HESA

Higher Education Strategy Associates

Tag Archives: budget 2017

March 30

What’s Next for Student Aid

A few months ago, someone asked me what I wanted to see in the budget.  I said i) investment in aboriginal PSE, ii) system changes for the benefit of mature students and iii) changes to loan repayment (specifically, a reduction of the maximum loan payment from 20%  of disposable income to 15%).  To my great pleasure, the government came through on two of those wishes.  But there is still a lot of work to do yet.

Let’s start with the Post-Secondary Student Support Program, which the Government of Canada gives to individual First Nations to support band members’ education costs.  The Budget provides a $45 million (14%) bump to this program but also said the Government would “undertake a comprehensive and collaborative review with Indigenous partners of all current federal programs that support Indigenous students who wish to pursue post-secondary education”, which I think is code for “we’d prefer a new mechanism which is somewhat more transparent than PSSSP”.

Let’s just say I have my doubts about how easy this collaborative review will be.  Indigenous peoples – young ones especially – have a lot of issues with the federal government at the moment, and it will be difficult to try to manage a focussed review of this one subject without a lot of other agenda items intruding.  I’ve written on this subject before, and there certainly are ways which the funding could be arranged to be managed more efficiently.  That said, some of these ways involve taking management away from band councils and giving it to some other aboriginal organization operating at a larger scale and not all bands are going to find that appealing.

Anyways, the takeaway is: if the feds are expecting a replacement to PSSSP to be in place by fall 2019, they’d better get to work yesterday.

Now, what about the new measures for mature students/adults returning to school?  This was a welcome budget initiative, because the policy discussion has perhaps been focussed too heavily on traditional-aged students for the past few years.  There are however, maybe two cautions I would put on the initiative and how it will roll out.

The first is the budget description of the $287M over three years for programs benefitting these students as a “pilot project’.  I am fairly certain that is PMO-speak, not ESDC-speak.  First of all, I’m moderately certain the law doesn’t allow pilots; second, the idea that provinces are willingly going to spend time and money re-jigging all their program systems to accommodate program changes that are inherently temporary in nature is kind of fanciful.  So I suspect what’s going to happen here is that over the next few months CSLP is going to come up with a bunch of different ways to help this population (change cost allowances for older students, and maybe for dependents too), re-jig how prior-year income is calculated, raise loan limits for this population, raise grant eligibility, etc etc) and then roll them out in roughly ascending order of how irritating they are for provinces to program.  It’s not going to be a big bang, which may limit how well the policy is communicated to its intended targets.

But there’s a bigger issue at play here which the government missed in its haste to get a budget out the door.  One of the biggest problems in funding re-training are the artificial breaks in funding and jurisdiction that occur at the 12-month mark.  If your program is shorter than that, you’re covered by various provincial labour market initiatives and on the whole your compensation is decent.  Longer than that, you’re on fed/prov student aid, which in general is not as generous (and more to the point is repayable).  It would be useful for the two levels of government to work together to provide a more seamless set of benefits.  Perhaps regardless of program length, learners could benefit from 8 months of the more generous treatment and then move on to a slightly less-generous mixed loan/grant system.  This wouldn’t be a quick shift: my guess is that even if you now started talking about how to achieve this, it would still take four or five years for a solid, specific solution to come into view (if you think universities are slow, try federalism).  But still, now’s as good a time as any to start, and perhaps the dollars attached to the mature students programs may be a good conversation starter.

My third wish – the one that didn’t get any traction in this budget – was for improvement in student loan repayment.  I’m not that disappointed in the sense that I’m not greedy (no budget would ever have given me 3-for-3), but I do think there I work to be done here.  Perhaps this gets enacted as part of the follow-up to the Expert Panel on Youth being chaired by Vass Bednar and due for release at some point this spring (although who knows, if the Naylor Report is anything to go by, we could be waiting into 2019).  Or perhaps not: it’s not like CSLP hasn’t already been given a huge whack of work for the next couple of years.

But if that’s the worst problem we have in student aid in Canada, I’d say we are in pretty good shape.

 

(As a coda here, I’d just like to pay tribute to the Canada Student Loans Program’s Director-General, Mary Pichette, who is leaving the public service shortly.  Mary’s been involved two big rounds of CSLP reform: the one in 2004/5 which first created the grants for low-income students, and second the ones around the 2016 budget (not just the increase in grants but the many smaller but still important changes to need assessment as well. 

 I won’t say –I’m sure she wouldn’t want me to – that those two reforms were down to her.  But they were down to teams that she led.  She did a lot over her two stints in the program to make the policy shop more evidence-based and her legacy is simply that she’s made life easier for literally hundreds of thousands of student across the country.  They can’t thank her, but I can.  Mary, you will be missed.)

