Yesterday, I outlined the 2013-14 budget picture for university and college operating transfer funds.  Today, I’m doing something similar for student assistance. It’s a very different picture.

In addition to the caveats I mentioned yesterday regarding the challenges of budget-to-budget comparisons, student aid analysis poses its own unique set of challenges.  The main one is that provinces have trouble accurately predicting demand; so if in one year demand soars (or falls), the next year tends to bring a big budget increase (or decrease) to bring numbers into line with reality. Also, at least theoretically, student aid is counter-cyclical.  As student incomes rise, need goes down, and so too do aid expenditures.  So a declining budget doesn’t necessarily mean a government is cutting – it may also mean that students are better off (or that a government budgeted high the previous year, and is bringing estimates down to match reality).  In short, some care is required in interpretation.

That said, here’s what we see when we look at student aid budgets across Canada from 2012 to 2013.

Change in Student Aid Expenditure Estimates, 2012-13 to 2013-14, by Province

 

 

 

 

 

 

 

According to provincial estimates, BC and Newfoundland both appear to have cut student aid, but I have my doubts about whether this happened in practice.  In BC, the reduction may be a recategorization of certain expenses; in Newfoundland, the budget speech actually indicated an enrichment of the program this year, so my guess is that they wrongly budgeted high in the previous year, and are bringing estimates down accordingly.  But here’s the key point: nationally, aid is up by $135 million (or about 6.4%), to $2.3 Billion.

This is not a one-year fluke, either. If we extend the baseline back to 2011-12 (which allows us to see the full effect of Ontario’s unnecessary tuition rebate scheme), we see the following:

Change in Student Aid Expenditure Estimates, 2011-12 to 2013-14, by Province

 

 

 

 

 

 

 

Your eyes do not deceive you; that’s a 25.4% increase nationally, over two years. Institutions, in comparison, received a 0.9% increase.  To put this another way: student aid is up $465 million; institutional funding is up $156 million.  For every new dollar going into higher education, just 25 cents are going to institutions.

Distribution of New Provincial Appropriations for Post-Secondary Education, 2011-12, 2013-14

 

 

 

 

 

 

 

This 75-25 split might make sense if provinces were allowing institutions to make up cuts through tuition, as they did in the 1990s.  But this isn’t the case.  This year, tuition increased nationally by a little over 2.5%; next year, it will almost certainly be less than 2%.  The 75-25 ratio might also make sense if student aid money were going to poorer students; but of course that’s not true either; the Ontario 30% grant by design primarily ended up mostly in middle-class hands.

This vote-chasing foolishness is tolerable for a year or two.  But if provincial governments don’t change tack, we’re soon going to have a real institutional capacity problem on our hands.  Mark my words.