The 2004 budget contained two major sets of policy announcements relating to access to education. These two proposals\u2014 the first a set of improvements to the Canada Student Loans Program (CSLP), and the second a new savings initiative for low-income parents whose centre-piece is the Canada Learning Bonds initiative\u2014 amount to the largest reform of Canada’s system of student support since the multibillion dollar Canadian Opportunities Strategy of 1998. Though stakeholder reaction to the education sections of the budget has been tepid, the 2004 education package is one of the most progressive and innovative social policy steps the Government of Canada has ever taken.<\/p>\n
Before evaluating the impact of the budget measures, it is worth examining what existing policy research has to say about access to post-secondary education. Canada\u2014 like every other country in the world\u2014 has problems in ensuring equality of access to post-secondary education. While it has an enviable record in ensuring equality of access to community college programs, its record is less than spectacular when it comes to universities (see figure 1).<\/p>\n
What accounts for the difference between college and university access rates? Some critics have been quick to jump on tuition fees as the culprit. Nationally, tuition fees at community colleges are about half what they are at universities (less if Quebec’s free CEGEP system is included in the total). This is surely significant, but if cost is a barrier then tuition is only the least of the problems. Colleges are more numerous and hence more convenient to attend than universities; college students, on average, have lower living costs than university students. Also, college programs last half as long as university programs, thus reducing total costs and\u2014 more importantly\u2014 total foregone income. So while it is plausible that cost differences account for poor Canadians’ preference for colleges over universities, singling out tuition as a barrier makes very little sense. Yet cost is not the only factor that distinguishes colleges from universities. Crucially, the latter are selective in their admissions policies while the former\u2014 a few niche programs aside\u2014 are not. Secondary school results therefore become a critical \u201csorting\u201d mechanism for determining what kind of post-secondary education, if any, a student will receive (table 1).<\/p>\n
The results in table 1 would be irrelevant to access rates of rich and poor if secondary school achievement was completely independent of parental socio-economic status. Yet, as numerous studies have shown, there is in fact a very strong link between the two not just in Canada but in all OECD countries. As UNB sociologist Doug Wilms recently noted when looking at the results of Canada’s 15 year-olds in the OECD’s Programme for International Student Assessment (PISA), the difference in average literacy scores in Canada between \u201crich\u201d students (95th socioeconomic percentile) and \u201cpoor\u201d students (5th socio-economic percentile) is equivalent to nearly an entire year’s worth of schooling. This in turn is a reflection of lower levels of cultural and social capital (in the Coleman-Bourdieu sense) among lower-income families.<\/p>\n
A final piece of the puzzle is the effect of parental expectations on children’s own views of their educational future. Evidence suggests that children’s expectations of their own educational future are highly correlated with their parents’ aspirations for them (even if, on average, children’s expectations on average lag slightly behind parental expectations). Therefore, the lower the parents’ aspirations, the lower the children’s expectations. At birth, parental aspirations for children are uniformly high across all income groups. As time goes on, parental aspirations diminish and, moreover, this drop is correlated negatively with income. The best explanation is that over the long term, as parents start to assess their children’s performance in school and\u2014 to a lesser extent\u2014 their own financial situation, they begin to mentally \u201cmap\u201d their child’s educational future and encourage their children accordingly. High-income families, who have more money and whose children tend to have higher grades, are more likely to condition their children to go to university; lower-income families, who have less money and whose children tend to have lower grades, begin to condition their children to go to college or trades\u2014 if they finish high school at all.<\/p>\n
Of course, just because people\u00a0want to go to post-secondary education\u00a0and are accepted by the institution\u00a0of their choice, doesn’t mean\u00a0they can actually afford to go. That’s\u00a0why student assistance programs\u00a0exist, providing loans and grants to\u00a0people who face a cash constraint in\u00a0the pursuit of their studies. For the\u00a0most part, these programs seem to be\u00a0achieving their goals. While there are\u00a0young people who cite \u201cfinancial barriers\u201d\u00a0as the main reason for not\u00a0attending PSE, they account for only\u00a0about one-fifth of the 30 percent of\u00a0young Canadians who have never\u00a0attended a post-secondary institution.\u00a0This is not a perfect record, but\u00a0neither should it be considered a policy\u00a0failure.<\/p>\n
