by Terrance Hunsley

This week the Public Accounts Committee heard from government departments about the workings of Financial Assistance to Students. For the most recent statistics available, they were told that 

For the 2016–2017 loan year (which runs from 1 August to 31 July) the federal government provided direct loans worth $2.6 billion to about 500,000 students; in 2018, it invested $1.1 billion in the Canada Education Savings Program. 

In 2018/19, a year when the economy was banging away on all cylinders, non-repayment of student loans amounted to about $500million.  They also reported that more than half of people who have applied for interest relief, understated their income.  

Financial literacy may be part of the problem. Department officials reported that:

• Only 44% of borrowers in their last year of studies knew that interest on their loans would start to accumulate from the time their studies ended.
• Only 35% of new borrowers knew that interest would start to accumulate from the time they changed their status from full- to part‑time student.
• Only 19% of borrowers in their last year of studies knew about the Repayment Assistance Plan.”

The news on the Canada Learning Bond was not great either.

Low-income families did not fully participate in the Canada Education Savings Program – even though the Canada Learning Bond is paid by the government without any contribution from families, about 62% of eligible children did not receive it as of 2018 because no account had been opened for them.  Also, the proportion of low-income families with a Registered Education Savings Plan account who contributed and therefore received the grant decreased from 92% to 74% between 2007 and 2018.

But aside from these valid concerns, I began to wonder if the federal government measures or estimates the value accruing to Canada from the investments in students, or whether this program is simply treated as a cost to government. I asked Dr Google and got very little, mainly some regular actuarial studies of the costs of the program and how that might vary according to changes in interest rates, cost to government to borrow, etc. Best I could find was an evaluation about ten years ago which simply stated that higher education was good for people.  

But I was looking for solid estimates of the benefits of the program, because I suspect it turns out to be a real moneymaker for governments. The revenues which they receive in income taxes and sales taxes are bolstered by the increased incomes that Canadians earn because of their higher level of education. Canada has one of the highest levels of postsecondary achievements of the OECD countries. Which would suggest that more investment in education, and in programs that ensure that every child and adult is provided whatever assistance is needed to achieve their highest education possible, would be good for all of us.