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The Price of Knowledge 2006-07Access and Student Finance in Canada
Saskatchewan Institute
of Public Policy
Joseph Berger
Canada Millennium Scholarship Foundation
June 13, 2007
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P. 2
The Price of Knowledge 2006-07
1. Why Access Matters
2. Barriers to Post-Secondary Education
3. Student Finance in Canada
4. Governments
5. Student Debt
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P. 3
The Price of Knowledge 2006-07
Why Access Matters
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P. 4
Youth Population – Medium Growth Projection
Statistics Canada, CANSIM, table 052-0004 and Catalogue no. 91-520-X. Last modified: 2005-12-21.
2006 2011 2016 2021 2026
2006 Population 18- to 24-Year-Old Population
3.106 million
3.199 million
2.914 million
285,000 fewer
18- to 24-year-
olds between
2011 and 2021
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P. 5
Youth Share of the Population and Dependency Ratio Projections
Statistics Canada, Population Projections for Canada, Provinces and Territories (December 2005).
14%13%
12%11% 11% 11%
0.440.47
0.51
0.57
0.61
0.44
0%
2%
4%
6%
8%
10%
12%
14%
16%
2006 2011 2016 2021 2026 2031
0
0.1
0.2
0.3
0.4
0.5
0.6
0.715- to 24-year-old share of the population Dependency Ratio
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P. 6
Statistics Canada (2005), Projections of the Aboriginal populations, Canada, provinces and territories
Aboriginal Share (projected) of the 15- to 24-Year-Old Population in 2006 and 2017
70.4%
5.6%
62.8%
4.9%
4.5%
2.2%
23.9%
31.0%
8.8%
2.4%
5.9%
3.7%
1.8%
2.3%
19.4%
21.2%
7.5%
6.1%
% 10% 20% 30% 40% 50% 60% 70% 80%
Atlantic
QC
ON
MB
SK
AB
BC
Territories
CANADA
2006
2017
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P. 7
Educational Requirements of Today’s Jobs
Bergeron, Louis-Philippe, et al. (2004), Looking Ahead: A 10-Year Outlook for the Canadian Labour Market, 2004-2013.
Management 11% Management 12%
University 26% University 22%
College 31%
High school or on
the job training
34%
High school or on
the job training
35%
College 29%
66% 65%
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P. 8
Post-Secondary Participation Two Years After Graduating High School
Malatest (2006), Class of 2003; and Shaienks, Eisl-Culkin and Bussière (2006), Follow-up on Education and Labour Market Pathways of Young Canadians Aged 18 to 20 – Results from YITS Cycle 3
60%
52%
83%
31%
61%
72%
39%
48%
28%
17%
70%
40%
General
population
Parents - No
PSE
Parents -
Completed PSE
Parents -
University
Degree
Aboriginal Non-Aboriginal
Continuing or completed PSEDropped out of high school, never pursued PSE or dropped out of PSE
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P. 9
Drolet (2005), Participation in Post-secondary Education in Canada: Has the Role of Parental Income and Education Changed over the 1990s?
Participation in Post-Secondary Education Among 18- to 24-year-olds Living with at Least One Parent in 2001 by Family Income and Parental Education
81%
49%
60%
76% 77%
53%
63%68%
Less than
$25,000
$25,000 -
$50,000
$50,000 -
$75,000
$75,001 -
$100,000
More than
$100,000
High school
or less
Some post-
secondary
University
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P. 10
JDMD Groupe conseils (2006), Demographic and Economic Trend Analysis and Projections.
Projected Post-Secondary Enrolment in Canada by Demographic Scenario, 2005 to 2021
1,700,000
1,750,000
1,800,000
1,850,000
1,900,000
1,950,000
2,000,000
2005 2009 2013 2017 2021
Optimistic demographic scenarioPessimistic demographic scenario2005 enrolment
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P. 11
JDMD Groupe conseils (2006), Demographic and Economic Trend Analysis and Projections.