Nevertheless, concerns have been\u00a0raised recently about student financial\u00a0assistance programs, primarily in a\u00a0series of research publications and presentations\u00a0by the Canada Millennium\u00a0Scholarship Foundation. This research\u00a0suggests that student assistance limits\u00a0\u201d\u201d presently at $275 per week\u2014 are\u00a0too low; that expected parental contributions\u00a0(which in many cases can\u00a0amount to $10,000 for a family earning\u00a0$80,000 annually) are too high;\u00a0and that a considerable amount (nearly\u00a0half) of all \u201cneed-based\u201d assistance\u00a0ends up in the hands of children\u00a0above-median income families.\u00a0<\/p>\n
Against this backdrop we can look\u00a0at the following important budgetary\u00a0measures designed to increase\u00a0access to post-secondary education:\u00a0<\/p>\n
Changes to expected parental\u00a0contribution levels in the\u00a0Canada Student Loans Program\u00a0in order to ease the burden on\u00a0middle-income families. Starting\u00a0in September 2005, this is\u00a0expected to primarily benefit\u00a0approximately 40,000 families in\u00a0the $60-$100,000 income bracket\u00a0whose children currently have\u00a0great difficulty receiving assistance\u00a0because the contribution\u00a0formula assumes that their parents\u00a0are providing a much larger\u00a0share of costs than is actually the\u00a0case. The details remain sketchy\u00a0on the scope of the changes,\u00a0although the estimated cost of\u00a0this measure\u2014 $10 million\/year\u00a0\u201d\u201d suggests that the adjustments\u00a0will for the most part be quite\u00a0modest. \u00a0<\/p>\n<\/li>\n
An increase of $45 in the weekly\u00a0loan limit for full-time student\u00a0borrowers from September 2005.\u00a0This key measure is the first\u00a0major increase in money available\u00a0to students since 1994. After\u00a0ten years of inflation and tuition\u00a0hikes eating away at the purchasing\u00a0power of student loans, this\u00a0will be welcome news to many\u00a0students. It will also, however,\u00a0create friction with several provinces and may become a flashpoint in federal-provincial relations over the next year (see below). The new combined federal\/provincial assistance limit for single students without dependents will in most instances rise from $9350\/year to $10880\/year. Should provinces also increase their loan limit to follow the nominal 60\/40 split in assistance (by no means assured in all provinces), assistance limits could move as high as $11,900. The total cost of this measure is estimated to be $74 million\/year.<\/p>\n<\/li>\n
The introduction of a grant for first-year lowincome students from September 2005. Another welcome measure specifically targeted at students accessing post-secondary education for the first time, this program is intended to provide first year students with one-half of the cost of their tuition up to a maximum of $3,000. It is estimated that 20,000 dependent students will receive the new grant each year, at a cost of $30 million.<\/p>\n<\/li>\n
The creation of a Canada Learning Bonds (CLB) program. This new program will provide every child born into a lowincome family (defined according to National Child Benefit guidelines as families with incomes under $35,000) with a $500 \u201cbond,\u201d cashable for postsecondary education once the child turns 18. Subsequently, these children will qualify for $100 CLB instalments until age 15, in each year their family is entitled to the NCB supplement. Children born after 2003 who are not eligible for the CLB at birth but subsequently become entitled to it will qualify at that later time for a $500 CLB and thereafter become eligible for the annual $100 CLB instalments. A child in a low-income family could therefore receive CLB payments totalling up to $2,000. It is estimated that in 2004 the CLB will benefit over 120,000 newborns, at a cost of $85 million.<\/p>\n<\/li>\n
Expansion of the Canada Education Savings Grants (CESGs). In addition to the learning bonds, enhancements to the CESGs were announced in order to make educational savings more attractive to low-income parents. The 2004 budget proposes that, beginning in 2005, this 20 percent matching savings rate be doubled to 40 percent for families with incomes up to $35,000. It also proposes increasing the rate to 30 percent for families with incomes between $35,000 and $70,000. These enhanced CESG rates will apply only to the first $500 contributed in a year to a child’s RESP. This is expected to cost $80 million annually.<\/p>\n<\/li>\n<\/ul>\n
The changes to the Canada Student Loans Program will not affect access to postsecondary education in any significant way, as most of the decisions regarding PSE are made long before anyone applies for student assistance. They will, however, make the existing system fairer by providing slightly more money to lower-income students, lowering contribution requirements on middleclass families and providing all students with higher borrowing limits so that they need not be so reliant on private sources of debt such as lines of credit and credit cards.<\/p>\n
