative Party of Ontario announced in January will affect their ability to afford higher education. Notable changes include a decrease in grant-to-loan ratios, changes to the definition for independent students who are eligible for more support, and scrapping the free tuition program for low-income students. Some Twitter users posted screenshots comparing past OSAP payments to their current assessments to emphasize the substantial decrease.

Hundreds of thousands of students depend on OSAP to fully or partially cover their tuition, easing the financial burden of higher education. These changes may even determine whether students can afford to attend college or university at all. 

Students should not have to live in fear and trepidation while trying to better their lives. These changes intensify the economic barriers that can prevent promising students from accessing opportunities equal to those of their wealthier peers. Although many students work while going to school, a job may not be able to fully fill the gaping hole left by these cuts.  

Some students claimed that their final OSAP loan and grant recalculation differed drastically from their initial estimations they received in the beginning of the summer. Twitter user @natashambeckett wrote that her estimate was “8k less than [OSAP] originally totalled,” and that she didn’t “have that kind of money” to pay the difference — especially so late in the summer.

For me, the estimate did not change much: I am receiving approximately $1,600 less than last year. A glance at my own funding reveals that approximately 75 per cent of my OSAP funding would be through loans. My previous applications indicate that my funding has always been around 60 per cent loans, with the remaining 40 per cent coming in the form of grants. 

This kind of change from previous years will cause students to accumulate more debt once they leave their higher education institutions. Nonetheless, the most significant change is the overall funding that OSAP will provide. 

As a full-time student in a deregulated program, my yearly tuition is roughly $13,000. While in previous years OSAP covered about 80 per cent of my tuition, it is now estimated to only cover 65 per cent. With my last year only a month away, there is little opportunity for me to make up for this cost. This is the difficult situation that many students now face.

Ontario already has the highest tuition rates in Canada. Additionally, the loans-to-grants ratio has increased, with “a minimum of 50 per cent” of OSAP payment being through loans. If the steep tuition costs did not discourage many potential postsecondary students from enrolling in Ontario’s universities before, the inability of the province’s student aid program to cover a considerable amount of postsecondary education expenses may now.

These cuts potentially dissuade many students from pursuing higher education, especially with additional changes to funding eligibility,  such as a new definition of “independent” student. In calculations, students who have “been out of high school for six years or less, rather than four years” will have their parents’ income considered in the assessments. This means that students entering graduate programs are expected to rely on their parents’ support, preventing a considerable number of students from receiving aid that they expected.

It is also important to consider that students from affluent households already have a greater chance of obtaining a college or university education. Higher education is a known pathway to high-income jobs, and yet these OSAP changes threaten to further deepen the wealth inequality between low- and high-income students and serve as a barrier between economically disadvantaged students and tertiary education.

According to Statistics Canada, 81.4 per cent of graduates aged 25–64 were “in fields important for building a strong social infrastructure.” A more educated population creates a stronger, more fulfilled society, so placing financial barriers on students’ ability to learn is a poor long-term investment.

Students should not have to worry about financing their education. Education should not be something restricted to and exclusively for the wealthy. Currently, a bachelor’s degree is a must for entry into most mid-to-high income industry positions. Postsecondary education has become less of an asset and more of a requirement, meaning access to higher education is a necessity. 

With economic barriers to education, fewer students will enrol in postsecondary studies. Research shows that people with more education lead healthier and happier lives. When people are given access to postsecondary education, they are given the opportunity to forge better lives for themselves and ultimately create a more productive society.

Belicia Chevolleau is a fourth-year Communication, Culture, Information & Technology student at UTM.

Opinion: Ontario budget’s postsecondary education provisions like painting lipstick on a pig

Despite ostensibly reducing fees, changes to OSAP, tuition will cost students, the economy more in the long run

Opinion: Ontario budget’s postsecondary education provisions like painting lipstick on a pig

As promised, the 2019 provincial budget makes sweeping changes to the postsecondary education system as we know it, decreasing funding in 2019–2020 by $700 million compared to last year in the name of “efficiency” and “sustainability” while claiming to better prepare students for the workforce. In reality, these cuts, primarily through changes to the Ontario Student Assistance Program (OSAP) and the availability of grants for the middle class, hinder the accessibility of postsecondary institutions for lower income families and the middle class, impacting the future of the economy as new graduates are burdened by more debt.