Participation Rate of Youth in the Bottom Four Income Quintiles Necessary to Maintain 2005 Enrolment Levels by Demographic Scenario, 2006 to 2021
42%
44%
46%
48%
50%
52%
54%
56%
2006 2011 2016 2021
Optimistic Scenario Pessimistic Scenario
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P. 12
The Price of Knowledge 2006-07
Barriers to Post-Secondary Education
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P. 13
Barriers to Access and Persistence
Malatest (forthcoming), Class of 2003
33%
31%
19%
8%
13%
11%
22%
14%
29%
27%
9%
12%
10%
Finances Career
indecision
Lack of
interest
Program not
what expected
Employment Academic
challenges
Personal/family
Never attended Discontinued
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P. 14Financial BarriersAmong those who cited financial barriers to access (33%) or persistence (22%)
Malatest (forthcoming), Class of 2003
25%
21%
18%
7%
24%
18%
16%
12%11% 11%
6%
15%
Concerned
about too much
debt
Not enough
money to
attend
Program too
expensive
Too expensive
to leave home
Benefit not
worth the cost
Want to earn
money right
away
Never attended Discontinued
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P. 15
Financial Barriers: The Pull of the Labour Market
54% 53%
43%
49%
34%
26% 25%
20%
Alberta Manitoba Saskatchewan New Brunswick
15- to 19-year-old average employment rate
Percentage who worked immediately following high school
Malatest (forthcoming), Class of 2003
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P. 16
Academic Barriers: Literacy Scores at Age 15 and Post-Secondary Education
89%
98%95%
77%
62%
88%
76%
62%
45%
28%
Lowest level Level 2 Level 3 Level 4 Highest level
Literacy proficiency level
Graduated high school by age 19 Enrolled in post-secondary by age 19
Knighton, and Bussière (2006) Educational Outcomes at Age 19 Associated with Reading Ability at Age 15.
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P. 18
Informational/Motivational Barriers: Expectations and Reality
Prairie Research Associates (2005), Secondary School Student Survey, 2003-04 Pan-Canadian Student Financial Survey
74%69%
16%
35%
73%
31%
59%
83%84%
0.4%
43%48%
86%
76%
Income from work Parental support Scholarships Government aid Co-op income
High school seniors expect
First-year full-time dependent universitystudents receive
Full-time dependent college studentsreceive
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P. 19
Informational/Motivational Barriers: Family Discussions About PSE
Canada Millennium Scholarship Foundation (2006), Closing the Access Gap: Does Information Matter?
13%
38%
84%
Talking to their kids
about government
student aid
Talked to their kids
about financing PSE
Talking to their kids
about PSE
Parents reported…
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P. 20
Low-Income Families: Planning
Acumen Research (2004), Ontario University Applicant Survey
23%19%
38%
43%
32%
Less than
$30,000
$30,000-
$50,000
$50,000-
$90,000
$90,000-
$120,000
More than
$120,000
Family Income
Proportion of Ontario university applicants discussing finances with their parents before grade 10
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P. 22
First Generation: Planning
Prairie Research Associates (2005), Secondary School Student Survey
17%18%
22%23%
26%
33%
17%
10%11%
13%15%
18%
8%
11%9%
8%10% 10%
8%
16%15%
Grade 6 Grade 7 Grade 8 Grade 9 Grade 10 Grade 11 Grade 12
No PSE Both Parents College Both Parents University
High school students who plan to work after high school and study later
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P. 23
First Generation: Attitudes
80%
69%
76%
64%
48%
61%
76%
65%
71%
Need post-secondary to get a
good job
Paying for post-secondary is a
good investment
There are other benefits to post-
secondary besides a good job
No PSE College/apprenticeship University (both parents)
High school seniors’ attitudes about PSE by parental education
Prairie Research Associates (2005), Secondary School Student Survey
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P. 24
Aboriginal Youth: Academics
Mendelson (2006), Aboriginal Peoples and Post-Secondary Education in Canada
61% 61%
46%
58%
27%
44%
60%55%
40%
71%
CANADA NL NS NB QC ON MB SK AB BC
On-reserve Aboriginal population with less than high school education, aged 20 to 24 in 2001
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P. 25
Aboriginal Youth: Barriers
Canada Millennium Scholarship Foundation (2005), Changing Course: Improving Aboriginal Access to Post-Secondary Education in Canada
59%
40%
25%20% 18%
27%
Neet to support
family
Lack of funds Don't want to
leave
community
Grades too
poor
No need for
PSE
Dislike school
On-reserve Aboriginal youth’s reasons for not pursuing post-secondary
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P. 26
Interacting Barriers
Prairie Research Associates (2005), Secondary School Student Survey
38% said they faced a barrier related to poor school marks
54% said that they faced a barrier related to lack of interest or career direction
Of those who said they faced a financial barrier:
45% said they faced an academic barrier
67% said they faced a financial barrier
Of those who said that their lack of interest or career direction posed a barrier:
66% said they faced a barrier related to their lack of interest in further studies or career direction
68% said they faced a financial barrier
Of those who said that poor school marks were a barrier:
Senior high school students were asked whether various factors posed a barrier to them continuing their studies after high school.
