1. Identifying a student’s category – The first step is to determine a student’s category. Students may fall into one of six categories: (1) Single Dependent – living at home; (2) Single Dependent – living away from home; (3) Single Independent – living at home; (4) Single Independent – living away from home; (5) Married; and (6) Single Parent. Individuals over the age of 25, could fall into any of categories three to six. The type of category a student falls into will affect the way costs and resources are assessed. For example, students who are deemed ‘independent’ will have only their own resources assessed, while dependent students will have their parents’ income assessed as well. Similarly, for married students, their partners’ resources must be considered as well as their own.
2. Assessing costs – A student’s education and living costs are assessed for the entire academic year. All of the provinces adopt a similar approach, with only minor differences. Expenses include tuition, books, supplies, living allowances, transportation, and childcare. Higher living allowances are calculated if students are married or have dependents.
3. Determining resources – Depending on student’s category, three types of resources may be taken into account: student resources, family resources and spousal resources. In general, resource calculations rules do not work in the favour of older adults. Two rules are particularly problematic. The first rule relates to how personal assets are treated. All jurisdictions, except Québec and the Northwest Territories, consider a student’s assets and personal savings when they calculate resources. This means that students are basically required to deplete their savings accounts before they can receive any government assistance. In general, younger students are not unduly affected by this rule since they tend to have few assets and few responsibilities. In contrast, this rule may place considerable stress on older students who tend to have more assets and considerably more financial responsibilities. Students with dependents may be particularly reticent to deplete their entire savings, especially at a time when their annual income is likely to be lower than normal. Moreover, the practice of needs testing runs counter to the logic of most other types of loans. With most other types of loans, the more assets an individual has the more likely they will be able to secure favourable borrowing terms.
The second rule relates to how expected spousal contributions are calculated. For married students, all jurisdictions expect the learner’s spouse to make a significant contribution to his/her education. In fact, in all jurisdictions except Québec, spouses are required to make a contribution starting at much lower levels of income than parents, and their contribution rate progresses more steeply. This requirement has a major effect on the eligibility status of married learners. In fact, in all provinces but Québec, a married student with no dependants whose spouse earned $25,000 or more would have expected spousal contributions set so high that he or she would likely be ineligible for loans. In contrast, a similar student in Québec would not have any expected spousal contributions and would receive a substantial amount of assistance.32 In addition, in all jurisdictions but Québec and the Northwest Territories, spousal assets are calculated as part of the student’s resources. Automobiles worth over $5,000 and RRSPs above a certain limit are considered assets.33 Above these limits, the full value of student and spousal financial assets are added to expected contributions, requiring both individuals to liquidate most assets before the student achieves loan eligibility (Hemingway, 2003).
32 In Ontario, there is no expected minimum contribution when both spouses
are students.
33 Students may accumulate $2000 in RRSPs for every year that their age exceeds
18.