1.      A Brief Description of the Canadian Higher Education System

Canada is a federation of ten provinces and three territories. Under the Canadian Constitution (1867), the provincial and territorial governments govern postsecondary education. The federal government provides only indirect support to postsecondary education through financial transfers to the provinces and through its funding of university research and student assistance.

There are over 90 public and private institutions in Canada that grant degrees. The total number will increase over the next several years as Ontario colleges of applied arts and technology begin to offer applied degrees. [1] University degrees are offered at three consecutive levels - bachelor's, master's, and doctoral. There are thousands of non-degree-granting postsecondary institutions in Canada. Of these, over 200 are recognized public colleges, institutes, or colleges of applied arts and technology. Many are registered or licensed. Many more are effectively unregulated.

Higher education plays a crucial role in this industrialized, trading nation. It is estimated that in the five years between 2000 and 2005, 44 percent of all new jobs in the country will require more than 16 years of education and training. [2] Universities conduct about one-quarter of all research activity in Canada. [3] In 1999, university graduates made up just over 15 percent of the population but paid close to 35 percent of the nation’s income tax while receiving just 8 percent of government transfers. In contrast, people with less than a high school education made up 25 percent of the population in 1999 but paid just over 10 percent of all income tax and received over 40 percent of government transfers. [4]

Canada is one of the countries with the highest postsecondary education participation rates in the world. The full-time Canadian participation rate for 18-to –20 –year-olds in colleges and universities has risen steadily to about 33 percent, and the full-time participation rate for 22-to –25 –year-olds in colleges and universities to about 16 percent (in 1998-99) [5] . Over the last 20 years, students outside the 18- to 24-year-old cohort age group have accounted for an increasing proportion of university and college enrolments. Today, students over the age of 24 make up about 25 percent of university enrolments, up from 22 percent in 1980. Women, meanwhile, have become the majority on both university and college campuses. [6]

More than 1.4 million  Canadians are enrolled in full-time or part-time postsecondary programs at universities and colleges. In the fall of 2001, an estimated 645,000 full-time and 275,000 part-time students were enrolled in Canadian universities. A little over 500,000 students were enrolled in postsecondary programs in Canadian colleges and related institutions, 410,000 full-time and 91,000 part-time. [7]

The quality of postsecondary programs is ensured through a combination of legislative and administrative mechanisms rather than by a single system of institutional or program accreditation. [8] Professional schools have nation-wide accreditation boards. At an institutional level, the Association of Universities and Colleges has a procedure for checking quality at institutions that wish to become members.  

2.      Costs, or Expenditures, in Canadian Higher Education

Public postsecondary education derives the majority of its funding from provincial/territorial and federal government sources. Provincial and territorial governments provide most of the direct funding for public education in Canada. The balance of public postsecondary education income is obtained from tuition fees, research grants, contracts with business and industry, government research contracts, donations, and investment income. Since the early 1990s, university tuition fees have accounted for an increasing proportion of university revenues. However, in recent years this trend has begun to stabilize. In 1999-2000 student fees accounted for 19 percent of total university revenues, compared with 20 percent in 1998-99.

Average undergraduate university tuition rose by 76 percent through the 1990s, or by 6 percent a year, in inflation-adjusted dollars. In the late 1990s, increases in average general undergraduate tuition rates came to a halt while tuition increases in professional, graduate or second-entry programs surged. Tuition in dentistry and medical programs, in particular, has increased dramatically. [9] From 1980 to 2001, average undergraduate tuition in Canada rose from $1,600 to $3,550, and average graduate tuition has risen from $1,650 to  $4,400 (in 2000 Canadian dollars). [10]

In 2000-01, Canada's total spending on public postsecondary education is expected to reach $26.8 billion, with $13.6 billion going to community college and trade-level programs, and $13.2 billion to universities. [11]

 Since 1995, total government (federal and provincial) expenditure on post-secondary education has remained unchanged in real dollars. However, there was a significant shift: Canadian governments are choosing to fund individuals and families rather than educational institutions. Total transfers to individuals for the purpose of post-secondary education in 2001 amounted to $4.25 billion. [12]

The average student can cover his/her costs using summer earnings and debt financing. During the summer, nine in ten students are employed, earning on average a total of $4,000 of which approximately $1,200 is saved. In the total pool of student income, students rely most upon employment (37 percent), followed by government loans (13 percent), family support (16 percent, including  parental contributions,  other family or spousal contributions, and family loans), private loans (7 percent), government non-repayable aid (5 percent) and other grants (5 percent). [13]

