University of Toronto

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An Illuminating Annual Report on Student Financial Support

The Government of Ontario does many things well, but it provides Ontario’s universities with the lowest level of per-student funding in Canada (by a wide margin). This unfortunate reality means that Ontario’s universities rely increasingly on tuition revenues to stay afloat. And that in turn makes it especially important that universities dedicate themselves to robust programs of student financial support, while keeping an eye on both student socio-economic profiles and student debt. (On that latter point, Alex Usher’s blog at HESA has an interesting series of recent posts on student debt in Canada.)

Some insights into these issues can be found in the University’s Annual Report on Student Financial Support, presented to Governing Council on April 11th by the Vice-Provost, Students.

The Governing Council’s 1998 Policy on Student Financial Support states:

“No student offered admission to a program at the University of Toronto should be unable to enter or complete the program due to lack of financial means.”

In practice, this means that U of T provides institutional student aid to qualified students whose financial need is greater than what OSAP covers. This aid comes in the form of non-repayable grants, and has helped keep the institution open to outstanding students from a range of socio-economic backgrounds. Indeed, the Province’s 2006 Student Access Guarantee was based in part on our Policy.

How much student financial support does the University provide? In 2010-11, the University of Toronto contributed a total of $147.3M in student assistance. The scale of that commitment is notable: $147.3M is larger than the operating budgets of some Canadian universities. This figure excludes funding for graduate students from external fellowships and scholarships, as well as employment income earned by graduate students through work as Teaching Assistants or Research Assistants.

About 45% of all full time undergraduate University of Toronto students receive OSAP support. Over half of them graduate with no OSAP debt. For those who do graduate with OSAP debt, the average amount has been virtually unchanged for over a decade ($20,607 in 2011, $20,525 in 1999, in constant 2011 dollars).

I should raise, however, two cautionary flags.

First, while average levels of student debt have remained fairly constant since the late 1990s, there has latterly been a slow rise in the proportion of students graduating with more than $35,000 of debt. This is still by far the smallest category (fewer than 1 in 10 students) – and it may be somewhat mitigated by the new Ontario Tuition Grant (OTG) . Nonetheless, I believe this category should be watched closely, and if it persists, be addressed promptly by adjustments to the loan-bursary mix in OSAP.

Second, while the majority of students continue to graduate with no OSAP debt, the proportion of students graduating with any OSAP debt has climbed in recent years (from a mid-decade low of 40% to 48% in 2010-2011). This trend is not as straightforward as the other one. It may reflect in part our success through the combination of internal and external student aid in keeping the University of Toronto open to talented students from all backgrounds, including those more reliant on OSAP. And it may be partly explained by the Province’s 2006 decision to increase the number of students eligible for OSAP by raising the parental income threshold. That decision in turn would lead to shifts from private borrowing to OSAP loans – generally on better terms for students. Whether this trend will be blunted in any way by the Ontario Tuition Grant is unclear. But this phenomenon, too, bears ongoing scrutiny in my opinion.

I should add that, in response to constructive counsel from student Governors and other student leaders, the University conducted a survey in June 2011 of 7,434 recent graduates to get a sense of the levels of non-OSAP student debt. These are notoriously difficult data to capture and interpret, and, given some outliers, it seems intuitively obvious that there was a tiny bit of mischievous gaming of responses. Nonetheless, the data are important and the details appear in the Report.

Another interesting point in the report concerns effective versus posted tuition fees. Many U of T undergraduate students pay far less than the full tuition sticker price. In fact, as shown in the figure below, just about the same number of OSAP-eligible undergraduate students pay no tuition (or even negative tuition) as pay full tuition.

University of Toronto Effective Tuition

There’s another way to look at effective tuition. For the 45% of our full-time domestic undergraduates who receive financial support from the University and/or the Province of Ontario, the average tuition paid is half the posted tuition rate. And none of this takes into account the Ontario Tuition Grant that awards eligible students $1600 a year to put against their tuition. The OTG isn’t a panacea, but it should improve the situation further.

Two closing thoughts…

First, there are many factors at work in the bitter dispute in Quebec over proposed university tuition hikes. However, looking at the data above, I have to wonder whether it’s a level playing field when commentators compare the Quebec and Ontario tuition fees. Ontario achieves higher participation rates and more equitable access than Quebec using a model of higher fees coupled with high levels of student aid, such that the effective tuitions for a great many students are not what the posted prices would indicate. It could be interesting to examine effective tuitions in Quebec now, and what they would be if the proposed increases were to take place along with any off-setting enhancements to student aid.

Second, in my view the current model has served Ontario surprisingly well, and appears to be the rational way forward until the current period of budgetary stringency passes. However, over the longer haul, I believe the higher-fees-higher-aid model will only be sustainable and equitable if the Government of Ontario meaningfully enhances the OSAP bursary system. It would also be a very good thing if, at some point, the province finally brought levels of per-student funding closer to the national average, and then gave students and universities alike a breather from the ongoing cycle of tuition increases.

Meanwhile, I encourage you to take a look at the full report.