Over the past few years, Canada has quietly moved from the era of the health care review to the era of the review of post-secondary education. Having digested (or set aside) the recommendations of the Romanow and Kirby commissions, federal and provincial governments have developed an appetite for proposals on how to enhance access to and improve the quality of higher education.

Ontario was first off the mark, with a post-secondary review chaired by Bob Rae that reported in 2005. It has since been followed by reviews in BC, Alberta, Saskatchewan, New Brunswick, and Newfoundland and Labrador. The federal government has followed suit, launching reviews in 2006 and 2007 of the two main instruments through which it sup- ports undergraduate university and college students, namely the Canada Student Loans Program and the Canada Millennium Scholarship Foundation.

Commissions in provinces such as Ontario and New Brunswick have called for specific and significant new investments in student financial assistance, which Ontario at least moved quickly to implement. Others, such as the Campus 20/20 report in BC, have called for rapid gains to be made in the post-secondary participation of children from low-income families and Aboriginal youth. At the federal level, the background against which the reviews are being conducted is the government’s wish to ”œmodernize” the sys- tem of student financial assistance. This intention was stat- ed in the 2006 autumn economic update, and reiterated in Budget 2007, which spoke of the government’s objective to ”œmodernize and simplify the administration and delivery of student aid in order to make supports more effective, trans- parent and predictable.”

This wave of interest among policy-makers in access to post-secondary education is being driven by a number of factors. The first is the widespread understanding that Canada’s continued prosperity in an ever more competitive and integrated global economy rests on its ability to maintain an advantage in terms of the skills, flexibility and innovativeness of its labour force. The new jobs the economy is creating, and the existing jobs being vacated as baby boomers start to retire, require candi- dates with a post-secondary education to fill them. While Canada has per- formed well in terms of access to post-secondary education " just over half of 25-to-34-year-olds have a college diploma or university degree " it cannot afford to rest on its laurels. The US already produces more university graduates than does Canada, and other Organisation for Economic Co-operation and Development (OECD) countries are gaining ground. In this context, Canada needs to be sure that it has the right policies in place to encourage an increasing num- ber of young adults to gain a post-sec- ondary credential.

A second factor is related to the first, but stresses equality of opportuni- ty for individuals more than nation- wide economic competitiveness. Post-secondary education has become an increasingly important determi- nant of economic advancement and social well-being. Since 1980, the earn- ings of those with a post-secondary education have grown, while the wages of those with a high school diploma or less have not. It is in this context that the prevailing inequity in access preoccupies policy- makers. One-half of students from low-income families do not continue their studies past high school, compared with one- quarter of those from high-income families. By age 20, non-Aboriginal youth are three times more likely than Aboriginal students to be pursuing or have already completed post-second- ary studies. Unless these gaps are nar- rowed, too many low-income and Aboriginal youth will be denied the opportunity for advancement.

This point is particularly impor- tant because it suggests that the policy objective should be not just to improve overall levels of participation in higher education, but more specifi- cally to improve the participation of youth whose backgrounds have histor- ically made them less likely to go to college or university and who face the steepest barriers to access. Of course, the general and specific goals are relat- ed: Since students from relatively advantaged backgrounds are already participating in post-secondary educa- tion in significant numbers, gains in average participation rates are more likely to be made by focusing on stu- dents from these underrepresented groups (student from low-income fam- ilies students with no history of post- secondary education in their families and Aboriginal students). Since the size of the young adult population will begin to decline in the next decade, the failure to promote equality of edu- cational opportunity in this way will likely translate into a decline in the absolute numbers of post-secondary graduates in Canada, which will surely place the country at a disadvantage.

A third factor driving the discussion about access to higher education is the availability of new research. As little as five years ago, policy research on the subject in Canada was still in its infancy; much of the research that had been conducted was confined to rela- tively rarified academic circles. The publication since 2002 of three edi- tions of The Price of Knowledge by the Canada Millennium Scholarship Foundation and the availability since 2002 of data from Statistics Canada’s longitudinal Youth in Transition Survey have helped to change this. We now know much more about why stu- dents do or do not continue their stud- ies after high school than we used to, and this knowledge has begun to inform policy discussions at both the provincial and federal levels. Here is a partial list of key research findings that have emerged in recent years: 

  • Lack of adequate information and lack of preparation before the end of high school constitute impor- tant barriers to access. While financial considerations are among the main factors deterring some from undertaking post-sec- ondary studies, lack of interest in further studies and lack of infor- mation about the costs and bene- fits of a higher education cannot be overlooked. We know that high school students continue to look to their families and friends for information about college and uni- versity, but that they do not always get the answers they need. Few parents, for instance, talk to their adolescent children about the costs of a post-secondary educa- tion and the availability of student financial aid. As always, the stu- dents who need this information the most are usually the least like- ly to get it.