OSAP cuts and grants hang in the balance 

Before the formal release of the budget, the Ford government planned to cut funds available for grants by as much as 50 per cent in favour of more loans. This would impact middle-class students the most, as the budget commits to ensuring that 82 per cent of available grants are received by families with incomes of $50,000 or less, up from 76 per cent in the previous budget. However, the budget neglects to specify how much the total funds will be decreased — if they end up being reduced it at all — as previously stated.

The budget fails to disclose many policies previously purported, such as the elimination of guaranteed free tuition for low-income families and extending the amount of time parents are expected to financially contribute from four years after high school to six when applying for OSAP. We don’t know if these policies have been axed due to public outcry, or if the Ford government lost its nerve and is simply postponing the announcement.

Many students are able to fund a significant portion or even the entirety of their tuition through grants, and that is the only way they can afford it, regardless of the tax bracket their parents fall into. What will happen to these students? For starters, they will be forced to take out and pay back more loans. The cost of these loans will be inflated due to the elimination of the interest-free grace period for the Ontario portion of these loans — which gave graduates a six-month window to gain employment before running up interest on their loans. As if students in their final year didn’t already have enough to stress about, now they must frantically job hunt while cramming for exams and writing papers.

The interest-free grace period gave students a crucial cushion post-graduation, allowing them time to find a job before feeling the full weight of crippling financial debt. Its elimination will have an impact on the future of the provincial economy, as young adults moving into the workforce will have less disposable income to stimulate local economies. As baby boomers continue to age and exit the workforce, young people are poised to become the backbone of the provincial economy. It is unwise to burden them with financial debt straight out of the gate, before they have a chance to realize their full potential as contributors to the economy by entering the workforce.

This lecture brought to you by Coca-Cola?  

In a thinly veiled attempt at appeasing angry students, a 10 per cent tuition cut has been slapped on top of these austerity measures, painting lipstick on the proverbial pig that is this education budget. While this seems beneficial to students on the surface, without a means of compensating institutions for their revenue losses, this serves to further destabilize the postsecondary education system as we know it. The only institutions that will have help adjusting to the tuition rate reduction are “smaller Northern institutions” that will have access to an unidentified fund, amounting to an undisclosed amount, at an unknown rate.

In reality, the people who stand to benefit the most from the tuition rate reduction are those who can already afford it, because students who can’t afford it would have been able to offset the cost through grants, bursaries, and the free tuition program. With the aforementioned changes to OSAP, the amount of people eligible for financial aid programs has drastically been reduced, forcing students into the debt cycle immediately after graduation.

Postsecondary institutions will have to adapt to an approximate cumulative of $440 million in lost revenue, which will have a significant impact on the resources and services available to students on campus. At U of T, these measures have wiped $88 million from its 2019–2020 operating budget. According to the budget, the average student enrolled in an arts and science degree will save what amounts to $55 a month in tuition costs. In return, postsecondary institutions may rely on cutting back services and resources to students, such as closing libraries earlier or reducing writing centre hours. Depending on the individual, the savings may not feel worth it.

Regardless, postsecondary institutions will be forced to make up for this lack somehow. It is not unrealistic to presume they may choose do so through a dystopian amount of corporate sponsorships. Before we know it, lectures may soon be ‘brought to you by Coca-Cola’ on chalkboards plastered with bold logos and quippy slogans.

Prioritizing the wants of the rich

In another meagre attempt at appeasing students, the 2019 budget states students will be able to pick and choose which “non-essential” incidental fees they want to pay for. These “non-essential” fees serve to fund important student organizations and associations, such as newspapers, student unions, and clubs supporting minority groups. It is perturbing to realize how this move systematically defunds the very groups who are most likely to try and hold the government accountable for its actions and ideologies.

