The Canadian student financial aid system should have a relatively simple primary goal: to ensure that every qualified Canadian has the financial means of pursuing post-secondary studies without suffering undue hardship. Otherwise put, cost should not be a barrier that stands in the way of going to college or university.

Beyond this broad objective, specific aspects of the defi- nition of ”œaccess” arise, and I would further define the con- cept to include that individuals should be able to enrol in the program that is best for them (provided, of course, they qualify); that they be able to attend the institution of their choice, including " importantly " going out of town (again assuming they meet the relevant entry standards); that they need not work at an outside job during term or at least not be forced to do so in any way that impedes their studies; and that they do not accumulate excessive debts or face unrea- sonable debt burdens in the post-schooling period.

It all sounds simple, even obvious.

And it would not be unreasonable to ask if the current system was not already doing this. After all, we have the Canada Student Loans Program, its provincial counterparts, the Canada Millennium Scholarship Foundation, myriad grant programs at both the federal and provincial levels, various debt remission programs, programs that help individ- uals facing difficulties with their student loans in the post-schooling period, education-related tax credits, Canadian Education Savings Grants, Registered Education Savings Plans, all kinds of institutional-level support and more.

Surely these are doing the job. Unfortunately, they are not. We could, and should, be doing better. The good news is that we can. And " happily enough " at least most of the job could probably be done with the money currently being spent on student financial aid in this country. This is one pol- icy area where the solution is not so much new and more money, but rather a matter of doing a better job of allocating the existing resources. What is needed is what might be called ”œa new architecture” of student financial assistance. And fur- ther contributing to the relative ease of the solution is that it could be engineered by basically tinkering with the existing system rather than reinventing a new set of structures and procedures from the ground up " which always carries its own set of special challenges, disruptions and costs.

Not only is reform of the student financial aid system possible, it is important, since providing every Canadian the chance to pursue post-secondary studies is both a basic issue of fairness and social justice, and essential to ensuring that we have the skilled labour force needed in the emerging knowl- edge-based economy in the years and decades to come.

The system should consist of the following elements.

First, the amount of each student’s financial assistance package would be determined in the following manner:

  • The student’s schooling-related costs, including tuition, other fees, equipment, supplies, and liv- ing expenses would be calculated using established formula with enough flexibility to respond to any special circumstances.

  • Simple but fair formulas would be used for arriving at the student’s own contribution towards these costs, including earnings from sum- mer jobs and support from parents or others who might contribute.

  • The resulting difference between costs and resources available would be declared the student’s financial need, and this amount of money would comprise the finan- cial aid package.

Under such a system, and unlike the current system, no individual would be denied access to the post-sec- ondary education system because he or she lacked the necessary funds.

The composition of the financial aid package must then be determined, especially its balance between loans and grants.

  • The first, say $5,000 (per year), of the package would be given in the form of a loan. This ”œloan up-front” approach would keep incentives right (”œoverconsumption” becomes a risk when education becomes too inexpensive); would deliver the aid in a highly efficient manner (a dol- lar of government spending on loans goes much further than a dol- lar spent on grants because it is effectively recycled as it is paid back); and would generally limit borrowing to reasonable amounts. Furthermore, if $5,000 were deemed too high " or low " this parameter could be easily adjusted.

  • The rest of the aid would be given in the form of a (nonrepayable) grant or bursary. This more gener- ous " and expensive " form of assistance would thus be reserved for those who have greater overall need, and would effectively deliv- er a price subsidy (the fact that the money does not have to be repaid effectively reduces the overall price of the schooling) where it is likely to be most effective in improving access " i.e., to indi- viduals from low income families.

  • Additional aid would come in the post-schooling period in the form of assistance for those who faced excessive debt burdens at that point, depending on their current (post-schooling) incomes and accu- mulated debt levels. This aid would come in the form of both shorter- term interest relief and, for more chronic situations, reduction of the principal owed. Such programs cur- rently exist, but are not heavily subscribed to and need to be better advertised and made more user- friendly so as to reach the target populations " something govern- ments are currently working on.