March 29

Conflicting Views on Research Funding

Every year on budget night, we at HESA Towers publish a graph tracking granting council expenditures in real dollars.  This year it looks like this:

Tri-council Funding Envelopes

Research Council Funding.png

Some people really like the graph and pass it around and re-tweet it because it shows that whatever governments say about their love for science and innovation, it’s not showing up in budgets.  Others (hi Nassif!) dislike it because it doesn’t do justice to how badly researchers are faring under the current environment.  Now, these critics have a point, but I think some of the criticism misunderstands why government funds research in the first place.

The critique of that graph usually makes some combination of the following points:

  1. Enrolments have gone way up over the past fifteen years, so there are more profs and hence more people needing research grants.
  2. At some councils, at least, the average grant size is increasing, sometimes quite significantly.  That’s good for those who get grants, but it means the actual number of awards is decreasing at the same time as the number of people applying is increasing.
  3. In addition to an increasing number of applicants, the number of applications per applicant also seems to be increasing, presumably as a rational response to increasing competition (two lottery tickets are better than one!).

Now, from the point of view of researchers, what all this means is that “steady funding in real dollars” is irrelevant.  On the ground, faculty are having to spend more time on grant proposals, for fear of not receiving one.  The proportion receiving awards is falling, which has an effect on scientific progression, particularly when it happens to younger faculty.  So it’s easy to see why the situation has academic scientists in a panic, and why they’d prefer a graph that somehow shows how applicant prospects of receiving grants are nosediving.   And that graph would as be as undeniably true as the one we publish.

But, from the perspective of Ottawa, I think the answer might well be: “not our problem”.

Here’s why.  The main reason governments get into the research game is to solve a market failure.  The private sector can’t capture all the benefits of basic research because of spillovers, so they underinvest in it.  Therefore, governments invest to fill the gap.  This has been standard economic theory for over 50 years now.

So, to be blunt, government is there to buy a particular amount of science that is in the public interest given corporate underinvestment.  It is not there to provide funds so that the academic career ladder works smoothly.

Provinces and universities decided to hire more science profs to deal with a big increase in access?  Great!  But did anyone ask the feds if they’d be prepared to backstop those decisions with more granting council funds?  Nope. They just assumed the taps would keep flowing.  Academia decided to change the rules of pay and promotion in such a way that emphasized research, thus creating huge new demand for more research dollars.  Fantastic!  But did anyone ask the feds to see how they’d cope with the extra demand?  Nope.  Just hope for the best.

There’s a case, of course, to say that the federal government, via the granting councils, should be more concerned than it is with the national pipeline for scientific talent.  What’s happening right now could really cause a lot of good young scientists to either flee their careers or their country (or both), and that’s simply a waste of expensively-produced talent.  But for the feds to thoroughly get into the business of national science planning requires provinces and institutions to give the councils a more direct role in institutional hiring decisions and the setting of tenure standards.  I bet I can guess how most people would feel about that idea.

So could the government put more money into granting councils?  Sure.  Could some councils make things better by reversing their Harper-era decisions to go with larger average grant sizes?  Yes, obviously.  But let’s remember that at least part of the problem is that institutions and academics have taken a lot of decisions over the past twenty years about what research and scientific careers should look like with very little thought to the macro fiscal implications, under the assumption that the feds and the councils would be there to bail them out.

That needs to change, too.

March 23

Federal Budget 2017

Morning all.  A long night last night at HESA Towers as we covered Budget 2017, which contained an exhaustingly large list of little programs (as well as a few big ones) affecting post-secondary institutions.  You can find our full budget analysis here.  My thanks to the HESA crew – Paul, Melonie, Johnathan and Jackie – for sticking it through the evening.
Just a few thoughts, from very late last night: Budget 2017 is uneven: some parts are good, others not so good.

Unequivocally, the Skills component is excellent.  The money for Indigenous peoples is a great step, as is the commitment to provide more help for mature students.  The biggest investment, on skills training, properly goes to the provinces through the existing Labour Market Transfer arrangement and the amalgamation of several of these transfers means that provinces will have more flexibility in designing new programming.  One could quibble about the lack of detail on some programs (e.g. the CSLP “pilot projects”), but that would be churlish.  And the one initiative that had the potential to be a disaster (FutureSkillsLab) has been hedged in such a way that the government can take several more months to get the essentials right (which means spending lots of time with the provinces).  Overall, the Government has done good work here, and unlike last year, their efforts cannot be derided as solely university-focused; colleges will do well out of the training provisions.