The degradation of the education budget is an example of the Ford government showing its true values; prioritizing the wants of the rich at the expense of the needs of the working class. Instead of balancing the budget within his first term as originally promised, Doug Ford is performing a precarious balancing act between attempting to appease students with superficial policies, while taking away key financial resources which will help them in the long run. He has underestimated and insulted the intellect of postsecondary students with red herring policies meant to distract us from the immediate and longer term consequences of these misdirected austerity measures.

As province-wide campus protests have shown, we will not take the attacks lying down.

Federal government lowers student loan interest, establishes free grace period

Additional job opportunities, mental health leave support among other changes in 2019 federal budget

Federal government lowers student loan interest, establishes free grace period

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.”

What we know about the Ford government’s changes to postsecondary education

U of T stands to lose $88 million in expected revenue, describes little communication with province

What we know about the Ford government’s changes to postsecondary education

On January 17, Minister of Training, Colleges and Universities (TCU) Merrilee Fullerton stood before a room full of media in the provincial offices east of Queen’s Park to announce that Ontario universities must cut domestic tuition by 10 per cent, provide “opt-out” options for incidental fees, and adhere to broad changes made to the Ontario Student Assistance Program (OSAP).

Despite some clarifications made in an earlier Varsity interview with David Piccini — the Parliamentary Assistant to Fullerton — ambiguity remains about the specifics of the provincial mandate. The university has also not commented heavily on the issue.

Meanwhile, several protests organized by student unions and other groups have occurred across the province, with more to come. In these protests, thousands of students demanded answers about what these changes will mean for them.

Based on further interviews with the government and the university, The Varsity takes a look into what we know and what we don’t know about the cuts so far.

Domestic tuition cut by 10 per cent

Repeatedly described as “historic” by Piccini, the Ford government’s leading announcement is of a 10 per cent cut to domestic tuition for the next academic year, which will also apply to graduate studies, including Master of Business Administration and Juris Doctor programs. The government has also mandated a tuition freeze for the following year.

Universities and colleges will have to absorb any losses in revenue, as the cut is unfunded by the provincial government.

In an interview with The Varsity, U of T Vice-President & Provost Cheryl Regehr said that these cuts will take $65 million off of the university’s base budget, or $88 million from its expected revenue, since the university had planned to continue raising tuition by three per cent.

In the second year, the changes will cost the university $113 million.

Regehr went on to say that the impact will vary depending on individual divisions, as some divisions rely more heavily on domestic tuition income, but also said that there will be university-wide adjustments as well.

“What we hope to do is find solutions that minimally impact students, staff and faculty, and programs,” said Regehr.

Regehr also confirmed that international tuition will not be affected by the cut, adding that the university plans to follow its already-published tuition framework.

Speaking to The Varsity, Piccini declared that such changes were what he and the Ford government were elected to do.

“I’ve been in meetings with… university presidents, administrators since day one. I’ve been out on campuses and have been in various universities. We’ve been here speaking to presidents as well. And they’ve all said, ‘We know a tightening of the belt is coming,’” said Piccini.

However, in the interview with Regehr, the provost said that neither she nor the university had held discussions with the provincial government on the changes to the university’s funding structure, and that, since then, the university has only received directives through the Council of Ontario Universities — with no word from the provincial government or Fullerton’s office.

When this was brought up to Piccini, he said that The Varsity was “cherry-picking” this policy. “Do you think it’s feasible for our government, every time it introduces legislation, to go around the province on every single piece of draft legislation introduced? That’s unrealistic,” he said.

Piccini went on to say that he had received a “standing ovation” at events after bringing up postsecondary affordability, and that the 10 per cent domestic tuition slash was a result of conversations at events, on campuses, and “over a kitchen table.”

“So in summation, all of that has fed into this policy.”

OSAP interest rates, grants, loans

OSAP will also be undergoing dramatic changes, primarily centred around a push to provide more grants to students whose household income falls below a $50,000 threshold. To accommodate this change, the Ontario government will be shifting the program to provide more loans than grants.

Interest will also begin accruing from day one after graduation, where previously, interest did not accrue on provincial loans for a six-month grace period.

