Last year, the Government of Ontario announced it was moving to a new and more generous systems of student grants.  Partly, that was piggybacking on a new and enhanced federal grants and partly it was converting its own massive system of loan forgiveness and tax credits into a system which – more sensibly – delivered them upfront to students.  For most students from low-income backgrounds, this means they will receive more in grants than they pay in tuition.

Now, while the new federal grants came into place last week (yay!), the new provincial program isn’t due to be introduced until 2017-18.  But the *really* important piece of the Ontario reform actually won’t kick in until even later.  As I noted back here, it’s the move to “net billing” (that is, harmonizing the student aid and institutional application systems) which has the most interesting potential because now students will see net costs at the time of acceptance rather than just sticker costs.  It has been generally appreciated (in part because I keep banging on about it) that this will be revolutionary for students and their perceptions of cost.  What is not as well appreciated is how revolutionary this change will be for institutions.

Currently, Ontario universities use merit scholarships as a major tool in enrolment management.  At the time students are accepted, institutions offer them money based on their grades.  The scale differs a bit between institutions (an 85% might get you $1,000 at one university and $2,000 at another), but the basics of it is that over two-thirds of entering students receive some kind of financial reward, usually for one year.  It’s a total waste of money for institutions, but everybody does it – so no institution feels it can stop doing it.

But the effect this money has on students is predicated on the fact that the institutional award offer is the first time anyone has talked about money with them.  In our current system of student aid, you have to be accepted at an institution before you can apply for student aid.  Even $1,000 is a big deal when nobody else is offering you any money.  But as of early 2018, students will learn about their institutional award at exactly the same time as they find out their student aid award.  How will that affect the psychology of the money being offered?  No one knows. How should universities therefore adjust their policy?

Bigger questions abound.  “Net billing” implies that institutions will know the outcome of a student’s provincial need assessment before the student does.  Will they be allowed to adjust their own aid offers as a result?  Could the province stop them from doing so even if they wanted to?

What will new letters of acceptance look like?  When an institution tells a student about tuition, aid, and “net cost”, will they be required to lump all aid together, or will they be allowed to label their own portion of the aid separately?  You would think institutions would fight hard to keep the label on their own money but prohibiting labeling might be the best way to cut down on these scholarships and re-direct the money to better use, something I advocated a couple of years ago.  With no labellings, there would be no incentive to spend on this item, and institutions could back away from it with no opprobrium.  We’ll see if institutions are actually that shrewdly or not.

Even if they do retain the right to separate labeling, what will the effect on students be?  Getting an offer of a $1,000 merit scholarship is undoubtedly psychologically different than receiving a $1,000 scholarship on top of a $6,000 need-based grant.  And when placed in context with a tuition fee, the effect may vary again.  In other words, we’re heading into a world where Ontario universities – who collectively spend tens of millions of dollars a year on these scholarships – have literally no idea what effect they will have in the minds of the people they are trying to attract.  I suspect we may see one or two institutions re-profile their aid money and head out in very new strategic directions as a result of this.

Universities have a lot of business-process work to do to make net billing work over the next 12 months or so.  But more importantly, they have some big strategic decisions to make about how to dish out money to students in the absence of much hard intelligence.  How they react will be one of the more interesting stories of 2017-18.