Auditor General of Ontario report<\/a>.<\/p>\nBut the benefits to Ontario\u2019s budget balance will come mostly at a cost to university budgets and to low- and middle-income post-secondary students. Post-secondary education will be more affordable for kids from rich families, and it is likely to be less affordable for kids from low- to middle-income families. And interestingly, the federal government comes out a winner.<\/p>\n
How does this work?<\/p>\n
First, the government puts the tuition-fee savings for a \u201ctypical\u201d undergraduate student at $660. Students end up better off by $660, on average, but universities get $660 less in tuition fees. Since the Ontario government is not planning to increase its own funding to universities to make up the difference, this means that university (and college) budgets are going to be under pressure.<\/p>\n
But fees have fallen, so post-secondary education gets more affordable for students, at no cost to taxpayers, right? Well, not quite. Other federal and provincial programs complicate the calculation.<\/p>\n
The first complication is the federal tuition tax credit. For every dollar spent on tuition fees, students get 15 cents back on their taxes. If tuition fees fall by $660, then the tax credit will fall by $99, so that, really, the saving to students is only $561. This change affects all students, regardless of their parents\u2019 incomes. It also means that the federal government saves $99 for each \u201ctypical\u201d university student. For students whose incomes are high enough that they don\u2019t qualify for financial aid, that is the only change \u2013 post-secondary education is definitely more affordable for them.<\/p>\n
But there are other changes for those from low- to middle-income families. First, lower tuition fees mean that assessed financial need falls, which reduces financial aid. This will save both the federal government and the Ontario government some money. These savings, though, come mainly because the governments will be giving less money to middle-income students (who get less in subsidized loans) and to low-income students (who get less in nonrepayable grants).<\/p>\n
On top of that, the Ontario government\u2019s changes to the OSAP program further cut aid to low- and middle-income students. Reducing grant aid for all students will mostly mean that lower-income students pay higher net tuition fees than they would have otherwise. (Net tuition fees reflect the cost after grants are factored in.) And lowering the family-income threshold at which students no longer receive OSAP grants will reduce aid to middle-income students.<\/p>\n
Does this meet the goals of increasing affordability and improving targeting of the OSAP program? Well, not really. The proportion of total OSAP spending going to lower-income students might increase, making it appear that the program is better targeted at low-income students. But this misses the broader point. The cuts to tuition fees mean that post-secondary education becomes more affordable for higher-income students, but once the cuts to OSAP are taken into account, many low- and middle-income students could find their education is less affordable.<\/p>\n
The OSAP aid estimator<\/a> gives a rough guide to how much of the tuition fees come out students\u2019 pockets, net of Ontario\u2019s grants and the federal tuition tax credit, under the 2018-19 and 2019-20 tuition-fee and student-aid policies. It is useful for showing the example in the figure of an only child who just graduated from high school and is living away from home while studying, with no other special circumstances (figure 1).<\/p>\n