An aside here: universities and colleges have not got what they asked for on Work-Integrated Learning, but I think the government has done the right thing by putting all its eggs in the MITACS basket.  Effectively, the government has said it is happy to play a role in Work-Integrated Learning, but only for graduate students, where the outcomes are tied to other policy goals around innovation.  Undergraduate students?  College students?  No thanks, that’s a provincial responsibility.  That’s both shrewd and respectful of provincial turf.

The Innovation section is not great, but the thinking on display is a lot better than it has been for most of the last 12 months.  The government still confuses growth policy with innovation policy, but at least it has realized that innovation is mostly about firms.  There are all sorts of justifiable trepidation about government “picking winners,” and no doubt regional jealousies will play an outsized and unwarranted role in the final set of decisions, but you know, baby steps.

Where the budget really falls down is on Science.  Between the unconscionable stalling on the publication of David Naylor’s report on Fundamental Science and now the funding freeze – not to mention the ongoing fiasco at CIHR – the nation’s academic scientists are going to be at war for funding.  Any goodwill the government fostered from last year’s bump of council funding is almost certainly gone.  For a government that prides itself on being pro-science, they have a big communications challenge ahead of them for the next 12 months, even if they do intend to make big investments in the area next year, as some have suggested.

On the whole, there is more to like in this budget than not.  Students in particular will be happy.  But the government has squandered an enormous amount of goodwill among scientists.  Expect a lot of sniping from this quarter: and it’ll be aimed not just at government but at the university administrators.  Universities Canada’s decision to not criticize the government, even a little, over the granting council snub will almost certainly not play well in laboratories across the country.  Stay tuned.

March 22

The Next Big Skills Policy Agenda

So today is budget day.  If the papers are anything to go by, there’s something big-ish in there about “skills” which will no doubt be presented as some massive benefit to the country’s middle class (and those trying to join it). I have difficulty imagining what might be announced since most skills policies are in the hands of the provinces.  But what I do know is that skills policy is an area long overdue a makeover.

The labour force is aging.  Any new burst of productivity – essential for rising incomes – is going to have to come from older workers, not newer ones.  Part of that is going to have to come from firms making greater capital investments – that is, better machines and IT infrastructure for workers to use.  But part of it is going to have to come from more intensive and continuous skills upgrading on the part of workers’ themselves.  And this is a problem, because historically Canada has been uniquely bad at achieving a culture of skills upgrading.  Go back year after year, report after report, and it’s the same story: where continuous upgrading is concerned, it tends to be concentrated among people who already have high levels of skills.  Those that have get, those that do not, do not.

Part of the problem here is funding.  That’s why we sometimes see government get interested in handing money either to individuals or to firms (for example, the Canada Jobs Grant) to subsidize training.  But I’d argue that money is at best a partial barrier to more training.  A larger barrier is time.  And a lot of existing institutional practices are as much a hindrance as a help in this regard.

Workers don’t have a lot of spare time.  They have jobs, kids, parents, families: all of which make time a scarce resource.  We don’t normally think of time as something governments can control, but they actually do have a couple of policy levers they could pull, if they wanted to.  First, they could create incentives or entitlements to time-off for the purpose of training/re-training.  This idea was mooted 35 years ago in the Macdonald Commission report as a “Time Bank” – every year, workers would accrue a certain amount of time off specifically for the purpose of training.  It would no doubt be a colossally unpopular move among employers, but is still probably something worth considering (and might not create that much dissension provided it was fairly applied across all workplaces and didn’t create free-rider problems).

But the other way to make more time available to people is to radically re-consider the nature of the credentials being sought.  Universities, God Bless ‘em, have never seen a labour market problem they couldn’t design a 1- or 2-year Master’s Degree to solve.  The problem is a) not everyone wants to do a year of full-time study (or the part-time equivalent over a longer period of time) and b) who really wants to wait until next September to get started if you just got laid off last week?

From an adult learners’ perspective, the best thing in the world would be credentials that are both shorter and continuously available.  The latter can be solved to some extent simply by throwing money at it.  Continuous intake is relatively easy if you have more instructors to teach more classes at different times of the year.  Putting a greater fraction of classes online could conceivably bring some economies of scale that would assist in the process.

But the bigger problem is reducing the length of credentials.  In theory, there is a pretty clear way forward, which are called “stackable credentials”.  Many institutions use some variant of this: thirty credits equals a certificate and once you bunch three certificates together you get an applied degree, or something along those lines.  But even the notion of thirty credits can be kind of off-putting if what you think you need is just a minor skills upgrade. What is needed is a trusted provider (which usually means a non-profit provider) to come up with a way to come up with smaller-duration credentials which actually convey to employers a sense of competency/mastery in particular fields, and which could also combine over time (i.e. “stack”) into more traditional credentials like diplomas and degrees.

