OK, so the Ontario government rolled out its tuition/OSAP announcement and it’s big enough I should probably cover it, so apologies if you were looking forward to the second part about millennials – I’ll pick that up next week.

The Government backgrounder is here, but in brief here’s what was announced:

1)      As widely leaked earlier this week, universities and colleges have been told to reduce tuition by 10% in every program for which they receive public subsidies.  This does not apply to full-cost recovery programs or international students.  This will mean a hit of around $450-500 million to institutions (roughly 3-4% of total income); theoretically students get 100% of the benefit.

2)      But that doesn’t mean 100% of students are better off.  The government also announced changes to the Ontario Student Assistance Program.  The headline was that they were “ending the free tuition program” (remember – in Ontario the targeted free tuition was always just a program where grants were meant to equal tuition), but beyond that, details were in very short supply.  From the hints in the document, it seems like a number of things are happening:

• The maximum grant size is being reduced for everyone;
• The income threshold beyond which students are ineligible for grants is being lowered;
• Expected parental contributions are being raised;
• The age at which students are considered independent of their parents is being raised.

The upshot of all this is that students are going to get more of their aid from loans and less from grants, and the total reduction in expenditures is to the order of $600 million.

We can’t be totally sure about the magnitude of changes because the government announcement is extremely light on detail (it’s unclear whether they are being deliberately coy to forestall criticism or because they haven’t yet worked out the details) but it seems almost certain, from the available information, that the cut in grants experienced by each student will be larger than the benefit from the reduction in tuition. 

3)      There is a minor change which requires some clarification – one early media report announced the government “getting rid of the student loan grace period”.  This does not mean that they are killing the six-month period during which no repayment is required; it means that interest will start to accrue on the loans from the time the student graduates.  This is not a big deal – it’s already the case for federal loans.

4)      The government has instructed institutions to give students the ability to opt-out of all “non-essential non-tuition fees”.  It’s a little unclear what exactly counts as “non-essential” here, and the government sent slightly different messages in its press conference and in its instructions to institutions, but it very definitely applies to student union fees; in other words, the age of Voluntary Student Unionism has arrived.  This is going to have huge, mainly negative, effects on student life in Ontario.  I’ll deal with this more next week but expect lawsuits on this one because basically every student union in the province (and also the big student federations) are likely facing some very hard times. 

The government is claiming that it is making students better off and that its new grants system is “fairer” than the old one.  These claims are strictly speaking true concerning points 1 and 2 above, respectively, if you look at them in isolation. Students are better off as a result of the tuition reduction; the grant system is “fairer” in the sense that its is now more tightly targeted on low-income students than the old system (which is a good thing).

However, what’s important is the interaction between the two policies.  Those students who are currently on student aid will almost certainly all be worse off as a result of the announcement because the cut to grants will be larger than the cut to tuition.  The only students who are better off are those who do not use student aid, which is mainly students from wealthy backgrounds (the current family income threshold for eligibility is about $170,000, so everyone above that comes out ahead).  Any policy which leaves students from the top 5% of families better off and everyone else worse off is – if you ask me – difficult to describe as fair.

There are already a lot of takes on this move, which seem to me to be over-the-top.  A 3-4% cut in institutional funding will be challenging to deal with, but it’s not the end of the world.  As I suggested a few months ago, most institutions will deal with it by admitting more international students.  And while the situation on student aid is certainly not ideal, but it’s not a catastrophe either – basically, we’re back where we were in 2015, which wasn’t exactly an accessibility dystopia.  Students are going to graduate with a bit more debt, but not unprecedented amounts either: they will be worse off than students who graduated last year, but still better off than, say, students who graduated around the turn of the century.  It’s a bad announcement, but it’s not a disastrous one.

I think the announcement on student union fees will be the piece of this which will have the most long-lasting and pernicious effects.  Student life on campus may be very, very different in a couple of years.  It’s a policy solution to a problem that doesn’t exist.  The rest of it can be passed of as a sad but necessary means to fulfill a mandate to restore balance to public finances (which were indeed in a lamentable state), but the student union piece is just a vindictive ideological move meant to suppress a group of organizations seen as hostile to Conservatives. 

Bottom line: institutions are worse off, needy students are worse off, and student life will be poorer as a result of these changes.  Government books will be closer to balanced, and students from wealthy backgrounds will be better off.  I think they could have achieved their fiscal goals in a fairer manner and with less carnage, but c’est la vie.

Have a good weekend.