  • Providing students who need financial assistance with bursaries in addition to student loans con- tributes to their success. Students who receive bursaries borrow less and accumulate less debt. Students with less debt are more likely to stay in school long enough to com- plete a program of studies and earn the intended diploma or degree.

  • Need-based bursaries historically have not been effectively directed to students from the lowest- income families. In the Canadian system, bursaries have been awarded to students with the largest loans. Students from low- income families, however, often receive less loan aid than others because they strive to keep their net education costs low: they are less likely to move away from home to study, more likely to enrol in lower-cost college pro- grams and more likely to work while in school to earn income. The system essentially penalizes them for this behaviour by provid- ing them with repayable loans but not nonrepayable bursaries.

  • Most of the recent growth in gov- ernment transfers to students has been in areas that have little impact on access. For the past decade, governments of all levels and political stripes have favoured tax credits as the means of provid- ing more financial support to stu- dents and their families. At the federal level, expenditures on the tuition and in-study tax credits have ballooned from just over $400 million in 1994 to more than $1.8 billion in 2004 (see table 1). For their part, provinces have recently developed an appetite for measures such as post-graduation tax rebates. These measures may ease the tax burden for some families but dis- proportionately benefit students who do not need financial assis- tance: they are not targeted to students from lower-income families, and low-income students or par- ents often lack the taxable income against which the credits can be claimed. In any event, tax credits provide support only months after tuition, books and rent must be paid for. While such tax measures may have made sense as a means to complement the need-based sys- tem of student aid, they now cost more to finance than do student loans and bursaries. A better bal- ance needs to be struck.

  • Financial and so-called ”œnon-finan- cial” barriers interact, compounding the challenges for young people who are already underrepresented in post-secondary education. As mentioned, finances are only one of several obstacles that students face in accessing and successfully com- pleting college and university pro- grams. Students who struggle academically or have little informa- tion about or interest in further studies may never get to the point of assessing whether they have the means to pay the cost. What’s more, students likely to be confronted by one type of barrier are also likely to be confronted by the others: for a variety of reasons, students from lower-income families may receive less encouragement to strive for a university degree, face greater aca- demic challenges and have fewer financial resources at their disposal. This means that access to post-secondary edu- cation cannot be promoted through one policy tool alone: it needs to be addressed through a compre- hensive set of policies designed to provide a range of supports to students who are at risk of turning away from or dropping out of college or university.

Finally, a fourth factor responsible for pushing access issues up the political agenda is the pending expiry of the Canada Millennium Scholarship Foundation. The foundation was creat- ed by Parliament with a mandate to dis- tribute all of its $2.5 billion fund (plus interest) to students in 10 annual instal- ments from 1999-2000 to 2008-09. Each year, it provides $335 million in need-based bursaries to 125,000 college and university students across the country, as well as $12 million in undergraduate merit scholarships. The bursaries reach two in five high-need student borrowers, and serve to reduce their debt by 30 percent.

The program is one of the main fac- tors responsible for the levelling off of the average debt of graduating students " while average debt levels doubled in the 1990s, they have not increased since 2000 (in 2006, average debt for those who borrowed was $24,000). In certain provinces, the Millennium Program has even led to a drop in average student debt. While the foundation is a federal entity, its bursaries are delivered as part of the overall package of aid that students access through provincial student loan programs. This means that it is the provinces that will have the unenviable task of telling their clients in 2009 that the bursaries are no longer available. For this reason, the provinces have asked Ottawa for a decision in 2008 about whether the foundation will be replaced or renewed, which in turn has sparked the federal review of the foundation.

For all these reasons, then, the stage has been set for a discussion about how governments support post-secondary students and what changes need to be made to student assistance programs. Inevitably, however, it is much easier to gain consensus about the need for student financial assistance policies to be modernized than it is to agree on precisely what ”œmodernization” means and what new policies governments should put in place. The federal government has indicated that its own answer will be offered in its 2008 budget.

Ideally, the government’s current deliberations will be informed by what has been learned over the last decade both through research and through experience, including the experience gained by the Canada Millennium Scholarship Foundation. Taking both this research and experience into account, we would like to outline what a sound approach to modernization might be. We argue that the effort to modernize student aid should be guid- ed by four principles.

