5 questions we have about Ontario’s free tuition plan

The Ontario government released its budget yesterday and the biggest showstopper policy was a complete overhaul of the province’s student financial aid services. Under the new Ontario Student Grant (OSG) system, to be implemented in the 2017/18 school year, lower-income students are going to be eligible for enough grants to cover their entire college or university tuition. It’s pretty exciting news for many young Ontarians (as well as their parents, obviously). “There are some very, very good components to it,” says Colin Busby, associate director research at the C.D. Howe Institute. “You’re taking this assortment of programs, bringing it into one program, one that’s very transparent and readily understood and available to people and to potential students.” But the announcement also raises a number of questions. More details will be revealed in the coming months but in the meantime, here’s what we know:

1. Who qualifies and how?

Ontario students from families that earn $50,000 or less will be eligible for larger grants than under the current system. Unlike loans through the Ontario Student Assistance Program (OSAP), they don’t have to pay anything back, which will ideally see them graduating with much less debt. Many students from families earning $83,000 or less will also receive more grant money upfront to pay for tuition than through the 30% Off Tuition Grant that everyone currently qualifies for.

2. Is it really free?

That depends on your family income and what form of postsecondary education you’re pursuing. The government estimates that 90% of dependent college students and 70% of dependent university students, whose parents earn $50,000 or less, will receive enough grants to cover the average cost of tuition. For those whose parents earn up to $83,000, approximately 50% of students will receive non-repayable grants substantial enough to cover tuition. While tuition won’t be free for all, the Ontario Liberals promise that no one will receive less than what they’re eligible for now through the 30% Off Tuition grant.

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3. Where is all the extra money coming from?

The Ontario Student Grant is basically a reshuffling and consolidation of existing loans, grants and tax credits. It’s meant to simplify what is currently available to students. The government is also cancelling tuition and education tax credits, and those funds are being directed to the new grant.  In essence, the money you would have received in tax credits, possibly years after graduating, you will now get upfront in order to avoid taking on as much debt.

4. Who are the winners and losers?

The biggest winners of this new policy are obviously college students from low-income families. In a hypothetical situation, the Ontario government states that a college student living at home with a family income of $40,000 would receive grants of $5,383, which is more than enough to cover the average tuition of $2,768. It would also reduce the loan the student would have taken from $3,143 to just $531. Bear in mind, this is after the provincial student aid transformation has rolled out completely in the 2018-19 year and taking into account the federal Liberal promise to boost Canada Student Grant maximums.

Meanwhile, high-income-earners (those earning between $90,000 and $160,000) wouldn’t receive enough in grants to cover even half of either college or university tuition.

5. Do other governments offer free tuition?

Yes, but not in Canada. Germany, Italy, Finland, Sweden, Denmark and Norway all offer students free tuition for post-secondary education.