Financial Aid Changes

Brett Hughes (2L)

Financial aid, if not tuition, became a major focus this year for both the Students’ Law Society (SLS) and the Faculty of Law administration. This renewed focus has already led to some preliminary changes to the financial aid system. I sat down separately with Aladdin Mohaghegh, head of the Financial Aid Office, and Spencer Burger, one of the SLS representatives on the Financial Aid Committee, to learn more.

At the October 22 Faculty Council meeting, SLS President Natalie Lum-Tai and former SLS Vice President of Student Affairs and Governance Padraigin Murphy made forceful presentations about the growing gap between tuition and financial aid, the challenges faced by students with access to credit issues, and more. This helped drive a renewed focus on financial aid reform by the administration, including a definitive statement by then-Professor Iacobucci that it is “not acceptable” to turn away admitted students with credit issues.

Even before the October Faculty Council meeting, the Financial Aid Committee had been making changes. As Burger put it, the Faculty used to engage in a “bait and switch” where it divided total financial aid funding equally into three pots for each year, regardless of need between years. This meant students would have more unmet financial need covered by bursaries in first year, when they could also rely on savings. In upper years, the fixed pot of funding would be spread more thinly, as unmet financial need of upper-year students tends to increase as their savings are depleted. Beginning in the present 2014-15 academic year, the Financial Aid Committee removed this discrimination to instead distribute one pool of funding across all years based on need.

Payment Deadlines

Beginning in the 2015-16 academic year, the University of Toronto will allow students to pay tuition fees on a per semester basis, rather than requiring the full year’s payment upfront. This change was mandated by the Ontario government. As a result, the effective deadline for fall tuition payment has been moved up. Service charges on unpaid fall fees will begin to accrue on October 15, 2015 (rather than mid-November, as it was last year). For students not receiving government financial assistance, service charges for winter tuition will begin to accrue on December 15, 2015. For students receiving government financial assistance, service charges for winter will start on February 15, 2016.

The former fee payment schedule did not align with the OSAP disbursement schedule, which only provides funds to students on a semester basis—the first OSAP payment comes in September, and the remainder in January. The former schedule also meant that students relying on private loans had to incur interest charges for winter tuition throughout the fall semester. Finally, the tuition tax credit can only be claimed for the tax years in which the semesters occurred, so even though law students had to pay $31,500 in September, 2014, only half of that amount can be claimed on 2014 tax returns.

The inequity was, and still is, compounded by U of T’s unjustifiable late payment penalties. If U of T does not receive a student’s payment on time, it imposes a monthly “service charge” of 1.5% of unpaid tuition fees compounded monthly (19.56% per annum). For 2014-15 law school tuition (approximately $31,500), the late fee would amount to approximately $470 for the first month, an additional $480 for the next month, and so on. It is highly unlikely that this charge bears any relation to U of T’s borrowing costs, assuming it even incurs borrowing costs if payments are not made promptly on the deadline. More importantly, the late fees usually amount to a tax on the poorest students, who are most likely to struggle to make the full payment on time.

Financial Aid Assessment Timeline

In order to accommodate the earlier fee payment deadline, Mohaghegh said that the Faculty of Law’s Financial Aid Office had to move up the date on which financial aid assessments will be released.

Beginning in the 2015-16 academic year, the complete financial aid application will be due on August 4, 2015, with final summer pay-stubs due on September 8, 2015. This will allow the Financial Aid Office to issue assessments to students on September 18, 2015.

The change should allow students to meet the new fee payment deadline. As an ancillary benefit, students will have more time to pursue alternative sources of financing if the assessment does not reflect their actual financial need. For example, they would be able to file financial aid appeals earlier.

Access to Credit

The Faculty’s financial aid system is contingent on students having access to substantial amounts of private credit. The Faculty misleadingly claims to “offer” an interest-free loan, even though its policy is to pay a certain amount of interest on private lines of credit that students must independently obtain from Scotiabank or other lenders.

The Financial Aid Booklet previously suggested to students with access to credit issues that they need not apply. This year, the language has been slightly softened to encourage students facing credit issues to approach the Financial Aid Office as soon as possible to start working on finding solutions. For example, Mohaghegh said that many students simply have no credit history, having made it through undergraduate degrees without private loans or credit cards. The office would work with such prospective students to start establishing credit histories in advance of a line of credit application. The Financial Aid Office can also advocate to Scotiabank on a student’s behalf if that student has faced issues in the Scotiabank Professional Student Plan (SPSP) application process.

As a last resort, the Financial Aid Office offers “Short-term Emergency Loan Assistance” to students who have exhausted other means of financing. Students would previously not know whether they could access this emergency financing until the school year had already begun because the Financial Aid Committee would not sit in the summer. According to Burger, the head of the committee will now be able to exercise discretion to meet without the full committee in order to approve (but not deny) emergency loan applications in early August.

Financial Aid Calculator

In the next few months, the long-awaited Financial Aid Calculator should launch on the Financial Aid website. Mohaghegh said that Professor Ben Alarie had been pushing for this for years, and that the calculator would effectively provide an “upper year provisional assessment” similar to what incoming first-year students receive in early summer. Students input most of the information they would enter on a regular assessment, and the calculator provides an estimate of how much financial support they could expect from the Faculty.

Going Forward

Dean Iacobucci has promised that financial aid will be the Faculty’s next fundraising priority. However, the law school still faces donor fatigue flowing from the recently completed $50 million building fundraising campaign, which has seen cost overruns that may have to be covered through additional fundraising (or from cost cutting in the building). As a result, this effort may not bear significant fruit for a while yet.

Financial aid and tuition played a major role in the recent SLS elections. SLS President-elect Andrew Wang ran on a platform that included seeking to pressure the administration to offer a guarantee to prospective students that they will be able to afford U of T Law, one way or another. He also said that he wants to restart the tuition discussion, which has been lost sight of following a shift in focus to financial aid alone.