What’s the government role in this?  Well, the problem is really one of co-ordination.  Individual campuses can experiment with short credentials or competency-based credentials all they like: if employers don’t understand the credentials, they will be worthless.  What is needed is collective action – someone has to corral institutions to work together to create new credential standards, and someone needs to corral business to talk about what feature they would find most useful in new, shorter credentials.

That may sound like a job for somebody like the Business-Higher Education Roundtable.  But frankly, some coercion is called for here.  My guess is if BHER floated this you’d probably get a few Polytechnics showing up to play (because it’s the kind of thing they do) and no one else.  But government has the muscle and dollars to make this happen a heck of a lot more quickly and efficiently.

Now, note I say “government” and not “the Government of Canada”.  It would be better all around if provincial governments, who constitutionally are the ones in charge in this area, took the lead.  But one could argue that the feds – provide they stay the hell away from directly funding institutions or getting too far into the curriculum weeds themselves – could at least nudge the key players towards the table.

Bottom line: if we want higher labour productivity we have to get much more serious about creating opportunities for workers to upgrade their skills.  Since the key pressure point for skills upgrading is time, we need to create new, shorter pathways to meaningful credentials.  That means shorter, stackable credentials.  These will need to be designed by employers and institutions together, but the quickest way to start this program runs through governments.  And there’s no time like the present to get started.

December 05

A Wish List for Budget 2017

A few days ago someone asked me what my wish list would be for the federal 2017 budget.  The science/innovation part of my answer will take a couple of posts to summarize (I’ll start addressing some of the issues related to the Science and Innovation Agendas over the next few days); but today I thought I’d give you my thoughts on the student aid part of the equation.

Briefly, I have three wishes.  They are, in order:

1)      Implement the promise on Aboriginal student funding.  In the Liberals’ 2015 manifesto, there was a promise to increase funding to the Post-secondary Student Support Program (the program which provides funding to bands across the country to send their members to post-secondary education) by $50 million per year.  For whatever reason (I explored this a bit back here), the Liberals chose not to implement that promise in the last budget.  Now, there is lots not to like about this program, and lots of ways it could be improved.  But the funding challenges for First Nations students are real, and we shouldn’t give them short shrift because of a desire to wonk around with program design first.  Fulfill the promise, increase spending on PSSSP by $50 million, wonk later.

2)      Increase Aid Limits for Mature Students.  Canada has a not-very-stellar record of adults getting training.  Part of it has to do with the way we support them while they are in school.  Provincial training programs usually cover programs of less than a year in length, and they tend to provide decent (though not lavish) support for living expenses.  If the program’s longer than a year then you tend to get pushed to provincial/federal student aid programs where the basic assumption is that everyone lives like an 18 year-old.  That’s wrong. People who return to education from the labour market tend to have houses or live on their own in digs considerably above the student norm.  They have credit card debt, they have cars.  Yet student loan rules basically says they need to chuck all that an find a roommate to live with.

 There’s a way to fix this.  As far as calculating student resources, we already have a two-tier system: less four years out of secondary school (or less than two years in the labour market, we assume parents are contributing to a student’s cost of attendance.  After that, we don’t, and students become eligible for more money.  There is no reason we could not do the same for calculating student resources, giving older students higher allowances (and higher aid limits).  I wouldn’t stick the dividing line at four years: I’d probably put the line at doctoral studies or three consecutive years in the labour market or something like that.  But either way: if we want to encourage more adults to return to school, something like this is necessary.

 3)      Improve Repayment Assistance.  As I noted last week , over the income range from the mid-$30,000s to $50,000 and at average levels of indebtedness, Canadian student loan borrowers are paying more on a monthly basis than loan borrowers anywhere else in the world (I didn’t actually include the whole word in that post, but trust me the five countries I did show are the ones you need to care about as debt tends to be higher there than in other jurisdictions).  There’s a simple solution here: tweak the Repayment Assistance Program (RAP) to limit the amount borrowers have to repay to 15% of income rather than 20% over the repayment threshold of $25,000.  For borrowers making less than $25,000 this will make no difference (they still pay zero), and for borrowers making over about $50,000 it won’t change anything either (which is fine because by an large they’re quite capable of repaying loans), but in-between (which is the income-range where most borrowers are for the first couple of years after leaving school) it would make a big difference.

Over to the folks in the Langevin Block.