For students in second-entry programs or attending out-of-province institutions, the grant-to-loan ratio will now be a minimum 50 per cent loan.

When asked how these changes would help students, Piccini answered that the government needs to be “fiscally responsible” — later claiming that “you could pull up to university in a Ferrari” and still receive grants under the previous OSAP system. He returned with a question of his own, asking why the federal government does not have parity with Ontario in its grant-to-loan ratio.

Emphasizing that “the sustainability of the system” needs to be ensured, Piccini also said that preserving the “integrity of the structure” of OSAP requires balancing “our own immediate interests” with the interests of students like those “in rural Ontario, whose families earn $30,000 median income in [his] riding.”

Regehr, who underscored the university’s high spending on student assistance, said that the university will work to “try and limit the impact of these changes on our students.”

Last year, U of T spent $210 million, or eight per cent of its budget, on student aid — more than any other university in Ontario, according to Regehr.

The Student Choice Initiative: an “opt-out” from incidental fees

The last mandate from the provincial government, dubbed the Student Choice Initiative (SCI), is for Ontario universities to develop an “opt-out” system for incidental fees, which would either be labelled “essential” or “non-essential.”

Already included in the “essential” category are walksafe programs, counselling, athletics, academic support, and health and safety-related fees.

Fullerton also announced on February 1 that transit passes, such as the ones offered at UTM, will also be considered essential.

Piccini expressed his belief that the SCI is in no way analogous to taxes, saying that he could “make that analogy ad nauseam” to all issues.

Piccini said that to compare funds for “the quidditch club or [to] boycott and divest Israel… with taxes is laughable at best and worrisome at worst.”

Piccini also gave the example of subscription fees for media outlets like The Globe and Mail or the National Post as a reason for why campus media should not be considered essential.

He added that the fees being considered non-essential “have nothing to do with taxes and have nothing to do with the essential services that government provides,” going on to say that “we prescribe and force feed down new students’ throats things — and from people whom they didn’t elect, programs that they didn’t vote to support.”

On whether health and dental programs offered by student unions are considered “essential,” Piccini said that these will be ongoing discussions between the universities and the student unions.

The University of Toronto Students’ Union currently administers the health and dental plans for full-time UTSG and UTM students, though there is an existing opt-out option for these fees.

Piccini had also confirmed in a previous interview that universities will have final say on the decisions to be made about which fees are labelled “essential” or “non-essential.”

Regehr, however, says that the university is waiting for a clearer mandate from the provincial government.

“We just don’t know what that means and what kind of latitude is expected, and whether there are parameters around that, like [if] certain amounts have to be optional,” said the provost. “We just don’t know that.”

“We certainly support the kinds of activities that are funded by student fees. We think that those are important and really enhance the student experience.”

Opinion: Shortsighted changes to OSAP, tuition will have long-lasting ripple effects

Students will pay the price for Progressive Conservatives’ political manoeuvre

Opinion: Shortsighted changes to OSAP, tuition will have long-lasting ripple effects

The provincial government’s recently announced changes to the Ontario Student Assistance Program (OSAP) have been met with protests and widespread criticism, and for good reason — how can the government enact such a consequential move when it has insufficient data, all the while cowering behind the guise of program sustainability and student affordability? To try and make sense of the Progressive Conservatives’ (PC’s) move, let’s put into context the previous Liberal government’s program changes and delve deeper into the government’s principal evidence trove: last month’s Auditor General report.    

While proposing the 2016 budget, the Liberals announced a plan to completely redesign student financial assistance, based on several reports such as the 2012 Drummond Commission report, with the goal of increasing accessibility and affordability. The principle change would be the provision of a majority of the funds upfront — in the form of grants — while eliminating loan forgiveness programs and tuition tax credits to counterbalance the rise in costs. Other changes included consolidating existing OSAP grants, modifying eligibility criteria to recognize family size as well as income, and expanding support for mature students. This sweeping transformation resulted in the program cost jumping from $1.347 billion in the 2016–2017 academic year to $1.614 billion in 2017–2018 — an almost 20 per cent increase that surpassed previous projected estimates — but should it have led to the PC’s latest program repeal?

