The Canadian Alliance of Student Associations has started a new campaign, entitled #halfyourCSG.  It rails against the perceived risk of a 50% drop in the maximum value of the Canada Student Grant (CSG) come this fall.  This might be kind of a sleeper issue for PSE over the next few weeks, so it’s worth taking a look at what the issues are and how everything might play out.

To recap the policy evolution here: in 2016 the Liberal government raised the maximum CSG from $2000 to $3000, a move paid for by axing the old Education Tax Credit.  In the 2019 budget, it promised to raise these grants by 30%, to a maximum of $4,200.  However, before this happened, COVID hit and instead the government decided to – for one year– increase the maximum to $6,000.  In the Spring 2021 budget, it extended this “temporarily” for another two years, to the spring of 2023.  Since then: silence.   For awhile, people saw the silence as an implicit decision that this doubling was going to be made permanent.   For the past few months, doubt has been increasing concerning this permanence, in particular since the feds announced that the waiving of interest on student loans, another COVID-era “temporary” measure (and an awful decision) would be made permanent. They pointedly said nothing about CSGs.

Here’s the way I suspect the Liberal government currently sees these grants. If money were no object, I am sure that it would keep the $6,000 grants intact.  But COVID cost the government a lot in fiscal 2021 (deficit of $328B, or 13% of GDP) and 2022 (deficit of $90B, or 3.5% of GDP). So, the fiscal picture has the potential to get all 1970s if expenditures and revenues are not balanced.  And initiatives with the “temporary” label are the easiest place to cut because all that’s required is letting the temporary authority lapse.  The government never promised that this increase would be permanent, and in any event it probably isn’t going to “halve” them: the most likely scenario politically would be to bring them back down to $4,200 promised in the 2021 manifesto.

PLUS – and let me be really clear about the plus– the Liberals have an overwhelming case, when it comes to students, for having given time and again.  42% of students availed themselves of the Canada Emergency Response Benefit during the pandemic – with a total cost around $5.5 billion (see this Statscan paper for more details).  Further, 29% of students took advantage of what was BY FAR the most generous student specific COVID relief program anywhere in the world, the Canada Emergency Student Benefit, and that was another $3 billion or so.  Add to that the minimum $4 billion that went into the temporary Canada Student Grant increase over the past three years.  That’s $12.5 billion in extra spending on students over the course of the last three years.  Which is even more incredible when one considers the total amount of students’ lost income over the pandemic was around $3 billion, as I showed back here. 

In short: from a financial perspective, students have come out ahead over the past three years (yes, yes, inflation.  I’m not convinced).  Maybe more so than any other group in Canadian society.  After all those billions spent, to complain about the government throttling back the generosity of aid to a being “mere” 30% higher than where it was in 2019-20 (or more than twice where it was in 2015-16), might very well appear to the Liberals as rank ungratefulness. The kind of ungratefulness, in fact, that could push an entire sector out of a government’s good books.  Why extend more favours to a group that only seems likely to bite the hand that feeds? 

And yet.  And yet.

Say you’ve been only been on student aid since 2020 (which, if memory serves, is a situation that describes about ¾ of all borrowers).  You wouldn’t know any system other than this one where a $6,000 max is the norm.  You probably didn’t read the federal budget and so don’t know that it is temporary (did any of the provincial student aid guides point out that it was temporary?  Maybe, but I have doubts).  You’d take it for granted that this is the natural state of things.  If you’re one of the 350,000 – odd beneficiaries of the grant every year, it wouldn’t be outlandish for you to be angry about a cut next year.  And, in turn, it is not absurd for student groups to represent their constituents and fight against such a cut, even knowing that this was always the way it was supposed to be.

The real mistake here was the Liberals’ 2021 decision to extend the temporary hike by two years.  There was not much economic rationale to it (other than students representing an important voting constituency in the 2021 election), and it vastly inflated the number of people who would feel the eventual expiry of the temporary increase as a “cut”.  Now, there are two groups which should be friends – students have done very well under the Liberals and the party has certainly benefited from youth support over that period – possibly about to come to blows over a policy where they should be allies.  It’s bad political management.  

But still, student groups need to be careful about how they react to this.  With respect to student aid, national student groups have been on a 30-year winning streak: no Canadian government has made the Canada Student Aid program less generous since around 1991, when the government briefly applied loan interest to student borrowers during the 6-month grace period.  There is zero institutional memory about how to react to bad news and how to maintain that balance between expressing disappointment and continuing to work productively with government on other issues.  And, I should add, this is a government that appears increasingly fragile and unable to deal even with good-faith advice/criticism (maybe not surprising given there is so much bad-faith advice/criticism around, but still).   There may be some delicate moments ahead.