A modernized system of student financial assistance needs to reach out to students before they have decided whether to embark on post-secondary studies and provide them with infor- mation they can use in planning their futures. No one would be expected " or even permitted " to buy a house or a car without knowing exactly how much debt they will be contracting and the terms under which it will have to be paid off. Yet we expect young people to choose to devote sev- eral years to education without telling them until after they have signed up how much financial assistance they will receive, how much money of their own they will have to find and how much debt they will end up with. Even when the offer of aid is made, it is made one year at a time; students have to reapply in every successive year, and are offered no guarantees. This is fine if the goal of student financial aid is to minimize expendi- ture, but less acceptable if the goal is to facilitate access.

Providing students with earlier commitments of funding and greater certainty would require signifi- cant changes to the existing student aid system. It may be possible to get there more quickly, however, by working through the tax system. Revenue Canada can identify parents with teenage children in various income categories, and already communicates with them annually with a tax statement that confirms, among other things, their allowable RRSP contributions. There is no reason why it could not also confirm to lower- income parents that their chil- dren will be guaranteed a minimum level of financial assistance should they choose to enrol in post-secondary edu- cation in the years to come. This minimum level could eas- ily be topped up through the financial aid system at a later date, but would serve the dual purpose of providing some cer- tainty and of encouraging fam- ilies to talk about the prospect of post-secondary education and the means of paying for it.

A modernized system of student aid needs to direct assis- tance to where it is needed and provide the right mix of loans and bursaries. This means, for instance, that students from low-income families should be offered bursaries and not just loans " a change that has already begun to be made with the introduction of access bursaries to low-income students (by the Millennium Scholarship Foundation, and the federal and Ontario governments) and, in some provinces, Aboriginal and rural stu- dents. These access bursaries could be expanded " in most cases they are available only in the first year of studies " but they could also be separated from the loan component of student aid (as is the case in the US). As it is now, students must first decide to borrow (which means getting over any aversion they may have to taking on debt) before find- ing out if they are eligible for a bursary. This situation could be turned on its head, with students facing financial dif- ficulties applying first for a bursary and only subsequently needing to decide whether to take on a loan as well. Offering students from low-income families nonrepayable aid first may be a better way of encouraging them to embark on post-secondary studies.

Providing the right mix of aid also means that bursaries should be gener- ous enough to ensure that borrowing does not become so high that students drop out before completing their stud- ies. Of course, it is not easy to know how much debt is ”œtoo much,” but at the very least, the funding for bursaries that is currently in the system cannot be redirected or phased out. The need to target aid appropriately also means that a moratorium should be placed on new tax credits for students. There is nothing wrong with lowering tax rates, but stacking one education tax credit on top of another is a poor way to get money to students struggling to pay the bills while in school.

A modernized system of student aid needs to be complemented by a compre- hensive package of support for students that addresses the full range of barriers they are likely to confront. On the one hand, an approach that provides more financial aid but does not help students overcome academic and other barriers will have only a partial impact on improving access. Simply put, financial aid benefits only students who have already decided to enrol and have been admitted by an institution; it cannot help individuals who neither apply nor gain acceptance. On the other hand, many students who make it to post-sec- ondary education will need a variety of support services from academic coaching to peer mentorship and career guidance in order to succeed. This will be especially true as the participation of those from underrepresented groups " students whose parents did not attend college or university, low-income students and Aboriginal students " increases. While financial assistance is distinct from other forms of student support, an effective access strategy must understand that the same students often require these different supports and that a comprehensive approach to policy-making will be more effective.

A modernized system of student aid needs to be delivered in a way that is flexible, accountable and transparent. A flexible federal program is one that varies in its details across jurisdic- tions so that it can take into account the needs and priorities of students in different provinces and territories, not to mention the variation in the exist- ing provincial and territorial programs which it must complement. Accountability and transparency means not only that the funds should be easily traced to the student recipi- ents, rather than disappearing into the mists of federal-provincial transfers, but also that the programs should be regularly evaluated and the results made available to the public.