On budget night itself, very little praise was heard from student groups on the budget measures. Long ensnared in the rhetoric of student debt, both of the national student groups chose to ignore the positive aspects of the new grant program and the improved parental contribution tables and instead levelled heavy criticism at the higher loan limits. They oppose these on the grounds that the new limits would result in higher student debt, which in turn would deter lower income students from attending PSE. Indeed, the Canadian Federation of Students went on record to say that an increase in loan limits (and hence in increase in student debt) is tantamount to a rise in tuition fees.<\/p>\n
This concern about higher debt is justified, but only to a point. First, while increased student debt loads are demonstrably a bad thing for recent graduates who often struggle with difficult loan payments, they are not a major deterrent to access. Recent data from Statistics Canada shows that only about 6 percent of young Canadians who choose not to attend PSE cite debt as the reason for their decision. In fact, of those Canadians aged 20-24 declaring that they would not under any circumstance take out a student loan, over 80 percent were actually enrolled in PSE at the time!<\/p>\n
Second, while there are risks to increasing loan limits, there are also risks to not increasing them. Since 1994, the after-tuition purchasingpower of the maximum student loan for single students has decreased from about $7,500 to under $5,000. The first duty of any student assistance program should be to make sure that students have enough money to keep body and soul together, and present loan limits make that extremely difficult.<\/p>\n
Third, it is by no means certain that the increase in loan limits will actually translate into an increase in borrowing. The reason for this is that provincial grant and loan remission programs are designed to reduce debt to fixed levels. To the extent that federal initiatives (e.g. the Canada Millennium Scholarship Foundation) reduce<\/em> student debt, provincial governments end up as winners because there is less debt left over for them to reduce. To the extent that federal initiatives (e.g. the current proposal) increase debt, provincial governments end up as losers because the amount of debt they must reduce increases. Either way, the student sees very little change in his or her overall package<\/p>\n If provinces leave their existing programs unchanged\u2014 a big \u201cif\u201d considering the financial implications for cash-strapped provinces\u2014 the main effect of higher federal loan limits will be to increase the size of the provincial grant programs, not to increase student debt. The present loan limit increase will have cost implications of between $100 and $200 million for remission and grant programs in Alberta, Saskatchewan, Ontario, Newfoundland and Manitoba combined. Cutbacks in their provincial grant and remission programs may become a real possibility if governments cannot meet these increased program costs.<\/p>\n The new Canada Learning Bonds are modeled on a program in the United Kingdom recently announced by the Blair government called the Child Trust Fund. The central idea behind the program\u2014 that a $500 endowment at birth plus annual $100 top-ups will change low-income parents’ long-term views about postsecondary education\u2014 may have a ring of flakiness to it, but the idea is rooted in some very sensible and innovative policy thinking. The notion of using assets in addition to income as a long-term move to reduce poverty was first introduced by Michael Sherraden in his 1991 book Assets and the Poor: A New American Welfare Policy<\/em>. The basic thinking behind providing the poor with assets rather than income is that it helps them to overcome the \u201cshorttermism\u201d that often accompanies poverty. Providing assets lengthens the planning horizon and promotes stability, investment in human capital, and reduces the risk-aversion of poor families. The OECD recently reviewed a number of asset-based poverty-reduction projects and gave them a favourable\u2014 albeit tentative\u2014 review, although the UK’s Institute for Fiscal Studies has been more critical of them, particularly as means to improve access to education.<\/p>\n If this program were solely about making sure low-income children have money to go to school, there would be plenty to lampoon. For instance, why give money to people over eighteen years when one could give it to them in one lump sum at the age of eighteen? By providing aid at the time of entrance to PSE, once could eliminate any targeting issues by ensuring that money went to students who were poor at the time they needed the money<\/em> as opposed to giving to anyone who even passes through poverty at some point during their childhood. Providing money in advance also raises the spectre of millions of dollars in interest being taken up by management fees in the hands of financial institutions, which is hardly an efficient way for government to provide money to lowincome Canadians (assuming 5 percent returns and a 1.5 percent management fee, roughly 40 percent of the total growth in the funds over 18 years will be taken by management fees, which equates to about $40 million per cohort).