Jeffrey Napierala – Caught in the middle: Many postsecondary students are struggling financially

While postsecondary students have been affected by the COVID-19 pandemic in numerous ways, they have been hit particularly hard in their ability to find work and earn wages over the summer. Roughly two-thirds report that their income will be disrupted by the pandemic compared to just one-third of other adults in Canada. While several federal aid programs have been put in place to help students, their position in the labor force means that some may not be getting the help they need.

Younger postsecondary students have struggled the most during the pandemic for several reasons. They generally occupy some of the lowest skilled jobs in our economy — jobs that often come with low pay, few benefits and limited security. These are also the first jobs to disappear during an economic downturn, as we are witnessing in the current crisis and also saw during the Great Recession. Further, most students are less likely to have their own savings to help them endure difficult economic times.

The main aid program for students is the Canada Emergency Student Benefit (CESB), which was designed for postsecondary students and high school graduates who do not qualify for the Canada Emergency Response Benefit (CERB) or Employment Insurance. CESB provides $1,250 for four sequential four-week periods between May and August. Students with disabilities or dependents can qualify for payments of $2,000. CERB offers $500 a week for up to 24 weeks. But, to be eligible for CERB, recipients must have been forced to stop working due to COVID-19, rather than simply be unable to find work due to the pandemic. They must also have earned at least $5,000 in 2019 or in the last 12 months. Since many students work irregularly, or only during the summer, due to their school obligations they may not qualify for CERB.

Despite the availability of CESB, students continue to raise concerns about their finances. A large survey of postsecondary students by Statistics Canada collected responses before and after the aid program was announced. The percentage of students who were “very or extremely concerned” about one or more aspect of their finances dropped from 82 before the announcement to 71 afterwards — a decline of only 11 percent. The single greatest issue of concern for students was using up their savings. Before CESB was announced, nearly three-quarters of participants were “very or extremely concerned” about using up their savings; this indicator dropped only 12 percent after the announcement.

To get a sense of the financial outlook facing students relying on aid programs this summer, payments from CESB and CERB (covering 16 weeks) were computed for both an individual and a single person with one dependent. These were then compared to a common estimate of poverty, or basic living expenses, known as the Low income cut-off (LICO). The LICO values shown below are for communities in Canada with populations over 50,000 adjusted to 2020 dollars using the Consumer Price Index.

A single student can collect a total of $5,000 through CESB over the summer, which is significantly less than the $8,828 needed to reach the low income cut-off. For students living in areas with a higher cost of living (such as Toronto), average expenses can be as much as $3,500 a month or $14,000 for the summer. By comparison, a single person receiving four payments through CERB will collect $8,000, which — at least in some places — is close to the amount required to meet basic needs. Single parents will likely struggle with the level of support offered by either program, which is almost $3,000 short of the low income cut-off for one adult with a dependent.

The Canada Student Service Grant, announced late last month, was designed to pay small grants to postsecondary students who volunteer through the program. If the program can continue functioning after changes in its administration, it could alleviate some financial pressure. However, because payments are “one-time” after completion of the program, they will likely be too late to help students make ends meet over the summer.

As a result, postsecondary students who were relying on expected earnings this summer will continue to struggle financially even with CESB benefits. This is particularly true for students from low-income families. Their families are less likely to have saved for their postsecondary education and their parents are more likely to be affected financially during the recession. This may lead to a greater risk of students dropping out or delaying enrolment, the latter of which is thought to decrease their chances of ever earning a bachelor’s degree by almost two-thirds.

When students return to school in September — in whatever form that takes — instructors, administrators and student service professionals should be sensitive not only to students’ learning needs as they adjust to new modes of program delivery, but also to issues related to financial hardship that the pandemic may have caused them and their families.

Jeffrey Napierala is a Senior Researcher at the Higher Education Quality Council of Ontario.