It is important to note that the above list does not include an attempt to simplify the system by reducing the number of agencies involved in deliver- ing assistance to students, something which is occasionally suggested by observers struck by the mystifying array of programs currently on offer. In the first instance, an attempt to simplify the system in this way is bound to fail: even if the federal government were to decide to offload its programs to the provinces, for instance, students would still be left to navigate among the loans, bursaries and scholarships offered by provinces, schools, banks and community groups " not to mention the money they can earn from summer or part-time employ- ment or borrow from family members. Just as important, however, is the fact that the confusion for students arises less from the fact that several actors are involved in the world of student aid and more from the fact that students cannot easily anticipate in advance of undertak- ing their studies how much aid they will get. Federal and provincial programs are actually relatively well integrated, with one point of access for students. Neither program, however, can tell a high school student planning their future " thinking about whether to start work, stay at home and study at college, or leave home to attend university " how much aid they will receive in their first or subsequent years of study. Aid amounts are calculated only once stu- dents have made their choices and can report both their program costs and their expected earnings in the summer following high school graduation. It is for this reason that any attempt to rationalize the number of actors in sys- tem while leaving the modus operandi of government student aid intact will seem no more simplified to its clients than it does today.

If simplification of the system is one of the goals, there may be better ways to achieve it. Many of those involved in student aid have focused on the need to sim- plify the process through which a student’s financial need (and thus the amount of aid for which they are eli- gible) is assessed. Loan appli- cation forms are notoriously long and complicated, and the amount of variables that are taken into account makes it that much harder for anyone to anticipate how much aid they might receive. Others have talked about devolving the administration and delivery of federal and provincial pro- grams to post-secondary institutions, so that students would have to deal with only one agency for all issues related to admission, costs and financial support. These and other ideas merit considera- tion; our view, however, it is that they should be approached with the four general principles we outlined above firmly in mind.

What we have proposed with these four principles is admit- tedly only the beginnings of a vision of a modernized system of student financial assistance. Even without fur- ther elaboration, however, there are already two significant obstacles to its implementation.

The first is that a considerable part of what is required to modernize the system of student financial assistance goes well beyond the parameters of existing programs. Student aid pro- grams currently deliver loans, bursaries and loan repayment assistance to stu- dents who are enrolled in or have graduated from post-secondary educa- tion. They have no way of reaching students before they have enrolled or supporting them in ways that go beyond finances once they get there. Adding these dimensions to the issue multiplies the challenges of develop- ing effective policy. More to the point, however, it means that efforts to improve financial aid by making adjustments within the existing pro- grams, rather than going beyond them, will have only limited success.

The second problem is that stu- dent financial assistance is delivered (at least outside Quebec) by both levels of government, which inevitably com- plicates the task of reform. Reforms initiated by individual provinces have to work around the federal program, and reforms initiated by the Canada Student Loans Program have to either be imposed on the provinces or await the long process of building consensus among all jurisdictions.

Neither of these problems are insurmountable, although they both suggest that significant progress may take longer than policy-makers might wish. Those wishing to make progress sooner rather than later, however, might wish to reflect on the role played by the Canada Millennium Scholarship Foundation. As an inde- pendent agency, for instance, the foundation has neither the statutory obligation nor the public expectation that it deliver exactly the same pro- gram in each jurisdiction. For this rea- son, it has sought out opportunities to work with provinces to improve the system on a jurisdiction-by-juris- diction basis. The results of these partnerships have included a new cur- riculum tool about planning for post- secondary education for use in BC high schools, new bursaries for Aboriginal students in Saskatchewan and Manitoba, joint loan reduction programs that pool together and mag- nify the impact of federal and provin- cial resources in several provinces and an experimental program to test the effectiveness of promises of financial aid to students as early as grade nine in New Brunswick.

It is through several of these initia- tives that the foundation has also tried to address the other obstacle to change, namely the need for student support policies to extend beyond the instrument of student financial assis- tance. The foundation, for instance, is assisting the University of Victoria to test the effectiveness of academic and peer support programs for its Aboriginal students, and has partnered with Manitoba and New Brunswick to develop a bet- ter guidance program for high school students. While these initiatives are modest in scope, they are a step in the right direction, and serve to move the agenda forward at a faster pace than that set when governments are the only actors.

Foundations such as the Canada Millennium Scholarship Foundation are intended to act as innovators and they have played that role quite well. They cannot replace govern- ment programs but are a tool that can complement them in important ways. They can work quickly and flexibly with provinces, they can conduct research that asks questions that gov- ernments are not always comfortable asking, and they can partner with vol- unteers and community organizations to broaden the scope and impact of pol- icy initiatives. All of these attributes are relevant to the task of modernizing stu- dent financial assistance. The Canada Millennium Scholarship Foundation is only one part of the puzzle, but any attempt to modernize the system should take into account the role it can play in making financial assistance more responsive to students’ needs.