Decision Canada 2006

Wednesday, January 11, 2006

Liberal education plan even worse then it first appeared

I was a critic of the Liberal’s “50/50” plan when it first came out. That was before I actually ran the numbers.

The leaked copy of the Liberal red book (available at http://westernstandard.blogs.com/shotgun/files/platforme.pdf), says that “– Students will have the choice either to opt in to the new (50/50) plan, or to draw benefits from the existing Tuition Tax Credit and Education Expense Deduction.” Ok, fair enough, either you get the cash, or get the tax credits. That wasn’t announced as loudly when they announced this plan, and for good reason – the tax credits are better.

Follow along with me:

As of 2003/2004, the average Undergrad tuition was 4,025/year. That works out to a savings of 4,025 under the 50/50 plan.

The total cost for University (if completely self-paid, via savings, scholarship, or loans) is, on average, 16,100 of tax-refundable tuition expenses. Consider the average University student spends 4 years studying full-time 8 months out of the year, that works out to 12,800 that can be claimed as an educational expense deduction. So, 28,900 in total. 16% of that is 4,624 in tax savings – far better then the Liberal’s handout of cash, and this hasn’t yet accounted for other tax refundable education expenses.

These tax deductions can be saved until the student starts working full-time – giving them more of their money to pay off loans, or start up a family.

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