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A better way to do financial aid

Daniel Carens-Nedelsky (3L) 

The Faculty of Law has an exclusively needs-based approach to financial aid. This is wonderful and incredibly important for ensuring that financial need is not a barrier to law school. However, increasing strains are being placed on the financial aid system and it is under great stress.

According to the Faculty’s annual financial aid reports dating back to 2007, the average increase in “effective tuition” for students applying for financial aid is 10% per year, in contrast to the average annual 7.25% increase in total tuition. The Faculty is effectively increasing tuition on its least wealthy students at a rate greater than for its wealthiest students. This should not be the case. I am suggesting a small change to our financial aid system that I believe will help correct this imbalance.

Before I explain my suggestion, here is a quick outline of the current program.

First, the Financial Aid Office combines students’ tuition costs with cost of living expenses to estimate total financial “need.” The Financial Aid Office then subtracts personal assets, government loans and grants, deemed parental income, and a few other sources of income to determine the student’s “unmet need.”

This need is met through bursaries (one-off grants by the university) and interest-free loans (the university pays interest on private loans). The total funds available for bursaries in a given year is a fixed amount ($2.8 million in 2014-2015), and is divided among students in proportion to each student’s unmet need as a percentage of the total unmet need of all students. Thus, if a student’s unmet need is 0.1% of the total unmet need of all students, they would receive a bursary of $2,800. This means the greater the overall need of U of T students, the smaller each student’s bursary will be.

My suggestion is that rather than having a robust bursary system U of T law should lower tuition and institute a robust “wealth fee.”

Here’s an example using 2014-2015 tuition and financial aid numbers. Instead of setting first-year tuition at $30,230, we set it at the “average effective tuition” ($23,307) and institute a wealth fee that requires wealthy students to pay an additional amount above this, up to the maximum amount allowed by the province. (I use the term “wealth” as a shorthand for the collection of sources of income that the Financial Aid Office imputes to students.)

The least wealthy students would still receive bursaries, the moderately wealthy students would only pay a portion of the maximum allowable wealth fee, and the very wealthy students would pay the maximum wealth fee.

The wealth fee would be based on the same criteria as our current system and can applied so that there is no difference in the tuition revenue the Faculty receives or the effective tuition each student pays. It is merely a reframing of our existing system with no distributional changes. Despite this, I argue there are at least four reasons to prefer this framing of our financial aid system.

It exceptionalizes wealth, not financial need

The current financial aid system presumes wealth. Students are assumed to be able to afford the law school, and must provide evidence that they cannot in order to partake in the law school’s largess. A wealth fee reverses this presumption. It assumes that the average student requires financial assistance to attend law school and only imposes a fee on those “exceptional” students who do not.

This would better reflect the increasing number of students who do, in fact, require financial assistance. It would also more accurately reflect the distribution of wealth in the Canadian population as a whole—the vast majority of Canadians, after all, couldn’t afford to come here without assistance.

It is more equitable

Students who require financial aid spend a significant amount of time and energy applying for it. They also provide a substantial amount of personal information. This is, quite simply, a tax on the less wealthy. Such a distinction is inconsistent with our university’s commitment to equality. If we are willing to demand something from one group of students, equality requires that we demand it of all students (barring a rational explanation for the distinction).

Collecting this information would entail an increase in administrative work, but it would also reduce other types of work we are currently doing. For example, the administration estimates the parental income of the 45% of the class that does not apply for financial aid by studying postal areas of each students’ listed “permanent address.” It also spends time cross-referencing postal area median incomes with data on the 55% of the class who do apply for financial aid. This effort can be spared by requiring that all students submit their financial information.

Having this information will also allow us to more confidently argue that increasing tuition is not negatively affecting the economic diversity of our law school.

It reduces “sticker shock” by highlighting how much low wealth students pay

The Faculty of Law spends a lot of time and money on recruitment activities across Canada. A key part of which is to convince students not to get “sticker shock” over the high tuition by explaining our financial aid system. Why not reduce this problem by actually reducing the tuition, thus greatly reducing the sticker shock?

It highlights who bears the risk of uncertainty

One objection to this proposal might be that it is impossible for the Faculty to know in advance what the average bursary will be in a given year, and thus what to set “expected tuition” at. However, U of T law can still make its best guess as to what “effective tuition” will be, and correct for any surprises, as it currently does with the expected bursary amount provided to students.

If the Faculty sets expected tuition too high (financial need is lower than expected), low wealth students’ bursaries will be larger than advertised. If expected tuition is set too low (financial need is greater than expected), students who have not yet reached the provincially allowable cap will pay a larger than expected “wealth fee” and low wealth student’s bursaries will be decreased.

This is identical to the situation faced by the half of U of T Law students who receive financial aid. However, this new framing highlights that it is currently the least wealthy who are forced to bear the risk of uncertainty, a clearly unjust outcome.

Lowering tuition and instituting a wealth fee clarifies what is at stake for less wealthy students as tuition increases outpace the growth of financial aid. More importantly, it is more representative and equitable, and an important step towards ensuring that less wealthy students are not deterred from attending U of T Law.

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