Reviewing the 2019 Federal Budget

Budget 2019, entitled Investing in the Middle Class, was released by the Federal Government on March 19, 2019. The Budget makes a series of targeted, relatively small investments in a series of post-secondary related targets, such as workers in training, Indigenous education, research funding, and reducing interest on student loans.

Overall there are several items for students to celebrate, as the investments bring some relief to several demographics of students.

During the budget consultation process, the Federation provided a written submission on behalf of members in BC, which can be found here. The submission included the elimination of interest on student loans, funding for post-secondary education-related reconciliation initiatives; and the implementation of a universal pharmacare program in Canada.

Interest on Student Loans

Budget 2019 reduced interest charged on student loans starting in 2019-20. Currently, interest charged on student loans is prime + 2.5% (floating) and prime + 5% (fixed). The Budget limits the interest rates to prime (floating) and prime + 2% (fixed). The Budget also eliminates interest charged on student loans during the six-month grace period following the end of studies, during which time borrowers aren’t required to begin paying back their loan.

The Government estimates that these changes will save borrowers an average of $2,000 over the loan repayment period. According to government figures, approximately one million student loan borrowers are currently in repayment, and 200,000 graduates leave school each year with student loan debt; these changes will help to relieve the pressure on those who are struggling to repay their student loans. However, only a full elimination of interest on student loans will create equity by removing the penalty on those from low- and middle-income backgrounds who are forced to borrow to access education.

Indigenous Education

The Post-Secondary Student Support Program (PSSSP) will receive an additional $327.5 million over five years, according to the Budget, to renew and expand the Program. Funding increases for the PSSSP have been capped at 2% annually since the mid-1990s; this funding increase takes a necessary step towards reconciliation through education by starting to fund the backlog of Indigenous learners seeking a post-secondary education. However according to the Assembly of First Nations’ Education, Jurisdiction, and Governance 2012 Report, an estimated $724 million would be needed to sufficiently address the backlog and support the number of Indigenous students qualified to attend post-secondary education.

Budget 2019 also provided an additional $9 million over three years to Indspire (an Indigenous-led charitable foundation) for additional bursaries and scholarships for First Nations, Inuit, and Métis students.

Support for Vulnerable Students

Budget 2019 invested $15 million over 5 years to modernize the Canada Student Loans Program to better address the needs of vulnerable students, including things such as:

  • increased cap for equipment grants for students with disabilities, from $8,000 to $20,000
  • expanded eligibility for students with severe disabilities to qualify for loan forgiveness
  • for borrowers taking a temporary leave from studies for medical, parental, or mental health leave, to be granted an interest-free and payment free leave, in six-month periods for a maximum of 18 months. This program will receive $20 million over five years starting in 2019-20, with $4 million per year ongoing
  • increased funding of $4 million to provinces and territories for these accessibility improvements.

The enhanced allowances for students with disabilities will make tangible differences to the accessibility of post-secondary education across Canada. Also, recognizing the needs of students who are parents is an important step in improving the ability of parents to attend and succeed in their education.

Work Placement & Apprenticeship Programs

Budget 2019 invested $631.2 million over five years to expand the student work placement program. This funding aims to support up to 20,000 new work placements annually for post-secondary students in all disciplines.

Budget 2019 has invested $40 million over four years, and $10 million annually thereafter, to Skills Canada. This aims to promote skilled trades to young people through skills competitions and providing resources. Additionally this Budget invests $6 million over two years to create a national campaign aiming to make trades a first-career choice for young people.

Worker’s Training Benefit

The Budget introduces a program called the Canada Training Benefit. This program will give workers funding to help cover up to half of the costs of a course or training program. Canadians aged 25 to 64 will earn $250 per year up to a lifetime limit of $5,000 to support their training costs. For this program the budget includes over $1.7 billion over five years, starting in 2019-20, and $586.5 million per year ongoing for this new program.

In support of this program, a new Employment Insurance Training Support Benefit will allow workers to receive four weeks of EI payments to support those in training. Together these programs aim to allow workers to build new skills whilst working. However, if the government really wants to encourage people to upgrade their skills, the money would be better used by being invested in the Canada Student Grants Program, to increase the current system of grants to the students who need the funding for their post-secondary education.

Research Funding and Researcher’s Leave

Budget 2019 increased funding to the three federal granting councils—$114 million over five years, starting in 2019–20, and $26.5 million per year thereafter, to the federal granting councils. This funding will create an additional 500 master’s level scholarship awards annually and 167 more three-year doctoral scholarship awards annually through the Canada Graduate Scholarship Program.

Budget 2019 increased paid parental leave for student researchers and postdoctoral fellows (from 6 months to 12 months). This increase should be beneficial for young researchers, particularly (though not exclusively) women.

International Education

Budget 2019 has increased funding to support Canadian post-secondary students to travel, study and work abroad totaling $147.9 million over five years, and $8 million per year ongoing. This funding is aimed at getting more Canadians to study abroad, since according to the most recent Canadian Bureau of International Education’s survey, only 2.3% of Canadian university students studied abroad in 2014, and 80% of those students require financial assistance to do so. However, some of this funding is also designated towards promoting Canadian institutions as top study destinations. Funding is not needed to promote Canadian institutions, seeing that Canada has seen a 119% increase in international students between 2010 and 2017. Rather than spending money promoting Canadian institutions, this money should used to better funding the Canadian institutions so that they do not continue to increase international tuition fees to make up for funding shortfalls (see our research document for related arguments).

Pharmacare

Budget 2019 laid the ground work for universal pharmacare program, by providing $35 million over four years toward the creation of the Canadian Drug Agency Transition Office; this Office will assess drug effectiveness and negotiate prices. Again, this could be a good first step towards making prescription drugs more affordable, but the Federation will keep advocating for a system of universal pharmacare to lower health costs and ensure access to prescription drugs for those who need it.

Conclusion

Overall, the 2019 Federal Budget makes small moves to help students in Canada, however there is still a lot more that could be done by the federal government to make post-secondary education affordable for all Canadians. The steps taken to decrease the amount of interest on student loans is encouraging, but students are hopeful that Justin Trudeau’s government is following the pattern of the BC government by first reducing interest, then eliminating it completely. Until then, the Federation will continue to call on Justin Trudeau and his government to completely eliminate interest on student loans to level the playing field for students who are forced to borrow to pay for their education. To learn more about the campaign efforts on this topic, to go www.knockoutinterest.ca.