How did hundreds of millions of dollars in Ontario student aid end up at the centre of a major funding scandal, and why did it take so long for the government to act?
In this episode of DemograFix, host Cara Stern sits down with Alex Usher, President of Higher Education Strategy Associates, to unpack how this scandal unfolded, why the province froze funding across all private institutions, and who gets left behind.
They also tackle the broader post-secondary crisis facing young Canadians—from credential inflation and delayed workforce entry to whether a four-year degree is still worth the cost.
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Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.
Cara Stern: If you talk to young Canadians, you hear a familiar refrain: “I got the degree, I took on the debt, I did everything right—so why am I still struggling to land a decent-paying job?”
Governments spend billions of dollars funding post-secondary education, yet many graduates are still struggling to get ahead.
In Ontario, hundreds of millions of dollars in OSAP funding have been frozen, and the Ontario Provincial Police have been called in to investigate fraud.
Meanwhile, tuition keeps rising, and many in Gen Z are questioning whether post-secondary education offers the same value it did for previous generations. So how did we get here, and where is all that money going?
To help us unpack it, we’re joined by Alex Usher, President of Higher Education Strategy Associates and author of the annual State of Postsecondary Education in Canada report.
Welcome! Thanks so much for joining us and coming back to the show.
Alex Usher: Hi, Cara.
Cara Stern: I’ve been hearing about how a bunch of students have had their OSAP funding cut because of a scandal at seven career colleges. To start us off, what are career colleges?
Alex Usher: Career colleges are a subset of private institutions. We do have some private universities in this province, places like Yorkville University, International Business University, and the University of Niagara Falls.
But private career colleges tend to offer programs of a year or so in length, sometimes a little longer, and they are very focused on getting people into jobs quickly. Some names you might know from television ads include TriOS College, the Academy of Learning, the Trebis Institute, and a lot of private music schools.
If it’s a career college, it means it doesn’t grant degrees. They tend to offer short, targeted credentials designed to get people back into the labour market quickly.
Cara Stern: What is this scandal about?
Alex Usher: Starting about three or four years ago, a number of private career colleges—the exact number differs across reports because some operate as chains, like the Academy of Learning with locations across the province—started enrolling significantly more students.
It’s not entirely clear how it originated, but it appeared to be a scheme involving immigration consultants targeting new Canadians. Often, individuals were told they could receive thousands of dollars just by applying, which itself is illegal since third parties cannot apply for student aid on your behalf.
In student financial aid, the government calculates your need, and the institution takes its tuition cut before any remaining funds go to the student. In many of these cases, the students received no money—the institutions pocketed it.
While students technically received credentials, investigations revealed that some were completing entire program tests in five minutes. These were not real courses.
The amounts of money involved are staggering. By late 2023 and early 2024, enrolment numbers at these private colleges were spiking. Public data shows an extra $700 million to $800 million flowing out in 2023–24 and 2024–25. Documents released in February indicate that up to another billion dollars went out in 2025–26 to a handful of private sector colleges that found a way to thwart the system.
Initial reports cited figures around $380 million going to these institutions up to 2024–25, but that excludes 2025–26 spending. Government documents from February show an unexplained extra $1 billion in outlays, suggesting the scheme continued into 2025–26. It is a massive amount of money.
Cara Stern: Were the students involved in the scam, or was this driven entirely by the colleges?
Alex Usher: In some cases, the students didn’t even know they were enrolled.
When federal authorities investigated—since the federal government shares student aid costs with Ontario—they found outright fraud. Immigration agents were telling people, “Click this button, and you’ll get money.”
Some individuals clearly were not in on the fraud; the money went straight to the institutions.
Cara Stern: You wrote a blog post pointing out that the province knew as early as late 2024 that there were bad actors in the private college sector.
You inferred that this scandal was used as justification to cut grants to public university students in the most recent provincial budget. Why did the government do that?
Alex Usher: That’s the $64,000 question.
When the government cut OSAP in February, it reduced student grant funding by roughly three-quarters—a cut in the hundreds of millions of dollars—claiming the system was becoming unsustainable. It is now clear the system was unsustainable because of malfeasance at a handful of private colleges, and the government knew that at the time.
The Association of Career Colleges had been warning them since 2023 about these specific colleges. Instead of cutting off those bad actors to make the system sustainable, the government cut grants for all public students in February. It wasn’t until May or June that they finally restricted funding to those specific private colleges.
Cara Stern: That’s wild. They knew so much money was being wasted, yet they didn’t act on it at the time.
Alex Usher: Not as far as we can tell.
Cara Stern: And now they’ve paused OSAP payments to all private institutions, not just the ones involved in the fraud. Why?
Alex Usher: My theory is that it’s a political distraction.
The last time we talked on your show, we discussed public-private partnerships and how the Ontario government kept pouring gasoline on the fire of international student enrolments. They got out of that situation without too much political damage by pointing fingers and saying, “Privates are bad actors.”
Private higher education doesn’t have a lot of friends in this country, so if you point at privates and say “bad,” people will forgive a lot of other stuff.
To make that look plausible, they’ve cut off all private institutions. A lot of private institutions are going to go under.
The statement the provincial government put out suggests we’re probably looking at March or April at the earliest before this is resolved, meaning companies will not be able to enrol funded students for six months. Larger operations like Yorkville University or the National Ballet School will be fine, but a lot of small mom-and-pop shops are in severe trouble. We’ve already had one in Sudbury announce it is ceasing intake.
Cara Stern: Were these private colleges also receiving funding through the Skills Development Fund?
Alex Usher: Some of them likely were eligible for and receiving those funds as well.
