There are three student-finance related measures to watch for in the upcoming budget.  One of them concerns graduate research funding and the other two concern student financial aid.  With this Liberal Government, one’d normally think all three decisions would land in favour of “more! more! more!”.  But there are faint signs that this government is starting to grasp that it has a real spending problem, and that makes these three decisions difficult to predict, for whenever the budget actually comes.

(Note to the Federal government: I will be on vacay in Japan with Little Miss Sumo for the middle two weeks of March – it’s basho time and we have snagged some primo seats at the Osaka Prefectural Gymnasium – so if you could not schedule a budget in there that’d be great, thanks.)

The first big decision has to do with granting council funding for graduate students and post-docs.  Inflation has been eating away at these awards for roughly twenty years now.  Back in the early 2000s, when the Government of Canada had ambition with respect to research, these awards were pretty valuable, but now, with their value having fallen by over a third in real terms, they’re pretty much a constant reminder of the slow deterioration of the research enterprise in Canada.  Graduate student and university groups have been lobbying hard in this cycle to see them increase, but will they?

The second decision has to do with student loan repayments.  Until last November, students with outstanding loans were not required to pay anything on their loans if their income was under $25,000; above that level, payments were capped at 20% of marginal income above the thresholds.  In 2019 the Liberal manifesto promised to raise this the threshold to $35,000 and reduce the cap to 10% of marginal income; a slightly COVID-enhanced package was put into effect in 2022, when the threshold was set at $40,000 instead of $35,000.  However, before this measure had even been implemented, the Liberals promised another rise in the threshold in their 2021 platform, to $50,000.  This coming budget would be the logical time to implement this measure.

And finally, the third decision has to do with the Canada Student Grant.  The CSG is a grant dreamt up by the Harper government to replace the Canada Millennium Scholarships awards, which existed between 2000 and 2009.  In 2016 the new Liberal government eliminated a set of education tax credits and used part of the proceeds to increase the value of these grants by 50%, so that the maximum value was $3,000 per academic year.  In the 2019 election, the Liberals promised to up the maximum value of these grants to $4,200 per annum.  However, before they could do that, COVID hit and instead the government decided to – temporarily – increase the maximum to $6,000.  This, as I have described elsewhere, has had a massive effect on student aid across the country.

That “temporarily” increase ends in August of this year.  Absent any new measures in this budget, the amount of federal grant aid available to students will drop by half come the summer.  The government has three choices: let the maximum stay where it is, let the current measures expire and return to a $3,000 maximum, or pick a middle road such as actually giving effect to the 2021 promise of $4,200 per year.

So how are these three decisions likely to play out?  I have no inside information on this, but if I were a betting man, here’s how I would see it playing out.

The graduate and post-graduate scholarships are going to get a boost.  That’s almost a nailed-on certainty.  I have my doubts that the boost will make up for 20 years of inflationary erosion, or if it does it will be for a subset of the grants.  I just don’t think this government cares enough about research to make up the difference.  Sad, but I expect a partial win here nevertheless.

The Budget Won’t Increase the Repayment Threshold.  So, here’s the thing you must understand about Liberal election promises: you aren’t meant to take them literally.  They may always be very specific and technocratically-phrased, but that doesn’t mean they’ve actually thought them through: rather, it’s just part of their self-image to sound wonkier than the other parties.  My guess here is that there is no particular constituency devoted to this, particularly not since the last threshold rise barely got any notice/political credit, and so there’s no political reason to touch it this budget round.  Technically, it’s not a broken promise unless it hasn’t been enacted by the time the writ next dropped so why not leave it for another year or two?

Say goodbye to $6,000 Canada Student Grants.  This one is a big deal.  One of the most obvious ways that Finance Minister Freedland can signal to bond markets that Canada is serious about brining budgets back into balance is to let temporary COVID emergency benefits expire.  And the Canada Student Grants are one of the easiest and most obvious places to make that happen.  Even a few months ago I would not have thought this was going to happen, not just because the Trudeau government has always made a big deal about being student-friendly, but because it’s been over thirty years since a federal government of any stripe made student aid less generous (I believe the last time was 1991 or 1992 when the Mulroney government decided to make interest accruable during the 6-month grace period).   But I have a feeling we’re going to see it now.  The government can plausibly claim to be making a still-important permanent increase in grants if it remembers its 2019 pledge to increase grants to $4,200 and acts on it.  I am genuinely unclear whether this government has the corporate memory to remember things it promised to do 40 months ago.

I could see all of this being plausible policy if the government hadn’t made such a big deal about its incredibly wasteful policy of eliminating interest on student loans just a few months ago.  This policy costs hundreds of millions of dollars, and all of it goes to middle-income graduates who are already in the labour market, rather than to current-day students who urgently need money to make ends meet.  Effect on access = zero.  Effect on low-income graduates already protected by the $40,000 threshold = zero. 

If I’m right about the Liberals punting on the $50K promise and on the $6000 grants, just remember: the money for the interest-free policy (which the Liberals only adopted as a priority in 2021, after having mocked the NDP for a similar promise in 2019) could have been used for these much better and more effectively targeted programs.  They just chose to use it to subsidize the consumption patterns of well-educated late-20/early 30-somethings instead. 

I hope I’m wrong.  But if I’m not: the federal government should be ashamed of its priorities.