Kicking away the ladder: The true cost of changes to the Ontario Student Assistance Program

The Ontario government recently announced changes to the Ontario Student Assistance Program (OSAP) that will drastically reduce access to post-secondary education. .

OSAP is the primary source of financial aid for post-secondary students, along with a similar federal program. Currently, students receive up to 85 per cent of their OSAP aid in the form of grants, depending on their financial situation, and the rest as loans. Under the new rules, grants will make up a maximum of 25 per cent of the aid.

The impact of this change is that students on OSAP will accumulate significantly more debt.

Can students carry more debt? What will they have to sacrifice to do so? Will it really pay off, or would it be better to give up on post-secondary education?

In Ontario, anyone who doesn’t come from a wealthy family now faces these tough questions. The available data can’t help us estimate what students will decide, as these are very personal choices. But the data allow us to paint a portrait of the people most affected and illustrate the current burden of student debt.

Who has student debt?

According to the 2023 Survey of Financial Security (SFS), 13.9 per cent of households in Ontario have student debt, which is nearly 887,000 households.

Households with student debt include unattached individuals (17 per cent); couples without children (17 per cent); couples with children and single-parent households where the major income earner is 34 years old or younger and the children are likely too young to have student debt (7 per cent); families with older income earners and children (22 per cent), where the debt may originate from the parents, the children, or both; and other family types (36 per cent).

Households where the major income earner belongs to a racialized group are more than twice as likely to have student debt (22.4 per cent) than households where the major income earner is not racialized (10.2 per cent). As a result, racialized households are overrepresented among households with student debt. While they represent less than a third (31.6 per cent) of households in Ontario, they make up slightly more than half (50.4 per cent) of households with student debt.

Table with 3 columns and 3 rows. (column headers with buttons are sortable)

Share of all households in Ontario	31.6%	68.4%
Share of all Ontario households carrying student debt	50.4%	49.6%
Share of racialized/non-racialized households carrying student debt	22.4%	10.2%

Households with student debt face greater financial challenges

Student debt is commonly thought of as an investment that yields returns in the future. Yet a large share of households carrying student debt face considerable financial insecurity, making that investment seem more like a heavy burden rather than an opportunity. That debt burden is evident across households of all ages, not only among young people starting their careers.

Table with 3 columns and 4 rows. (column headers with buttons are sortable)

Under 35 years	19.2%	6.3%
35 to 54 years	14.4%	6.2%
55 years and older	5.0%	3.0%
Total, all ages	14.4%	4.6%

Table with 3 columns and 4 rows. (column headers with buttons are sortable)

Under 35 years	7.2%	0.6%
35 to 54 years	5.3%	4.4%
55 years and older	2.9%	1.8%
Total, all ages	5.6%	2.5%

Table with 3 columns and 4 rows. (column headers with buttons are sortable)

Under 35 years	30.4%	20.1%
35 to 54 years	37.2%	22.8%
55 years and older	27.3%	17.3%
Total, all ages	32.4%	19.6%

Not all debt is the same

Some debt is outright bad, like a missed credit card payment that accrues high interest. Some debt promises positive financial returns, like a mortgage on a house in Canada’s speculative housing market. Student debt is not as bad as a negative credit card balance, as it constitutes an investment, but it is not a straightforward wealth-building strategy either. In our society, it is a necessary evil, and the least wealthy households carry a much larger share of it.

Table with 3 columns and 3 rows. (column headers with buttons are sortable)

Poorest 40%	59%	18%
Middle 40%	30%	50%
Richest 20%	11%	32%

Like elementary and secondary schooling, post-secondary training helps people develop a range of skills and abilities. They then contribute to our society in several ways. And whatever they do, they are part of what makes Ontario one of the richest places on earth, past and present. It should be common sense that a part of the province’s wealth be reinvested in everyone’s training.

But, to the current provincial government, it’s not. In Ontario, students pay some of the highest post-secondary fees in the country, in a system where public funding is much lower than it once was. Unable to pay, some students must apply for a mix of loans and grants to pay for their studies. Although the loans help get access to desired training, they have a lasting negative financial impact, as seen above.

Now, the Ontario government is drastically reducing the amount of grants students can receive and increasing the amount of loans they must take.

Targeted financial aid is not the end game; tax-funded free post-secondary education is. Still, OSAP served as a ladder for students trying to catch up economically with peers who started much further ahead. The Ontario government has just kicked away that ladder.

Originally appeared in the Canadian Centre for Policy Alternatives