The Canada Student Grant Cut

Somewhat remarkably, no media have picked up the story that the Canada Student Grants were slashed in last week’s budget. Possibly, this is because the government did not issue a press release saying in big letters, “HEY, WE ARE LOADING MORE DEBT ON LOW-INCOME STUDENTS”, and, without such an admission, no one wants to do the hard work of working out what just is going on.  

So, let me save everyone the trouble. Here’s what happened:

In the 2019 election, the Liberal Party manifesto promised to increase the maximum Canada Study Grant from $3000 to $4200 (page 10). Before they could introduce legislation to that effect, COVID hit. We did not get a budget that year, but on April 22nd, the government announced that as a temporary measure, they would increase the Grants to $6000 for one year. The 2021 budget extended this measure for another two years (pp.108-109). Take a look, though, at how this was accounted for in the budget tables (page 124).

Table 1: Cost estimate for Canada Student Grants, Budget 2021

See how the numbers for Canada Student Grants go to zero after 2023? That’s because the money for the grant was only ever temporary. That doesn’t mean that the government intended to return the maximum to $3,000 – it had, after all previously promised to bring it up to $4,200. It just means the government wanted to preserve flexibility – maybe they would renew it at $6,000, maybe they wouldn’t. They’d decide later.

So, come Budget 2023, the government decided to pull the grant back to the level it had originally intended: $4200 (see page 39). But look at how they entered that money in the budget tables on page 47 of the budget: the funding was never made permanent. It was a one-year deal, at an estimated cost of $814 million.

Table 2: Cost estimate for Canada Student Grants, Budget 2023

Budget 2024 was more of the same, another one-year extension at the $4200 level (text p.121, table p.134). Note the cost increase from $814 million to over $1 billion: this might be because of increased student take-up, though also see below).   

Table 3: Cost estimate for Canada Student Grants, Budget 2024

Under Budget 2024, the program should have expired for the 2025-26 (i.e. current) loan year – unless the next budget extended it again. But, of course, we didn’t get a budget until after the start of the program year, so the Liberals just extended the program without a budget decision: For 2025-26, students could still take advantage of $4200 grants.

This brings us up to last week. Though the budget’s text does talk about Canada Student Grants, it does so only with reference to taking them away from students attending for-profit schools.  Nowhere does it say that there is a cut to the program. However, as ever, it pays to look at the tables.

Table 4: Cost estimates for Canada Student Grants, Budget 2025

Note that there’s an extra column in this table, because the 2025-26 year is almost over and this budget is concerned with 2026-27 and onwards. There’s $1.2 billion for “extended increases to Canada Student Grants and Loans) in 2025-26 – that is, the program year we are currently in. But for next year? That extension money is gone (I don’t know exactly what the small negative numbers for future years are, but in a $3 billion program they are pretty small potatoes and can safely be ignored). The straightforward reading of this is simple: the money to keep grants at $4200 is gone.

Now, I admit to being a bit puzzled by why the cost of the extension is listed as $1.2B. If you look at the Canada Student Financial Assistance Program Annual Report for 2023-24, the cost of the entire grant program was just $2.6 billion. At most, the cost of pushing up grants from $3000 to $4200 should be 28.5%, or $741 million. I could see some cost increase if student uptake had increased, but a $460 million gap is just too big to explain that way. It’s a mystery. But it doesn’t alter the fact that the amount of money budgeted for the extension of the $4200 maximum is zero. And so, by definition, we have to assume that grant maxima are headed back down to $3000.

The only question, really, is why the government chose not to actually announce the cut.  As far as I can tell, there are four possibilities.

1. Cowardice/Sliminess. They knew they were letting funding lapse but didn’t want students to be upset at them, particularly when the finance minister was going around claiming that this was a “youth budget”. So, they cut the budget and hoped no one would notice (judging by media coverage so far, you’d have to say they were doing OK on that front).
2. Incompetence (1). Theyknew they were letting funding lapse and intended to tell everyone, but the relevant paragraphs just somehow didn’t make it into the budget. Version control fail, basically.
3. Incompetence (2). The table is a mistake. They meant to renew the money but forgot to put the right dollar figure in the right column. Oops.  
4. Wishful Thinking. Somebody thought they could get rid of the funding extension and there could still be enough money to cover the higher grant maximum. And who knows – maybe that’s true. If the actual cost of the higher grant is more like $740 million than $1.2 billion, and the government were to come to its senses and reverse its titanically stupid/regressive policy of eliminating interest for all students in repayment, then maybe – maybe – we could get close to this. There’s nothing to indicate this is actually what’s going on, but it’s a possibility.

I don’t know which of these is true.  I am sure, though, that any news organization could call Patty Hajdu’s office or the Canada Student Financial Assistance Program and clear this up right quick. I think Canadian students deserve that much.