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P. 27
The Price of Knowledge 2006-07
Student Finance in Canada
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P. 28
Distribution of Student Expenditures by Type of Post-Secondary Education
21%
29%
14%
10%
16%
10%
33%
27%
7%
12%
8%
13%
Tuition and fees Accomodation
and food
Transportation Books/computer Debt payment Other
College students University students
2003-04 Canadian Student Financial Survey
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P. 29
Financial Resources
• 2/3 of students rely on at least three sources, usually a combination of:
• Work
• Government loans
• Savings
• Parental contributions
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P. 30
Making Ends Meet – Full-Time Students
Total Income and Expenditure and Balance over the Year (Before Borrowing)
-$2,000
-$1,000
$0
$1,000
$2,000
$3,000
$4,000
Baseline September October November December January February March
Income before borrowing
Expenses
Balance before borrowing
2003-04 Canadian Student Financial Survey
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P. 31Making Ends Meet – Full-time Students
Total Income and Expenditure and Balance over the Year (After Borrowing)
-$1,000
$0
$1,000
$2,000
$3,000
$4,000
$5,000
Baseline September October November December January February March
Income after borrowing
Expenses
Balance after borrowing
2003-04 Canadian Student Financial Survey
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P. 32
Parental Contribution by Family Income
$1,837
$2,169 $2,169
$2,856
$3,588
64%
72%
78%
84%
89%
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$30,000 or less $30,000 - $50,000 $50,000 - $73,000 $73,000 - $100,000More than $100,000
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%Average amount Incidence of parental contribution
2003-04 Canadian Student Financial Survey
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P. 33
$11,284 $11,506 $11,595
$14,968
$9,048
$7,327
$11,555
$8,558
University Students College Students Private Career College
Students
All Students
Millennium Bursary Access Bursary
Assessed Need Levels of Millennium Bursary and Millennium AccessBursary and Grant Recipients by Institution Type in 2005-06
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P. 34
The Price of Knowledge 2006-07
How Governments Support Students
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P. 35
Probability of Degree Completion in Relation to Annualized Aid
Lori McElroy (2005), Student Aid and University Persistence: Does Debt Matter?
79% 78%75%
62%
38%
59%
48%52%
28%
8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Under $1,000 $1,000- $1,999 $2,000- $2,999 $3,000- $9,999 $10,000+
Annualized financial aid
Proportion who completed a degree
Grant + Loan Loan Only
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P. 36Dollar Value of Federal Education-Related Tax Expenditures, 1994- 2007
Christine Neill, Canada’s Tuition and Education Tax Credits
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Scholarship/bursary exemptionRESPs
Student loan interest creditCredits carried forwardTransferred credits
Education creditTuition credit
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P. 37Total Need-Based Financial Aid in Saskatchewan, 1993-94 to 2003-04 (in millions of 2005 dollars)
Educational Policy Institute, The State of Student Aid in Canada
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04
Loans Grants and Remission
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P. 38Total Universal Financial Aid in Saskatchewan, 1993-94 to 2003-04 (in millions of 2005 dollars)
Educational Policy Institute, The State of Student Aid in Canada
$0
$20
$40
$60
$80
$100
$120
1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04
Tax Credits - Canada Tax Credits - Manitoba CESGs
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P. 39Proportion of Repayable and Non-Repayable Need-Based Financial Aid in Canada, 1993-94 to 2003-04 (in millions of 2005 dollars)
Educational Policy Institute, The State of Student Aid in Canada
%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04
Net Loans Grants and Remission
Ontario accounting change
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P. 40Distribution of Total Need-Based and Universal Student Aid in Canada by Type, 1993-94 to 2003-04
%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04
Net loans Loan remission Grants Tax credits CESGs Merit/other
Educational Policy Institute, The State of Student Aid in Canada
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P. 41Total Universal Student Aid in Canada by Source, 1993-94 to 2003-04 (in millions of 2005 dollars)
Educational Policy Institute, The State of Student Aid in Canada
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04
