“Moderate standard of living” and the effect on parental contribution in New Brunswick

In October 2006 to the delight of many, the Graham government eliminated parental and spousal contribution requirements from the needs assessment for New Brunswick student loans.   But, this accessibility enhancement was short-lived.  This past March, the Alward government reinstated parental and spousal contribution as a cost-saving measure.  Finance and PETL staff estimated that restoring the contribution requirement would save $1.6 million.  As students return to post-secondary studies this autumn, their families are now required to come up with increased parental contribution amounts.  One student noted his parents’ contribution had increased to over $9,000.

I decided to do some homework on the issue of parental contribution, how it’s calculated, and how we compare to other provinces in Canada.  First, here are some quick points on parental contribution and how it works.

Who must pay parental contribution?

Students are considered to be dependent on their parent(s)/step-parent(s)/legal guardian(s) if they:

  • have not been out of high school for 4 years; and
  • have not been in the labour force for 2 periods of 12 consecutive months, while not studying full-time at a post-secondary educational institution; and
  • have never been married and do not have physical custody of any children. (Source)

 How is parental contribution calculated?

To its credit, the government is transparent with the formula, and with enough time and effort you could do the math yourself if so inclined.

It starts with your family’s income after income taxes, CPP, and EI are deducted.  Then, a number from Statistics Canada called the “moderate standard of living” is deducted, which reveals what the government considers to be your discretionary income.  The discretionary income is what the government says is available to support a dependent’s post-secondary education.

The “moderate standard of living” rates for New Brunswick are:

What is considered when calculating the “moderate standard of living”?  HRDC defines the calculation as a “measure of the costs of living for the parents of dependent students, which includes the costs for various family sizes for shelter, food, household operation, child care, furnishings and equipment, clothing, transportation, health and personal care, reading material, life insurance premiums, pension contributions, charitable donations, and other miscellaneous expenses.” (Source)

Here’s a quick visual from the GNB web site to summarize how government comes up with a family’s discretionary income:

Once PETL has calculated a family’s discretionary income, it uses a subsequent formula to determine the overall parental contribution.

Was that formula enough to trigger your math anxiety?  Don’t worry, the government provides a handy parental
contribution calculator
to run the numbers for you.   We’ll be using that later on.


Why is the “Moderate Standard of Living” calculation so important?

Here are the moderate standard of living numbers for all provinces and territories in Canada used to calculate discretionary income that could be contributed to a dependent’s post-secondary education.

Take a close look at that chart above.  Note that New Brunswick has the lowest numbers in almost every family size category.  The only exception is Newfoundland and Labrador in family sizes of 2-4 members.  In other words, government has made the determination that New Brunswick has the lowest cost of living in Canada based on information from Statistics Canada.  So when determining how much a parent in New Brunswick can pay, the assumption made by PETL is that a “discretionary income dollar” goes further for a New Brunswick family than just about every other family size in any other province.

Here’s the bottom line: if your cost of living is lower in New Brunswick, you can afford to pay more towards your child’s education.  I ran some scenarios through the government’s parental contribution calculator to see how New Brunswick compared to other provinces.  Check this out:

Scenario 1: Family of four with two parents and one dependent attending a post-secondary institution, study period of 34 weeks.  Calculation assumes that both parents make approximately the same gross income.   Top line is annual household income.

 $  45,000.00  $  61,000.00  $  80,000.00  $  100,000.00  $  120,000.00
BC  $                 –  $                 –  $        233.22  $      1,172.99  $      4,557.82
AB  $                 –  $                 –  $        176.46  $      1,059.39  $      4,292.42
SK  $                 –  $                 –  $    1,071.89  $      2,993.52  $      6,765.43
MB  $                 –  $                 –  $        977.02  $      2,499.86  $      6,179.19
ON  $                 –  $                 –  $        323.57  $      1,070.10  $      4,233.81
NB  $                 –    $          72.03  $    2,003.00  $      4,183.71  $      7,879.24
NS  $                 –  $                 –  $        945.88  $      2,381.10  $      6,058.33
PE  $                 –  $                 –  $    1,337.47  $      3,490.15  $      7,227.54
NL  $                 –  $                 –  $    1,646.29  $      3,569.64  $      7,179.39
YK  $                 –  $                 –  $        623.92  $      2,429.83  $      6,423.00

Scenario 1 – Family of four with one dependent attending a post-secondary institution.


