The troubling and vexing thing about financing a higher education

One of the most startling statistics I learned since joining HEQCO last year was that about 50 per cent of students eligible for financial aid don’t apply for it, even though some of the money they would get is grants that they do not have to repay.   Who gives up the opportunity of free government money?
This finding reinforced my long-held view that the debates we have about tuition are some of the more impoverished policy discussions we have in this country.  Sensible policies about tuition are important. After all, the cost of obtaining a higher education is very relevant to the decision on whether or not to pursue a postsecondary education.
The problem is that so much of the usual discussion about tuition misrepresents or distorts the evidence.  For example, contrary to the arguments made by a variety of advocacy groups, a recent paper from HEQCO notes  that tuition increases over the last decade or so in Canada  have not resulted in lower participation in postsecondary education. The paper also demonstrates that inflation and tax credits have significantly mitigated the real cost of tuition increases from 1999-2000 to 2007-2008.
Many students never pay the full tuition sticker price thanks to Ontario’s array of financial aid programs. And in spite of increased tuition, Ontario students now show historically low loan default rates and about 46 per cent of university students graduate from Ontario universities with no debt whatsoever.
Perhaps the most significant point made in the paper, though, and the one most relevant to the topic of this blog, is that it is inappropriate and illogical to talk about tuition without also taking into consideration the amount and nature of financial aid available to students.  It is in that context that the large number of eligible students failing to apply for available financial assistance is troubling and vexing, and it  is inextricably linked to what may be the most pressing challenge in Canada’s postsecondary system:   although Canada overall enjoys a very high postsecondary participation rate relative to other OECD countries, there are still some students in Canada – particularly those who are low-income, Aboriginal or first-generation (from families with no postsecondary experience) – that are underrepresented in higher education.  And, ironically, it is precisely these students who would most benefit from it.

We used to think this “underrepresentation” problem was relatively easy to solve: just make sure there is lots of financial assistance to support these students and they would go to university or college. The research shows, though, that putting more money on the table is a necessary but insufficient solution.  Students often make decisions about higher education early in life, and these decisions may be based on misinformation or misperceptions about finances.There are a host of sociocultural and attitudinal factors that make students from under-represented groups reluctant to pursue higher education and seek financial aid.  If we are to succeed in increasing their participation, we need to understand these factors better and figure out more effective ways of educating students about the realities of financing a postsecondary education.  Among the issues:  How much does it really cost? How much financial help can I get?  How much will I realistically owe by the time I graduate and how easy will it be to pay it off?  How great is the financial benefit to me of getting a postsecondary credential?

As I have learned, these issues fall under the rubric of “financial literacy” (even after one year I am still learning all the jargon).  Because of the primacy of the “underrepresentation” problem and the centrality of financial literacy issues in solving it, we are organizing a conference for November 3-4, 2011 at the Toronto Delta Chelsea Hotel that will bring together leading researchers discussing their work in educational financial literacy and innovators sharing their approaches to increasing awareness and use of financial aid programs. The conference will also feature an in-depth discussion session on next steps toward improving financial literacy, particularly for traditionally under-represented students. Our role is to spark the discussion. Our goal is to help find real solutions.  Save the date, stay tuned for more information soon or write to us if you just can’t wait for more information about the conference.
Thanks for reading.

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