Federal Governments Provincial Governments
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P. 42Total Expenditures on Need-Based and Universal Student Aid by Type, 1993-94 to 2003-04 (in millions of 2005 dollars)
Educational Policy Institute, The State of Student Aid in Canada
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
1990-
91
1991-
92
1992-
93
1993-
94
1994-
95
1995-
96
1996-
97
1997-
98
1998-
99
1999-
00
2000-
01
2001-
02
2002-
03
2003-
04
Need-Based Universal
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P. 43
Provincial Grants and Remission
$0
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
$1,200,000,000
1994-95 1995-96 1996-97 1997-98 1998-99 1999-
2000
2000-01 2001-02 2002-03 2003-04
All Provinces
All figures in constant 2005-06 academic year dollars
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P. 44
Provincial Grants and Remission
$0
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
$1,200,000,000
1994-95 1995-96 1996-97 1997-98 1998-99 1999-
2000
2000-01 2001-02 2002-03 2003-04
Ontario Rest of Canada
All figures in constant 2005-06 academic year dollars
Ontario accounting change
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Provincial Grants and Remission
$0
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
$1,200,000,000
1994-95 1995-96 1996-97 1997-98 1998-99 1999-
2000
2000-01 2001-02 2002-03 2003-04
Rest of Canada Ontario
All figures in constant 2005-06 academic year dollars
Ontario accounting change
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Provincial Student Aid Recipients in Canada, 1994-95 to 2003-04
0
100000
200000
300000
400000
500000
600000
1994-95 1995-96 1996-97 1997-98 1998-99 1999-
2000
2000-01 2001-02 2002-03 2003-04
522,723
415,239
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The Price of Knowledge 2006-07
Student Debt:Trends and Consequences
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$8,337
$12,671
$20,286 $20,074
$11,636
$15,809
$23,329
$21,437
$24,047
45% 45%
56%59% 59%
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
1990 1995 2000 2003 2006
-5%
5%
15%
25%
35%
45%
55%
65%
Amount in current year dollars Amount in 2006 dollars Incidence
University Graduate Debt in Canada in 2006 Dollars, 1990-2006
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P. 50More on University Student Debt
1. The amount of average debt has stabilized in recent years, but student aid policy changes are likely to lead to increases in the coming years.
2. There’s a need for additional borrowing not met by government. Thirty-nine per cent of all funds borrowed in 2006 came from financial institutions and family, up from 31 per cent three years earlier.
3. University graduates who plan on pursuing more education had less debt (about $3,200) than those who did not.
4. No apparent relationship between amount of debt and anticipated post-study income.
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Change in Accumulated Debt Among College Students with Debt outside Quebec, 2003-06
34% 35%
29%32%
15% 15% 14% 15%
17% 18%
29%
29%
31%
26%25%
0%
10%
20%
30%
40%
2003 (n=6,478) 2004 (n=7,202) 2005 (n=7,324) 2006 (n=6,846)
< $5,000 $5,000 - $10,000 $10,001 - $15,000 > $15,000
43% report no debt in 2006
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P. 53More on College Student Debt
1. In 2006 47 per cent of college students who had no debt planned to pursue further post-secondary studies, compared to fewer than 40 per cent of those with debt and 21 per cent of students with more than $30,000 of debt.
2. College debt catching up to university debt?
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P. 54Managing Debt: Approaches
1. The “eight per cent rule”: student loan payments should not exceed eight per cent of a graduate’s pre-tax earnings. (The bank’s perspective.)
2. Other approaches – “one size fits all” fits none.
3. Two principles and a conclusion (Schwartz and Baum):
1. Graduates with very low incomes cannot reasonably be expected to meet their repayment obligations.
2. The more a graduate earns, the larger the share of his or her income should be devoted to debt repayment.
3. Those earning lower (but not the very lowest) incomes should be expected to devote between five and ten per cent of pre-tax discretionary income to student loan repayment, with the payment-to-income ratio being capped at 18 to 20 per cent for those earning much higher incomes.
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P. 55Conclusion
1. Post-secondary education and Canada’s needs
2. Overcoming barriers to PSE
3. Targeting public funds effectively
4. Post-secondary outcomes
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The Price of Knowledge 2006-07
Canada Millennium Scholarship Foundation
Joseph [email protected]
1-877-786-3999
www.millenniumscholarships.ca