On debt

By Jenn Watt

On Feb. 25 the provincial Liberal government revealed this year’s budget filled with ambitious promises. Among them the announcement that students coming from homes bringing in $50000 or less a year will have free tuition.

Some of those from households with incomes at $83000 or less will be given tuition grants (though it’s not clear how those students will be selected). There will also be assistance for graduate students and a cap on how much debt students from higher income families can carry.
This is an incredible step forward for postsecondary education and is a move closer to giving equal opportunity to the students of Ontario.

As the Ontario chapter of the Canadian Federation of Students points out the lower the family income the higher the percentage of that income tuition represents. (A $50000 family would be paying 14 per cent of its annual income to cover a $7180 tuition; a $120000 family just six per cent.)

And since students from lower income families are more likely to have to access loans to pay for school they actually end up paying more thanks to interest.
“Students who rely on student loans pay more than those students who can afford to pay high fees up front because students accessing loans must pay the principle they borrowed and accumulated interest” CFS points out.
It is estimated that 70 per cent of new jobs in Ontario will require some sort of postsecondary education and yet those who choose to go on to higher education in many cases must commit to tens of thousands of dollars of debt.

Our local college Fleming released a statement applauding the government’s move noting that 80 per cent of its students access the Ontario Student Assistance Program.
Although this announcement by the Liberals is a good one and genuinely moves policy in the right direction the problem is that the income level of one’s parents doesn’t necessarily dictate one’s ability to pay for school.
At the end of a four- or six- or eight-year postsecondary career even those from higher income families can find themselves with debt. And debt can be crippling for the individual and for the larger economy.

Debt limits spending power and opportunities. It forces the recently graduated to avoid risky and creative ventures that could pay off in the long run for steady jobs just to pay the debt down.
It discourages investment in homes cars tourism – you name it – as disposable income is limited.
The Liberals’ plan for education is a hopeful sign. We are no longer living in a world where most can get jobs right out of high school. But we need to do more than give free tuition to some.
Bringing down the burden of debt should be the end goal in order to give all students the right start in their adult lives.