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HOW CAN WE GET AHEAD, WITH DEBT DRAGGING US DOWN?

Student loans are currently the central component of BC’s student financial aid system. They are the main source of financial assistance available for young people and workers from low- and middle-income backgrounds to access the education they need to start a new career and support a family. As education costs have increased far beyond inflation and as real incomes have declined¹, more and more students require financial assistance, and student debt has ballooned to now historic highs.

Student debt has become ubiquitous across Canada—half of all students graduate university in debt². According to the Canadian University Survey Consortium Graduating University Student Survey from 2018 64% of those in debt owe $20,000 or more upon graduation, and students required over $17,000 of financing for one year of university education³.

According to the latest National Graduates Survey 2016, the average student debt for a bachelor’s program in BC is over $30,000⁴. Among bachelor students who took out a loan in BC, the percentage of students graduating with a large amount of debt (more than $25,000) has been growing. In 2010 (the most recent year for which data is available), for bachelor graduates who owed money, 50% owed more than $25,000 in student debt.

How can we expect students to start their careers already saddled with over $30,000 in debt?

STUDENTS NEED GRANTS, NOT LOANS

BC is the only province that offers neither up-front grants, nor forgivable loans. Instead, the government offers a series of boutique grants and repayment assistance programs that are available to small pockets of the population. With no comprehensive system of grants, BC provides the lowest amount of non-repayable financial assistance in the country⁵. BC needs a student grant program to level the playing field and help all British Columbians access the education they need to succeed.

Up-front grants relieve financial pressures that students face while in study, and enable students to focus more on being successful in their classes, rather than worrying about how to make the next semester’s tuition fee payment. Further, the assurance provided by up-front, needs-based grants addresses debt aversion, a factor that limits those from low- and middle-income backgrounds from enrolling in the first place.

The Public Agrees!

Recent public opinion polling shows that 68% of British Columbians support or strongly support the creation of an up-front, needs-based system of financial aid for BC students⁶.

THE BC BUDGET CAN AFFORD GRANTS

Creating a student grant program is well within the government’s budget. The revitalized student grants program can be afforded by reallocating funds from the current back-end completion grants and from the education related tax credits.

Download our backgrounder on ways the government can make the implementation of a student grant program affordable for its budget while helping to make post-secondary education more affordable for families from low- and middle-income backgrounds.

GRANTS VERSUS LOANS 

Studies have shown that students with large amounts of student loans are more likely to drop out before completing their education; yet if the loans were reduced through the provision of grants or other means, this had a positive impact on their likelihood of staying in school.

Download our backgrounder that compares the impacts of student loans, loan forgiveness programs, and non-repayable programs like student grants.

INVESTMENTS IN FINANCIAL AID FOR STUDENTS NET A CLEAR RETURN FOR GOVERNMENT

Education is an investment for both the learner and society. Society’s economic return is realized in many ways. For example, a 2012 report showed that British Columbians with university education paid between $80,300 and $140,000 more in income taxes, and required between $15,400 and $18,100 less in government aid throughout their lifetimes⁷. Across Canada, those with a university degree earn 63% more than those with a high school diploma, have lower unemployment rates, and are less impacted during recessions compared to the rest of the working population⁸.

The government will see a clear financial return by investing in programs that assist students from low- and middle-income families. To sustain and grow the economy, BC must have a student grants system in place to ensure that those without the necessary resources can get the help they need to complete a post-secondary program.

Footnotes

¹ Vancouver Sun (2015). “B.C. income growth worst in Canada: analysis” January 22, 2015. www.vancouversun.com/business/income+growth+worst+Canada+analysis/10749375/story.html

² Canadian University Survey Consortium (2018). 2018 Graduating University Student Survey: Master Report. http://cusc-ccreu.ca/?page_id=32&lang=en

³ Canadian University Survey Consortium (2018). 2018 Graduating University Student Survey: Master Report. http://cusc-ccreu.ca/?page_id=32&lang=en

⁴ The exact value for bachelor’s graduates is calculated at $32,300, for graduates surveyed in 2010. The newest survey data for 2015 data will be released in November 2019. Source: National graduates survey, student debt from all sources, by province and level of study, every 5 years, CANSIM (database). (accessed: 12 Mar 2019)

⁵ Other provinces offer either upfront grants (Ontario, Alberta, Saskatchewan, New Brunswick, Manitoba), or forgivable loans (Quebec, Newfoundland & Labrador, Prince Edward Island, Nova Scotia), Of note, Ontario recently announced they will be lowering their threshold for those who qualify for grants, but will still offers grants for students with family incomes lower than $50,000, which is still more than Student Aid BC offers.

⁶ British Columbia Federation of Students (2018). BCFS Public Opinion Polling 2018 Report. June 2018. Note: In May 2018, the British Columbia Federation of Students commissioned Viewpoints Research to conduct province-wide public opinion polling relating to attitudes towards post-secondary education in BC. Surveys were completed online between May 16 and 18, 2018. Polling reached 2,001 adult Canadian citizens, who are residents of British Columbia. Because online respondents are self-selecting, not a random sample, margin of error cannot be calculated on their responses.

⁷ CCPA (2015). www.policyalternatives.ca/sites/default/files/uploads/publications/BC Office/2012/01/CCPA_Paid_in_Full_2012_web.pdf

⁸ RBC (2018). discover.rbcroyalbank.com/the-cost-of-credentials-the-shifting-burden-of-post-secondary-education-in-canada/