The sudden increase is not only due to the change in the composition of student aid but also thanks to an increase of 24 per cent in the number of university OSAP recipients and 27 per cent in college recipients. The surge in uptake rates is what the redesign was supposed to do — make more students eligible for a reduction in loans.

The Auditor General Bonnie Lysyk sees this same statistic as a sign that money is going to those who don’t need it, with no proof of aid being received by the low-income communities. Moreover, she argues that by the 2020–2021 academic year, the program cost would have ballooned to $2.012 billion — a 50 per cent net increase from 2016–2017.

How exactly did the Auditor General arrive at this projection in the first place?

OSAP costs would have to increase at a pace of more than 7.6 per cent year-on-year from 2017–2018 to reach the purported $2.012 billion target. This is more than twice the annual increase from 2013–2014 to 2016–2017 when the average annual increase was 2.09 per cent. How can the Auditor General justify such a projection, based on only one year’s worth of evidence? Especially considering the PC’s own argument that the increase in enrollment has been modest at a rate of one to two per cent? In fact, as the program takes effect and the dust settles, the ministry will tighten oversight and we could expect a plateau in costs.

How do the PC’s want to proceed instead? Their answer is with a 10 per cent tuition cut across the board, a freeze for the 2020–2021 academic year, and the possible opt-out option non-tuition fees. This “historic” proposal will not do much to help those who need financial support for education the most. The Minister of Training, Colleges and Universities Merrilee Fullerton said it herself: on average, the program will save a university student $660 per semester — hardly enough to cover textbooks for most programs.

The government will also not be providing any support for the institutions to recoup their losses, saying that a 10 per cent cut will only amount to a two to four per cent reduction in operating revenues. But even so, two years of consecutive declines could lead to universities hiking tuition at a hitherto unseen rate from 2021–2022 onward if the government does not implement any restrictions. In the interim, to make up for lost domestic revenues, the universities could also increase international enrollment and tuition for which there are no provincial regulations. The other thing to note is that the PC’s have not clarified whether they will be reinstituting the loan forgiveness grants and the tuition tax credits that the Liberals scrapped in favour of the comprehensive grant program.

Empirically and from a policy standpoint, many studies show that a tuition decrease does little to improve affordability and accessibility, but instead lowers the quality of education. On the other hand, other studies have shown that increasing the proportion of non-repayable funds will have a positive effect on enrolment — given time — and enhance accessibility for those families in the lower income brackets.

In the short run, the PC’s will reduce OSAP costs and achieve a more balanced budget. However, wouldn’t taking on a short-term deficit to improve the quality of education instead be a risk worth taking? At minimum, they could have increased the proportion of loans for middle-income families while instituting tighter controls on the disbursement of grants.

In reality, the disbandment of the Liberal policy is just a political manoeuvre. At the end of the day, the students will pay the price.

Students march through Toronto protesting OSAP cuts, changes to non-tuition fees

Ontario NDP Leader Andrea Horwath, protesters fight Ford government changes

Students march through Toronto protesting OSAP cuts, changes to non-tuition fees

Thousands of students chanted “Fuck Doug Ford” as they marched through the snow from Yonge-Dundas Square to Queen’s Park on Friday, January 25, protesting the provincial government’s recently announced changes to postsecondary education.

The march, which was organized by student groups and labour unions — including the Canadian Federation of Students–Ontario (CFS–O) and the Ontario branch of the Canadian Union of Public Employees (CUPE) — amassed in front of the Ontario legislature building amid neon posters and chants, including, “The students united will never be defeated.”

The changes announced by the Ford government on January 17 would reduce domestic tuition rates by 10 per cent, eliminate the six-month interest-free grace period on Ontario Student Assistance Program (OSAP) loans, shift provincial funding for students from mainly grant-based to loan-based, and make certain student incidental fees optional in an opt-out system.

Students join from across the province to protest

Speakers emphasized the diversity of the students in attendance, who came from all over the province to protest both their personal concerns over the Ford government’s plan and their overarching concerns for student life at colleges and universities.

