The Lazy Economist: The numbers behind the OSAP cuts

Looking into the Ford government's economic motives

One of the changes to OSAP includes shifting from grants to loans.
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After the controversy surrounding the Ford government’s recent changes to OSAP, we’re going to run you through some of the numbers that led the government to justify its decision, and cover what we do and don’t know about how this will impact access to higher education.

The proposed changes to OSAP include eliminating free tuition for low-income students, shifting on a large-scale from grants to loans, and lowering the eligibility threshold for OSAP. The government defended their cuts, arguing previous changes to the program were financially unsustainable.

In the Auditor General of Ontario’s 2018 Report on the OSAP Program, there’s evidence of the program’s financial unsustainability. The report said the Ontario Liberals anticipated they’d pay for its OSAP expansion by eliminating Ontario’s Tuition and Education Tax Credits.

According to the report, the elimination of the tax credit “was expected to more than offset any increased costs of the changes to OSAP.” This plan encountered problems when the total number of OSAP recipients rose by 24 per cent for university students and 27 per cent for college students—way more than the government projected. The recipient increase meant the tax changes couldn’t cover the total cost of the program. 

It’s also important to consider what kind of funding students receive from OSAP. According to the report, 98 per cent of OSAP funding given during the 2017-18 school year was in grants, up from 60 per cent the previous year.

Despite the increase in the number of students receiving OSAP, the report states that total post-secondary enrollment didn’t significantly change. There was a one per cent percent increase in the number of students enrolled in university and a two per cent increase for college students. 

The reasons for these figures aren’t clear. If there wasn’t a significant increase in people attending post-secondary institutions—but those who were receiving aid applied for more grants than loans—people could be taking on less debt.

However, we don’t know what the cause is for certain. The Auditor General’s Report says that, at the time of the audit, Ontario’s Treasury Board wasn’t measuring whether student debt had decreased after the changes were made in the 2017-18 period, or whether low-income students specifically were having an easier time accessing post-secondary education.

Despite the topic’s heavy media coverage, there’s still a lot we don’t know about how these OSAP cuts will play out and what they might mean for students.

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