Scenario 2: Family of three with two parents and one dependent attending a post-secondary institution, study period of 34 weeks.  Calculation assumes that both parents make approximately the same gross income.  Top line is annual household income.

 $  45,000.00  $  61,000.00  $  80,000.00  $  100,000.00  $  120,000.00
BC  $                 –  $                 –  $    1,223.74  $      3,027.31  $      6,841.06
AB  $                 –  $                 –  $        863.37  $      2,230.72  $      6,006.29
SK  $                 –  $        161.74  $    2,268.57  $      4,720.23  $      8,492.14
MB  $                 –  $        106.32  $    2,083.00  $      4,230.76  $      7,910.08
ON  $                 –  $                 –  $    1,165.48  $      2,464.08  $      6,159.62
NB  $                 –    $        627.63  $    3,484.59  $      5,665.30  $      9,360.84
NS  $                 –  $          68.93  $    1,994.24  $      4,085.50  $      7,762.73
PE  $                 –  $        373.75  $    2,801.13  $      5,218.27  $      8,955.65
NL  $                 –  $        581.26  $    3,320.19  $      5,243.54  $      8,853.30
YK  $                 –  $                 –  $    1,343.82  $      3,911.38  $      7,904.55

Scenario 2 – Family of three, one dependent attending a post-secondary institution.


Scenario 3
: Single parent with one dependent attending a post-secondary institution, study period
of 34 weeks.  Top line is annual household income.

 $  45,000.00  $  61,000.00  $  80,000.00  $  100,000.00  $  120,000.00
BC  $                 –  $        326.07  $    2,432.96  $      6,246.72  $    10,060.47
AB  $                 –  $                 –  $    1,237.00  $      4,647.64  $      8,423.21
SK  $                 –  $        701.04  $    3,383.47  $      7,155.37  $    10,927.28
MB  $                 –  $        583.32  $    2,991.26  $      6,670.59  $    10,349.91
ON  $                 –  $          11.86  $    1,542.34  $      5,178.30  $      8,873.84
NB  $        188.24  $    1,074.31  $    4,057.46  $      7,753.00  $    11,448.54
NS  $                 –  $        516.79  $    2,811.87  $      6,489.10  $    10,166.33
PE  $          66.50  $        983.46  $    3,915.51  $      7,652.89  $    11,390.27
NL  $        176.18  $        975.66  $    3,778.66  $      7,388.41  $    10,998.16
YK  $                 –  $        102.01  $    2,005.92  $      5,999.09  $      9,992.26

Scenario 3 – Single parent family, one dependent attending a post-secondary institution.

In summary, according to federal and provincial documents and calculators New Brunswick families pay not only the highest amounts of parental contribution in the Atlantic Provinces, but the highest levels of parental contribution in the country.   The government’s collateral suggests that this is due to having the lowest “moderate standard of living” calculation, which means the government believes we have the lowest cost of living.

Granted, it’s hard to compare New Brunswick to all of the other provinces dollar for dollar due to the varying cost of living across the country.  That said, New Brunswick’s contribution level is still significantly higher than level of contribution from the Atlantic Provinces, as much as 10-20% higher on average.

Between 2007 and 2010, the impact of this calculation would have been softened by the elimination of parental and spousal contribution on 40 percent (the provincial portion) of a student’s loan dollars.  But, since the reinstatement of parental contribution by the present government to save $1.6 million, New Brunswick families are now expected to pay more to send their kids to university and college than anyone else.

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