Student loan borrowing rose sharply over the past decade, both in terms of the number of borrowers and the total amount borrowed. The most significant increase in borrowing occurred between 1993 and 1995. Average student debt, among those students who borrow and graduate from 4-year programs, is approximately $21,000. Three in four students reported some type of government, private or other debt from either previous years or the current year. Average debt accumulation in a single year is $5,600 from both government and private sources. [14]

3.      Student Financial Assistance in Canada 

 There are three basic paradigms of government financial aid in Canada:

(1)        Assistance to full-time students on the basis of financial need  (main paradigm, consisting of 98 percent or more of assistance given) There are three interlocking sets of programs: the Canada Student Loans system, the provincial student assistance systems (loans and grants), and the Canada Millennium Scholarship Foundation’s millennium bursaries all of which can be applied for through a student’s provincial or territorial government. Applications are assessed for eligibility and need. Generally, the neediest applicants receive provincial grants and Canada Millennium Scholarship bursaries and those with low need receive loans.

Ten jurisdictions participate in the Canadian Loan Programs, which is administered by the Department of Human Resources Development Canada (HRDC), while the other three (Quebec, the Northwest Territories, and Nunavut) do not. However, the state still contributes to student assistance in these three jurisdictions through an alternative payment system.

There is 6-month grace period (during the first 6 months after the end of full-time studies) during which no loan payments are due. While the in-school subsidy continues for most provincial and territorial loan programs (i.e. the government pays the interest), interest does accumulate on federal loans. At the end of grace period, students are required to consolidate their loans, decide between a floating rate of prime plus 2.5 percent or a fixed rate of prime plus 5 percent, select the length of the repayment period (up to 10 year) and begin repayment.

(2)        Assistance to part-time students (on the basis of income rather than need)

There are only a few government assistance programs for part-time students including the Canada Study Grants program for high-need students and the Canada Student Loans Program (applied for through the provincial or territorial government student assistance office). A part-time student may borrow an overall maximum of $4,000 and if eligible may receive a grant of up to $1,200/year.

(3)               Assistance to north residents (universal grants, regardless of income or need)

In the Yukon, students receive a flat $1,240 grant per semester and are reimbursed for their roundtrip airfare to Edmonton or Vancouver. In the Northwest Territories all students are eligible for a monthly remissible loan of $300 that becomes a grant if the student graduates and works in the Northwest Territories. In addition, Indigenous Aboriginal students in the Northwest Territories are eligible for a basic grant of $1,750/semester for tuition and fees and $300/semester for books. The Nunavut Aboriginals receive a basic grant of $1,250 plus roundtrip airfare to the nearest college, a supplementary grant of $200 for books, a monthly allowance of between $205 and $1,505 (depending on marital status, dependents) and a loan of up to $3,200/year plus $4,000 for the first dependent and $500 for each additional dependent.

Alternatives Sources of Student Financial Aid

In addition to governmental grants and loans there are other source of student financial aid, including:

• Assistance from higher education institutions

Canadian colleges and universities spend almost $100 million per year on undergraduate merit-based student financial assistance and another $100 million on need-based awards. Nationally, over 50 percent of institutional merit awards and 80 percent of all need-based awards are distributed by universities in the province of Ontario.

• Private loans and credit cards

Private lines of credit are becoming increasingly popular with students. Almost two-thirds of Canadian post-secondary students possess at least one credit card and almost 40 percent report carrying debt on those cards. Older students accumulate substantially larger debts, and a larger proportion of this debt is private. Eighty-nine per cent of students aged 26 or older have government debt, private debt, or both, with an average value of $20,500. Sixty per cent of students in this age bracket have government debt averaging $18,700, while 43 percent have private debt averaging $13,300.

• Work study program.

Eligible students may participate in the work-study program that is funded by the government in certain provinces (Ontario and Quebec), but administered by college or university financial aid offices. In these programs students work on campus and receive an hourly wage. In other provinces, scattered institutions have this program, but there is not government subsidy.

• Tax assistance.

Tax assistance includes tax deferrals on educational savings, tax exemptions on scholarship and bursary income up to $3,000, and tax credits for tuition fees and for enrollment at recognized education institutions. It should be noted that tax based assistance is not need-based and actually costs the federal government more than need-based assistance.

Table 1

Higher Education Expenses Borne by Parents and Students,
Canadian Colleges and Universities
First Degree, [Academic] Year 2001-02

Special thanks to Alex Usher of the Canada Millennium Scholarship Foundation for his review of this country profile and for his valuable feedback. (5/2003)