Reversing the downward trend in education - by John Hutton

Students rallied at the opening of the provincial legislature in November 2013. Photo Robert DeVet

Presentation by John Hutton to the Nova Scotia Law Amendments Committee on what the 2014 Financial Measures Acts means to students.

Hello, and thank you to the honourable members for allowing me to speak here today. My name is John Hutton, I'm 24 years old from Halifax, and a student taking economics and international development at Dalhousie. I also sit on Dalhousie university's board of governors, and the budget advisory committee of Dalhousie. 

The budget makes a much more substantial cut in funding allocated for students and graduates than anything it adds. Overall, students will fall behind yet again as a result of this budget as currently proposed. The budget will invest 3.1 million into existing programs, $6.8 million for new programs, and then cut $49 million for a net loss of 39.1 million in programs. It is unfortunate that this money is being cut rather than re-invested, given the urgency for the province to invest in youth retention and success. Further, it will provide for a one percent increase in operating funds for universities. This is positive compared to the cuts of the previous government, but not enough to even cover the growth in costs. Sitting on Dal's budget advisory committee, we had to make tough decisions to balance our budget this year, and cut academics. As a result, students will be taking on more debt in order to fund an education of lower quality. We need to reverse this and we need the government to take this seriously. The Liberal party platform put it very well when it stated, “Education isn't a line item in a budget, it's our future.”

As a positive step, this budget will eliminate interest on the provincial portion of student loans,investing $1.6 million. This is welcome for students, who will see savings of approximately $800 over the course of their loan. It's also a progressive move, because it has some equalizing effect: low income people would presumably take longer to pay for their loan, and with interest payments accumulating it means that lower-income people would actually pay more for the same education as somebody who can pay off their loan quickly, or not need a loan at all. I do offer some advice moving forward, however. First, the savings from this policy will be fast eroded by tuition fee increases. This year, fees at dal went up by at least 3%, with an additional 3% increase in the international student differential fee, an additional 2% for medicine students and 6% for dentistry students. A student taking 5 classes ina bachelor of arts will pay an extra $197 from the fee hike, and arts is the cheapest program. Multiply that by four years for the length of their degree, and you've completely eroded all of the savings. But if tuition fees keep rising, any progress will be lost. The fact of the matter is that interest is not the root cause of student debt, tuition fees are. If you wish to preserve the benefits of this policy, it will be necessary to invest and address the principal in addition to the interest.

Further touching upon the elimination of interest. Having negotiated tuition fee increases with university administrators before, I strongly believe that this will be cited in order to justify fee increases. Indeed, Frank McKenna, a former New Brunswick premier, was speaking at St.F.X. In late March where he argued that tuition fee increases should be deregulated. “Caps on tuition are unnecessary. The market will decide. What you need to do is make sure equity and accessibility is preserved by having a generous loan and bursary and scholarship program.” You're hearing it from me now: interest-free loans do not justify tuition fee hikes.

The budget provides tuition relief to medical students, worth $750,000. Tuition support is welcome, of course, but I worry that this may be more cosmetic. Tuition fees for medicine students is not regulated, something which advanced education minister Kelly Regan was critical of when in opposition. This year at Dalhousie, it was decided that new medical students would pay an additional 5% in fees each year for four years. The reason Dalhousie chose to do this is to have their fees in the top ofthe third quartile of fees, compared to other medical schools, very little of the conversation at the budget advisory committee was about the actual financial needs of the school. So two actions which I suggest in order to support this policy is to regulate tuition fees for medical students, and of course invest in overall reductions in tuition fees. The Canadian Medical association has some interesting insights into the benefits of low medical school tuition which are well worth looking into, and I can share it with the committee if so requested.