<\/p>\n This analysis would, however, be wrong. The effect of Learning Bond money on the student price response is negligible and, political rhetoric aside, the Government of Canada knows this. This program is not primarily meant to increase affordability; it is primarily meant to change parents’ perceptions and aspirations about post-secondary education. As we saw earlier, parental aspirations are a key factor in determining children’s eventual post-secondary education outcomes. Sending families money at birth and then annually thereafter is a way for the Government of Canada to continually encourage low-income families to strive for post-secondary education. Many years ago, HRDC and its predecessors tried to do this with generalized \u201cstay-in-school\u201d programs. The Learning Bond is effectively the same thing, only more income-targeted and with cheques attached.<\/p>\n One challenge that certainly must be met early on is the possible negative interaction between the Learning Bonds and provincial welfare programs. At present, many provinces’ social assistance systems prohibit the accumulation of savings. Once savings reach a certain level, welfare recipients are required to cash them in\u2014 effectively liquidating their assets\u2014 or face penalties in the form of reduced welfare cheques. If this situation is not changed, many of the people who could potentially benefit the most from this program will find themselves penalized instead.<\/p>\n Will the learning bonds affect access? It is difficult to tell at present. Asset-building policies for education are promising but unproven. The government chose not to wait for the results of several early-intervention demonstration projects (such as the Learn$ave project currently being run by the Social and Enterprise Development Innovations (SEDI) and a low-income financial incentive experiment being run by the Canada Millennium Scholarship Foundation) before leaping into this program. But that’s politics. If the program succeeds in changing parental aspirations in a significant way, then the millions spent on the program, and the millions in management fees paid to financial institutions to manage the program, will seem well spent. If it fails, it fails\u2014 but at least it will be a cheap failure. At an initial outlay of $85 million\/year, the Learning Bonds represent only a fraction of the $1.2 billion currently spent each year by the federal government, to no apparent purpose and with no apparent return on investment, on a variety of education tax credits. In comparison, the Learning Bonds, while unproven, are still a bargain.<\/p>\n The 2004 federal budget is an impressive step forward for the Government of Canada. The Learning Bonds represent a new and interesting\u2014 if untested\u2014 approach to lifelong learning. The changes to the Canada Student Loans Program represent a major improvement on the present system, assuming that difficulties with provincial governments can be overcome. The poorest students will get a new set of grants, a large group of middle-income students will be admitted into the program for the first time, and all will benefit from higher assistance limits, which will reduce the amount of \u201cunmet need\u201d in the system. While there are still challenges to be met in terms of implementation, March 23, 2004\u2014 budget day\u2014 deserves to be remembered as a good day for students.<\/p>\n","protected":false},"excerpt":{"rendered":" The 2004 budget contained two major sets of policy announcements relating to access to education. These two proposals\u2014 the first a set of improvements to the Canada Student Loans Program (CSLP), and the second a new savings initiative for low-income parents whose centre-piece is the Canada Learning Bonds initiative\u2014 amount to the largest reform of […]<\/p>\n","protected":false},"featured_media":0,"template":"","meta":{"_acf_changed":false,"content-type":"","ep_exclude_from_search":false,"apple_news_api_created_at":"2025-10-07T23:40:41Z","apple_news_api_id":"2fadd3d9-19f1-4d7f-9f88-f83a024f89bb","apple_news_api_modified_at":"2025-10-07T23:40:42Z","apple_news_api_revision":"AAAAAAAAAAD\/\/\/\/\/\/\/\/\/\/w==","apple_news_api_share_url":"https:\/\/apple.news\/AL63T2RnxTX-fiPg6Ak-Juw","apple_news_cover_media_provider":"image","apple_news_coverimage":0,"apple_news_coverimage_caption":"","apple_news_cover_video_id":0,"apple_news_cover_video_url":"","apple_news_cover_embedwebvideo_url":"","apple_news_is_hidden":"","apple_news_is_paid":"","apple_news_is_preview":"","apple_news_is_sponsored":"","apple_news_maturity_rating":"","apple_news_metadata":"\"\"","apple_news_pullquote":"","apple_news_pullquote_position":"","apple_news_slug":"","apple_news_sections":[],"apple_news_suppress_video_url":false,"apple_news_use_image_component":false},"categories":[9346],"tags":[],"article-status":[],"irpp-category":[],"section":[],"irpp-tag":[],"class_list":["post-261797","issues","type-issues","status-publish","hentry","category-uncategorized"],"acf":[],"apple_news_notices":[],"yoast_head":"\n