Universities could also feel pinch with its bursaries and scholarships

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By Kristine Owram
THE CANADIAN PRESS

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TORONTO - Canadian students could face an increasingly difficult time funding their education as the ongoing financial crisis makes credit and financial aid in the form of pre-approved credit cards, bursaries and scholarships increasingly difficult to come by.

"Certainly there will be fewer additional funds available to students through the economic crisis," said Julian Benedict, co-founder of the Coalition for Student Loan Fairness.

Benedict said the accessibility of government loans -- the primary form of support for most students -- hasn't changed.

"However, because you cannot get enough loan money in an individual year to cover all your costs, many students rely on lines of credit or credit cards," Benedict added.

He said pre-approved credit cards, which were once heavily promoted on Canadian campuses, are becoming harder to get as banks move to reduce their exposure to risky customers, including students, who are often too young to have an established credit rating.

"What we're hearing is that generally students are having a tougher time getting credit cards and that the pre-qualified cards aren't as easy to obtain on campus as they used to be," Benedict said.

"That can make things more difficult for students when they do need that extra income to cover their costs over and above their student loans."

And although lending policies haven't tightened up yet -- TD Bank (TSX:TD), Bank of Montreal (TSX:BMO) and RBC (TSX:RY) all said their approach to student loans and lines of credit hasn't changed -- there's a chance students will find themselves with fewer options before the financial situation improves.

"I think in general you can expect that it may get a little bit tighter for students from the banks in terms of lines of credit," said Murray Baker, Vancouver-based author of The Debt-Free Graduate.

Baker added that Canadian students are much better off than their American counterparts, who are more dependent on troubled financial institutions to fund their education.

In Canada, government loans are relatively easy to obtain, although many students are forced to seek other forms of income -- including scholarships and bursaries from the universities themselves.

This is another area where students could see their options suddenly limited, Benedict said.

Universities tend to support their bursary and scholarship programs through endowments, or long-term funds made up of financial gifts donated by alumni, corporations and foundations. The money is then invested and the interest used to fund various programs.

But the recent market slump has hit many endowments hard, which could affect student funding in the longer term.

Catherine Riggall, vice-president of business affairs at the University of Toronto, said the endowment at Canada's biggest university has shrunk along with the markets.

She said "the cushion that we used to have is at this point underwater," but the university doesn't intend to cut student funding for the time being.

"Obviously if things get even worse than they are, who knows, but right at this point we will definitely be continuing with student support, bursaries, student aid. That's one of our highest priorities," Riggall said.

There could also be increased competition for bursaries and scholarships as the newly unemployed head back to school, Baker said.

Benedict said many students are struggling in an increasingly difficult economic environment, and called on the federal government to reduce interest rates on government student loans -- currently sitting at 2.5 per cent above prime -- to give students a break once they graduate.