This approach might seem obvious: calculate the student’s need, assess the resources available, deliver the dif- ference as a financial aid package, bun- dle the aid in a judicious combination of loans and grants, and help those who have unreasonable debt burdens in the payback period. The basic goal of the system of removing financial barriers to post-secondary education would be met, while excessive debt burdens would be avoided.

The final step would be to advertise this simple, effective and equi- table system so that all potential stu- dents were aware of the resources available to them and understood that financial barriers should not stand in the way of their pursuing post- secondary studies. The concern that ”œI can’t afford to go” would be effectively eliminated. This should represent a great step forward in terms of ensuring access to post-secondary education for all qualified Canadians.

How would such a proposed system differ from the one currently in place?

First, it would be unified and coherent, replacing the plethora of programs " grants, loans, debt remis- sion, tax credits, savings grants, and so on " with a single system that did the job of all these others more simply, thoroughly, and efficiently.

Second, it would fully meet stu- dents’ assessed financial needs, which " perhaps surprisingly to many " the cur- rent system does not necessarily do. Loan programs, for example, have limits that in many cases fall far short of stu- dents’ actual needs, and these deficien- cies result in limited choices, unreasonable financial burdens to stu- dents and their families, excessive work during school and other undesirable " and unfair " access-limiting outcomes.

In short, one program that does the job well should be preferable to a panoply of overlapping yet incomplete programs that often miss the mark and that don’t necessarily deliver enough money where it is needed while pro- viding funds to others (i.e., wealthier families) who don’t necessarily need the money to make post-secondary schooling a viable option.

Furthermore, once the system was in place, it could be fine-tuned in a rel- atively easy and transparent manner. If, for example, it were deemed that schooling costs were being under- estimated in certain circumstances, the relevant formula could be tweaked, and vice versa. Or if the contributions expected from parents in particular sit- uations were found to be excessive " or too light " the appropriate adjust- ments could be made. All in keeping with the simple goal of having a simple, unified system deliver the appropriate amount of aid where it was needed.

In many circumstances, this sys- tem would deliver increased amounts of aid to students " essentially where the current system leaves such individ- uals short-changed. There might also be a substitution of grants for loans, thus driving aid costs up further. And there should almost certainly be increased aid for those facing hardship in the post-schooling period because their earnings are not high enough to cover their debt loads (we should be generous here). Where would this money come from?

The answer is, first of all, by reduc- ing current spending where it is not needed to ensure access. Tax credits, for example, now account for roughly 40 percent of all spending on student financial aid. These go to wealthier families who don’t really need the assistance while doing little to help those at the bottom who do not have sufficient incomes to benefit from the credits. Other grant programs, such as the Canadian Education Savings Grants, are similarly misdirected " at least in terms of being targeted on those who truly need the assistance. Debt remission programs take another 10 percent or so of all student funds. They often go to students who would eventually be able to manage their loan payments with relatively little dif- ficulty (i.e., those with high earnings in the post-schooling years), and in any event go only to those already in the system, thus further limiting their effect on access.

Reducing the money going to those who do not really need the assis- tance would thus represent at least a large down payment on the funds required by the unified " and in many cases more generous " student financial assistance package of the type out- lined here. And while all those who currently receive these other kinds of assistance are surely glad to have them, the first goal of any student financial aid system must be to elimi- nate financial barriers to access for children from lower and middle income families " which the pro- posed system would do.

That said, many of those currently receiving the forms of support that would be eliminated in the proposed program " tax credits, debt remission, and so on " would receive assistance through the new system, so that what is taken with one hand would be given back with the other. But this would be as part of a unified and coherent sys- tem that rationally ensured sufficient support for all who truly needed it rather than carrying out a relatively ad hoc distribution of benefits which went towards the needy only in a lim- ited, incomplete, and wasteful fashion.

After those basic needs were met " after access was ensured for all " money could then be directed towards provid- ing subsidies to higher income families for this clearly costly expenditure. But, to repeat, only after the fundamental goal of assuring access to all is met.

