From the perspective of finance and funding

There are many aspects of student financial aid that need to be addressed but one of the most glaring problems is the maximum value of student loans. The current student loan maximum for a student living away from home is $9,350/year. That value has not changed since 1993, yet tuition costs and the cost of living have both increased. Currently, it is estimated that it would cost such a student a minimum of $14,000 in tuition and living costs if they were to attend school away from home. The challenge for many students has been making up the difference between the student loan maximum and the actual cost of attending university. This gap is even more pronounced for students who are assessed for less than the maximum.

For the first time since 1993 student loan maximums are slated to increase in September 2005. Details have yet to be finalized and the new maximums are still unclear, but even the idea of an increase is welcome news to most students. In addition, thresholds for parental income will also be raised in 2005 which means parents can earn a higher income without disqualifying their son/daughter from receiving OSAP. This means more students will be eligible for student loans and those who were already eligible will likely be able to borrow more.

That said, an increase in loans, loan maximums and an updated funding formula means students will be borrowing more. Higher debt means university graduates will be restricted from fully contributing to the economy until their debts have been repaid. For some, it will mean about 10 years of payments of approximately $500 per month, a heavy burden by any measure. In order for an increase in student loan maximums to be manageable, the government must look at providing a portion of total assistance as non-repayable grant assistance to students from low- and middle income families in all years of their programs. There is an existing structure of grants and loan forgiveness initiatives funded by various levels of government but they must be re-examined and restructured if they are to provide meaningful relief to students who are heavily indebted.

Of course increasing the student loan maximums does not mean that the full cost of a student’s university education should be borne by the students themselves. Tuition fees must be kept under control and government must do its share by funding all eligible students (both graduate and undergraduate) to the level enjoyed by other provinces and correct the problem of “unfunded students.” In a climate where costs are shared by students, universities and government, students can recognize that borrowing to fund their share of something as valuable as a post-secondary education is truly worthwhile.

Jen Sugar
Supervisor, Financial Aid, Carleton Awards Office

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