The 2008 federal budget /// The facts for students

With the 2008 federal budget, the Conservative government took its first steps towards setting an education agenda. The budget included approximately $500 million dollars on education related initiatives; however, the bulk of that money, $473 million, will not be put to use until 2009.

Spending initiatives in the Conservative budget include: funding to start in 2009 that will replace the Millennium Scholarship Foundation, funds to begin streamlining and modernizing the Canada Student Loans Program in 2009, and more than $25 million dollars invested into creating new scholarships for graduate students.

While many have been quick to praise the budget; student groups are more cautious, especially considering the vast majority of their education spending does not take place until the fall of 2009, after the next legally mandated federal election.

The planned extinction of the Millennium Scholarship Fund

In his budget speech, Finance Minister Jim Flaherty announced that the Conservative government will not be renewing the mandate of the Millennium Scholarship Foundation (MSF). Instead, the federal government will be taking the budget of the MSF, $350 million dollars, and creating the Canada Student Grant Program (CSGP).

The CSGP would receive $350 million in 2009-10, $400 million in 2010-11, $415 million in 2011-12 and $430 million in 2012-13.

According to Finance Minister Flaherty, the CSGP would target low – and middle – income Canadians, approximately 245,000 by government estimates. Low – and middle – income students would receive monthly grants of $250 and $100, respectively.

The Liberals argued that the new program was a re-branding of a former Liberal program. However, commentators have been quick to point to differences, not all good.

Zach Churchill, CASA national director, said that, “The Foundation was the only group that was doing research on access issues. Looking at Aboriginal students, low income students, and first generation students.”

“We haven’t seen any indication from the government that the federal research will be picked up,” added Churchill.

The Education Policy Institute was quick to point to a major flaw in the new programs design: the number of people eligible for support. The government estimated that 245,000 would be eligible for support through the CSGP; however, the Education Policy Institute places the number closer to 500,000, more than twice the expected amount. Such a miscalculation on the government’s part would mean that the program’s cost could more than double and would place increased stress on other areas of government spending.

Some commentators argue that the MSF operated outside of the government and the new program, the CSGP, will now be more transparent and accountable because it is a government-run program.

While many Canadian students will have access to these grants they will not be enough to fund someone’s education alone. To fill the financial void, many Canadian students will turn to the Canada Student Loans Program (CSLP). The government announced plans to invest more into the CSLP beginning in 2009 as well.

Plans to “modernize and streamline” the CSLP

Beginning in 2009 and stretching over four years, the Conservative government allocated funding of $123 million dollars for the Canada Student Loans Program (CSLP). The money will go towards the modernization and streamlining of the program, making loans more accessible to part-time students and making the program’s webpage more user-friendly.

NDP Education Critic Denise Savoie said that the investment in the CSLP was not enough and that improvements to the CSLP were vague.

“They do talk about streamlining the Canada Student Loans Program, but the devil is going to be in the details on that. There’s really no details,” said Savoie.

Savoie was not the only one concerned about the lack of detailed plans for the overhaul of the CSLP. Julian Benedict, the co-founder of Coalition for Student Loan Fairness, wrote an article for MacLean’s online that stated:

$100 million will now be earmarked for an as yet undefined “modernization” strategy. Here, voters might ask this question: after dozens of meetings with post-secondary groups, and thousands of e-mails from Canadians across the country, why is it that the feds are still unable to define exactly what is wrong with the student loan program? In any event, insiders say that this is really a slush fund aimed at those provinces which still haven’t signed on to integrated loan programs — many still have concerns about how much flexibility they will lose if such agreements are signed with the federal government.

Benedict was also quick to point out that there is no money set aside for an Ombudsman, something the United States did in 1998; no new regulations to reign in collections agencies working on behalf of the CSLP and no funds dedicated to reducing the 8.25 percent interest rate charges on student loans.

The latter of these issues seems to be Benedict’s most severe criticism of the program. He argues that as long as interest rates are as high as they are, borrowers will start life in a financial stranglehold and that borrowers are financially propping up the CSLP.

“So the next time you meet a student loan borrower paying 8.25 per cent in interest or more on their loan, thank them for subsidizing the existing loan system — they are doing it whether they can afford it or not,” wrote Benedict in his editorial for MacLean’s.