Among them, U of T students echoed the anger of all students at the protest. Max Xi, a computer science, psychology, and linguistics student at U of T, attended the rally because he believes that student leadership can build a more vibrant campus, also saying that the mental health resources that could be cut have helped him in university.

Xi believes that the changes to student groups and student life will “further worsen the… atmosphere of U of T as a very isolating and overly academic… depressing place.”

For criminology and sociolegal studies student Allie McMillan, the 10 per cent cut to domestic tuition is the most damaging of the announced changes as it “completely disregards accessibility and equity.”

“I think by making the 10 per cent cut, [Ford] is fully just proving that he only cares about the upper class and those who are already able to attain an education without the help of the government,” she said.

Political science student Hamid Mohamed said that, as a recipient of OSAP grants and someone directly impacted by the changes to the grant and loan structure, he is protesting “because [Ford] hasn’t consulted with us and it affects the very livelihood of our campus institutions.”

He added that, in particular, student unions are a necessary check on the university administration and they are now at risk of having their funding cut.

Andrew Gallant, a political science, criminology, and sociology student, believes that the announced changes are anti-democratic.

“It doesn’t make any sense. I do understand why these sorts of cuts have to be made, but I think that the way that they have been implemented has been poor,” he said.

Speakers rally students, decry Ford government changes

“They have woken up a monster,” said Felipe Nagata, President of the University of Toronto Mississauga Students’ Union and incoming Chairperson of the CFS–O. Nagata led the chants at the front of the march and also gave a speech at Queen’s Park while surrounded by a mass of students.

“We’re not going to stop until free tuition is here, we’re not going to stop until education is accessible, and we’re not going to stop until every single student and every single person has access to education regardless of their gender or their race or their background or their abilities,” said Nagata.

Jacob Landau, the Director of Operations for March for Our Education and a political science student at U of T, was the first person to speak at Queen’s Park. March for Our Education is a student advocacy group that was created last year in protest of Ford’s policies.

Landau said that the issues uniting the protesters transcend party lines, as evidenced by the diverse political affiliations of the speakers at the rally. “They all know that it is not a political issue. This is about education. This is about our kids, and this is about our future as a province,” he said.

Chair of CUPE 3902 Jess Taylor — the labour union representing contract academic workers at U of T — also spoke on stage at Queen’s Park, saying, “It’s not just our academic workers, it’s also our support workers, our service workers. Everybody working and studying on campus across Ontario. Many of our members rely on OSAP to get their education.”

Nour Alideeb, the outgoing CFS–O Chairperson and a part-time sixth-year student at UTM studying economics, biology, and women and gender studies, heralded the need for a defence of student democracy against the changes.

“The announcements we heard last week are nothing short of an attack on students. Student democracy is under attack because this government is afraid of us,” said Alideeb. “We are the watchdogs. We are the ones that hold this government and our local administrations accountable.”

Hamilton Centre MPP Andrea Horwath, the Leader of the Ontario New Democratic Party (NDP) and the Leader of the Official Opposition in Ontario, solidified her support for the student movement at the rally as she stood on stage flanked by local NDP MPPs.

Smiling as the crowd broke out into “Fuck Doug Ford” chants, she jokingly chastised the protesters for using “unparliamentary language,” but said that she understood where the students were coming from.

“I am here to say that New Democrats are standing with you and against Doug Ford. And we are here to say no to charging more interest on student loans. No to his callous cuts to OSAP. And hell no to his attacks on student unions.”

Alideeb, in an interview with The Varsity, also emphasized free postsecondary education as the ultimate goal for accessible education.

“The [CFS] has, since its existence in 1981, advocated for free and accessible postsecondary education… I think the first thing we need to prioritize is low-income students, and then make our way to ensure that everyone has free postsecondary education,” she said.

Crysta Montiel, a third-year student student studying philosophy at U of T who organized the march along with another student, channelled similar ideas in her speech.

“Under the Conservative government, post-grads will be straddled with mountains of accumulated debt,” she said. “It’s a paradox because we’re unable to find a job to pay it all. And the only way to break the cycle is to have free education for all.”