One potential complication of such a unified and coherent plan in the Canadian context pertains to the associated set of constitutional and jurisdictional issues and the mosaic of different provincial programs current- ly in existence, reflecting the different needs, circumstances, and ways of doing things that characterize the provincial and territorial jurisdictions across the country.

The short and easy answer to such concerns is that once the clear advan- tages of the sort of unified and coherent student financial aid system proposed here were recognized, it would simply be up to the relevant provincial and federal authorities to make it work; they would owe it to their constituents to co- operate to achieve this goal.

And indeed, this does not seem too insurmountable a problem in the context of student financial aid, because there is already a great deal of co-operation between federal and provincial authorities in this area. While, for example, the Canada Student Loans Program delivers federal dollars across the country with a single program, it does so with need- assessment procedures developed and carried out by the provinces. And although in the late 1990s there were moves to ”œharmonize” various aspects of the provincial loan programs pre- cisely so that individuals across the country benefitted from the federal lending program in the same manner wherever they lived, the program has got along since 1964 with a significant range of provincial idiosyn- crasies. In short, a new program could probably function with a fair level of diversity, thus diminishing the need for co- operation to the point of creat- ing a single set of rules and procedures across the country.

One easy solution would be for each province and the federal government to agree on the sort of system described above and then simply divide the costs " say, with the 60-40 split that has tended to charac- terize federal-provincial spend- ing on student financial aid in the past.

One potential danger of such an approach is that provinces might be tempted to push up tuition rates " rates which they control and the rev- enues of which they take in " or oth- erwise inflate students’ assessed costs in order to increase their assessed aid packages and, pari passu, the contribu- tion of the federal government to the province’s post-secondary student body. One solution be for the federal and provincial governments to agree to a single set of need-assessment and award formulas, where tuition fees and other costs were not pushed up in any such artificial manner. At a more limit- ed level of co-operation, the student aid formulas could be based on the average tuition fees across the provinces in all cases, thus largely eliminating any incentive to inflate tuition levels to these ends, while of course leaving the higher-cost provinces to offer additional support to help meet the extra costs for which they are responsible.

But even in the absence of feder- al-provincial co-operation of this type, any single government could, on its own, adopt a formula and set of procedures that should work if both levels of government were co- operating in a reasonable manner, and then hold up their end of the deal. In the face of provincial intransigence the federal government could, for example, adopt a reasonable need assessment procedure, guarantee its 60 percent share of the assessed aid package, and provide that financing in a mix that would make sense if the whole package was delivered in a uni- fied manner (e.g., the first $5,000 in loans, the rest in grants). A province could do the same thing. The respon- sibility of each level of government would presumably be clear, perhaps creating pressure for greater co- operation " especially if there were jurisdictions where the system was in fact working in a co-operative manner to students’ advantages. In the mean- time, although fuller co-ordination would clearly be much preferred, intransigence on the part of any single government " federal or provincial " would not necessarily prevent the implementation of a program that worked at least half-way right.

Another approach might be to sim- ply make the provinces responsi- ble for the tuition side of the student’s expenses. With, say, tuition fees gener- ally in the $4,000-$5,000 range at pres- ent (at least for the benchmark bachelor’s degree program), this would likely work out to the provinces picking up something like their traditional 40 percent share of student financial assis- tance. That is, the federal government could treat the student as if there were a single, unified aid package, but then use their resources to go towards

the nontuition side of costs. Other approaches could be tried. The overarching goal would be to ensure that the fed- eral and provincial governments together committed themselves to delivering the aid packages described above. Students wouldn’t care who paid which share, and would only want the program to deliver the money they needed in as administratively simple a system as possible.

I have proposed a rather sweeping reform of the Canadian student financial aid system, but one that rests firmly on the foundations of the current sys- tem and only replaces the myriad pro- grams currently in place with a single one that does the job better, delivering the full level of assistance required by needy students in a simple, unified and coherent manner. Removing the finan- cial barriers that potentially stand in the way of access to post-secondary educa- tion for those from lower and middle income families is both a touchstone of our nation’s democracy and essential to our economic prosperity. It’s time to get that architecture right.