Another signature program introduced in the budget I want to touch on is the proposed Graduate to Opportunities grant, worth $1.6 million. My understanding is that it will be a grant to businesses to hire recent graduates, to be designed by the Economic, Rural Development and Tourism department. My understanding of government communications is that this is meant to be the replacement for the Graduate Retention Rebate. While I'd like to somewhat reserve my judgement until I see the policy in action, I must express my skepticism that it will make much of a difference. I am concerned because I can easily imagine businesses that already hire recent grads from using the program, or worse, businesses laying off employees only to re-hire them using grant funds. Unless the program is well regulated and monitored I think there's a lot of risk. We've seen how the temporary foreign workers program has been abused, and when employers have a chance to lower their labour costs they can get creative- and not in a good way. It's also worth remembering the headline from the Liberal party's education section of the platform: “Whereas the NDP Government charges students on their loans and gives blank cheques to corporations, a Liberal government recognizes our post-secondary graduates are the key to Nova Scotia’s success.” With all due respect, this budget is cutting a $50 million program for graduates, then giving some of that money to businesses. The program can create roughly 77 full-time jobs at minimum wage, which isn't that big of an impact. I would suggest that the program be reconsidered.

Now for the biggest piece of the budget for students and graduates: cutting the Graduate Retention Rebate, saving an estimated $49 million. Compared to the savings for graduates by not paying $800 in interest, the loss of up to fifteen thousand in savings is staggering. No doubt, many will lose out significantly as a result of this being cut. Under the previous government, promotion of the rebate was being improved and it is feasible that more students were planning their futures, even in the short term, with the rebate in mind. That said, the program was not as effective as the previous government had hoped. While admittedly the data on whether the rebate worked or not at retention is not strong- some argue that it had no tangible effect and others argue that it mitigated deeper losses, I tend to believe that it was not effective. The main reason is that you had to actually earn enough in the years immediately following graduation to actually qualify for the rebate, and as a result it was older graduates collecting the credit in much higher numbers- not the target demographic at all. More importantly, it is a focus on back-end support for students, rather than front-end support. It is much more effective for the government to be supporting students while they're actually in their classes than afterwards. The student movement has been consistent on this point: our organizations were critical when the progressive conservatives implemented the graduate tax credit, and still so when the NDP expanded it into the graduate retention tax rebate. The Liberal party agreed with us on this point. What we've been calling for is that the funds from the rebate be redirected into up-front, needs-based grants. Not only would these funds have a greater impact by supporting students when they're actually taking classes and can't (or at least shouldn't) work full-time, but it's enough money to convert one hundred percent of Nova Scotian student loans into grants. Think of that: one hundred percent grants without taking on new spending. Newfoundland and Labrador just made that change in their provincial budget this year, a province that has seen a strong growth in enrolment from Nova Scotian students over the last decade and a half as they've invested in students. Converting NS student loans into grants using the rebate's funds will make a significant reduction in student debt for Nova Scotian students. A student receiving the maximum allowance would see their debt be reduced to$20,000 for a full degree, while it is currently more than $35,000 on average. This is exciting for government too: $20,000 is well below the value set by the provincial debt cap program of $28,500. If students aren't reaching the debt cap's level, the government saves money. It's estimated that you'd save a further $8.1 million by doing this. Students win, government wins. It's the right course of action.

The scenario that I'm pitching here was actually calculated using estimates of the rebate's value from previous budgets, where the rebate was costed out at roughly $20 million. Knowing that it was nearly $50 million this year only increases the potential for your government to make a real impact. A $30 million investment would reduce tuition fees by ten percent, reversing the hikes implemented under the previous government and saving students money. It would show that Nova Scotia supports its young people and is willing to take bold action to do it. The Ivany Report makes it clear that action is needed now to support youth retention, and I plead with you to listen to the voices of young people on this. We know what our challenges are and you have the ability to support us.

I am upset that the budget you've brought forward will make such a large cut to students and graduates, but thankfully there's such a place as law amendments. You have the chance to bring Newfoundland's success to Nova Scotia, support youth and reduce student debt. To do this, I urge the committee to amend the budget so that $20 million of the funds from the Graduate Retention Tax Rebate be re-allocated to make one hundred percent of Nova Scotia Student Loans into needs-based grants, and invest the remaining $30 million in increasing the university operating grant so that tuition fees can be reduced by ten percent next year. Education isn't a line item in a budget, it's our future. Take the opportunity given to you today and support this province's young people.

Thank you.

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