Ontario is the first province in Canada to agree to raise the limit on student aid each year by the rate of inflation, which will spell about $170 more per year for some 64,000 students who qualify for the maximum, starting September 2015.
Queen’s Park also will add a cost-of-living hike to the amount a student must pay back, although students still will have to repay only about 60 per cent of what they borrowed, with the other 40 per cent still to be covered by Ontario’s Student Opportunity Grant, said senior officials of the province’s ministry of training, colleges and universities Monday.
Too, Ontario is offering a financial olive branch to the roughly 100,000 graduates who have defaulted on repaying their student debt, by joining other provinces in making it easier to get back into good financial standing through a “debt rehabilitation” program.
“By taking important steps to increase the amount of financial aid available to students, improve flexibility in repayment and tie debt caps to inflation, our government is ensuring our student assistance programs . . . continue to help all qualified students regardless of income,” said MPP Reza Moridi, minister of training, colleges and universities.
Some 330,000 college and university students across Ontario receive financial aid jointly from Ottawa and Queen’s Park, but the most a typical single student has been eligible to borrow has been capped at $12,240 since 2010. Before that, the maximum had been stalled for five years, and before that there were 13 years between increases even though tuition had climbed during that period.
“As the cost of attending university rises, it’s imperative that loan structures for students are as predictable and consistent as possible,” says Jen Carter, president of the Ontario Undergraduate Student Alliance. “I was a student on OSAP (Ontario Student Assistance Program) for four years and it’s fantastic they’re adjusting loan limits to inflation to provide more stability for students in need of financial aid.”
However the Canadian Federation of Students in Ontario is concerned the changes simply increase the amount of debt students have to take on, rather than reduce their need for loans.
“We would have preferred to see (cost-of-living) increases to non-repayable forms of assistance,” said Federation chair Alastair Woods.
Ontario is the last province to offer a debt rehabilitation program to those who have fallen so far behind in their student loan payments they are not allowed to borrow more money, even years after graduation when they want to go back to school to upgrade their credentials.
Unlike the current rules, which require such a student to repay the entire student debt before getting a fresh loan, the new program will let them earn their way back into good standing by making a show of good faith over six months, by paying back the outstanding interest from missed payments plus a portion of the principle, and then returning to a more gentle repayment plan.
“The vast majority of these graduates made a youthful mistake years ago (by not repaying their loan) and are now trying to get back on their feet by going back to school,” said one ministry official. “The government wants to give them a chance to try to better their lives.”
By the numbers
• $22,207 = average debt of a graduate of a four-year university graduate 2012-2013
• $13,063 = average debt of a two-year college graduate 2012-2013
• $70 million = amount of student debt entered into default in Ontario 2013-2014
• 17,000 = number of student borrowers who defaulted on debt in Ontario 2013-2014
• 100,000 = number of students in default overall
• 68 per cent = portion of Ontario post-secondary students on OSAP