"Student loan help remains at 1994 levels"
Here's a story from today's Globe and Mail regarding the level of financial assistance available to Canadian university students through the Canada Student Loan program. It states that funding is still at a rate consistent with 1994 levels. Since that time, med school tuition has shot up dramatically, with little to no corresponding increase in student loan amounts.
The end result is that students are forced to borrow money through banks via lines of credit, and these have the huge disadvantage in that interest payments need to be made immediately on any funds used, unlike student loans, where interest payments aren't required to be paid back until 6 months after graduation.
Student loan help remains at 1994 levels
By CAROLINE ALPHONSO
From Saturday's Globe and Mail
Federal loan assistance for university students still stands at 1994 levels even though tuition fees have shot up 85 per cent since then, according to a report released yesterday. The document prepared for the Canadian Millennium Scholarship Foundation -- established by the federal government in 1998 to award grants to needy students -- shows that assistance in a number of provinces offers a maximum of $9,350 for a 34-week study period, unchanged since 1994.
However, student costs have increased to $14,000 or higher, especially for those who have to leave home to study.
Furthermore, tuition fees have climbed over the years, with undergraduate students paying an average $3,733 in the 2002-2003 academic year, up 84.5 per cent from 1993-1994, Statistics Canada reported.
"Financial aid administrators interviewed confirm the message that unmet need is increasing," states the report, prepared by Fred Hemingway of Fred Hemingway Consulting. He is a former chief executive officer of the Alberta Student Finance Board.
"Such conclusions are not surprising, especially as they relate to single students who must move to study, and mature students with dependants," he writes.
As a result of these increasing costs, rural students are choosing college programs over university courses, the study says.
It points to a 1995 Alberta high-school survey that found that 58 per cent of rural students chose college, compared with only 32 per cent of students in Edmonton and 27 per cent of Calgary students.
"As tuition and fee amounts have increased significantly since 1994, a decreasing amount of the [Canada Student Loan] award that students received under the program is now available for living and other costs. Unfunded need is increasing as a result," the report states.
"If loan limits were appropriate in 1994, they may be considered less than adequate now."
The report also looks at how much parents contribute to their child's postsecondary education. Student assistance programs routinely expect families with pretax incomes of more than $80,000 to contribute $10,000 or more per year to their children's education.
According to a recent paper from the Millennium Foundation titled Making Ends Meet, only 3 per cent of students receive this level of support from their parents. Many have to resort to private lines of credit.
The report says a number of middle-income parents have difficulty in meeting contribution expectations because of other living costs or the inability to save. "It is the general consensus that parental contribution levels are too high for some families," the paper says.
Leslie Church, executive director of the Ontario Undergraduate Student Alliance, said it is becoming clear that students are expected to rely on their parents to help finance their postsecondary education, but the amounts being required are not realistic. "Students and parents are being squeezed," she said.
Ms. Church added, "The past decade has seen tremendous increases in tuition and student financial assistance just hasn't kept pace."