Cara Stern: It's interesting seeing how this government seemed to be trying to push money toward private sector universities and colleges while not funding the public ones, and now they're turning around and saying, "Well, private is bad." It's like, is it bad? Because you guys seemed to like it before.
Alex Usher: Clearly, one of the reasons they were defending these malfeasant colleges initially was precisely because they were private. I also think there could be questions about political donations from the people running these colleges.
They just bought into "private is good" and didn't want to look too closely at it.
Cara Stern: What happens to the students who are in the middle of a program at these places or expected to start? All of a sudden they don’t have any money—what’s happening to them?
Alex Usher: They’re going without and dropping out of school.
Career colleges don’t work like public universities with fixed semesters; their big selling feature is continuous intake, meaning classes start all the time. If you’re a bit older or have kids, you don’t want to wait four or eight months for the next intake. That on-demand nature is one of the good things about private career colleges, but now nobody can get aid, so who is going to enrol?
Cara Stern: It’s a wild story. They knew all this money was being spent fraudulently, and instead of stopping the bad actors, they just stopped handing out OSAP to all private colleges. That’s horrible for all the people stuck in the middle who are in school trying to get better career prospects, who might not even have the money to pay for it right now.
Are the colleges letting them continue and hoping this gets sorted out, or are they saying, “Sorry, if you can’t pay, you’re out”?
Alex Usher: I don’t think anyone is saying “can’t pay, you’re out” yet, but there are hundreds of career colleges in the province, so different things are happening.
Some places are just saying they aren’t taking new students. The province could have stopped this at any time—they have extensive powers over private colleges and can literally walk in and inspect files at any time. It seems to me they chose not to.
Cara Stern: It’s hard to look into this and find out what really happened, especially now that the provincial government has decided to opt out of Freedom of Information requests in so many areas.
They haven’t gotten rid of everything in FOI. Journalists like Alison Jones at The Canadian Press and Kelly Grant at The Globe and Mail have done fantastic work using FOI and court files.
Since some of these colleges are now suing the province, documents are entering the public record about who knew what and when. We’ll get to the bottom of the story relatively quickly.
Cara Stern: That’s wild. We’ll definitely have you back once we have more answers!
I wanted to ask you about the broader picture, because one thing I hear a lot from young people is whether investing in post-secondary education is going to pay off for them the same way it did for their parents—many of whom are Gen Xers or Boomers. How different is that experience for them in reality?
Alex Usher: It’s pretty similar to Gen X—in some ways, actually better than Gen X. Gen X had a terrible time! Nothing was as good as what the Boomers had, so it just depends on who you’re comparing to.
Cara Stern: It seems like over time the number of credentials you need to do basic jobs has gone up, which leads to credential inflation. Boomers could make a lot of money earlier on in their careers, giving them extra years to spend making money instead of paying for school. Why was it different for Gen X?
Alex Usher: Sixty years ago, when the Boomers were in school, roughly 10% of the population got a university degree. Today, about 40% get a university degree, another 30% get a college credential, plus trades on top of that. So a lot more people hold university credentials now.
Just in this century, the percentage of young adults (ages 25 to 34) who have a master’s degree or above has gone from about 7% to 12%. That reflects some of the credential inflation you’re talking about—people asking, “Why do I need this second degree?” But that’s still a fairly small group (an extra 5%). The biggest increase in time spent in school is simply people moving from no university to a university degree.
Cara Stern: But having so many more people in university programs means that if everyone has a degree, you don’t stand out as much. It creates a difficult job market where, if you don’t have a degree, you’re competing against so many people who do for jobs that probably don’t even need it.
Alex Usher: There are at least two issues there. First, yes, there is credential inflation and increasing professionalization. Sixty years ago, journalism wasn’t a profession that required a degree; even 30 years ago, not everyone needed one. Now it’s practically 100%. Certain types of nursing and dietitians require extra credentials, which is gatekeeping by people inside the profession who want to limit entry.
Second, it becomes an arms race: as more people chase a set number of jobs, they get extra education just to stand out. But the number of jobs that genuinely require higher education has also gone up quite a bit. As a result, starting salaries for graduates now versus 20 years ago are pretty similar.
Salaries dropped temporarily after the “double cohort” in Ontario when we eliminated Grade 13 (OACs) and pushed two classes through at once, but graduate salaries have risen again in the last decade. It varies by field: humanities and science haven’t done as well over the last 10 to 15 years, whereas math, business, and health fields have done very well.
Cara Stern: Do you think it’s still worth getting a post-secondary education if you can afford to do it?
Alex Usher: It always depends on what you’re paying in tuition. At a public university, paying $8,000 in tuition plus $1,500 in fees per year over four years comes out to about $40,000—the cost of a good car—and it will pay off over your lifetime.
What people get upset about these days, particularly as housing costs go up, is that they wish it took less time. It’s not so much the tuition that matters, but the number of years you pay it. We didn’t always have mandatory four-year degrees! In the late 20th century, three-year degrees were the most common in Ontario, and they still are in Manitoba and across Europe. People do three years for a bachelor’s, and only take a fourth year if they want an honours degree. People just want to get their careers started faster and get out of the classroom faster.
Cara Stern: That makes a lot of sense when you think about how many years you spend in school—that’s time you aren’t earning. We’ve been doing a lot of shows about why people are having fewer kids, and one thing I hear is that people don’t feel established in their careers until much later.
Of course they don’t feel established until later, because they don’t even start their careers until much later than previous generations! It seems like there are so many knock-on effects.
When it comes to costs, Boomers always talk about how they used to pay off tuition by working a summer job. Now, you can work all summer and still not cover tuition, and definitely not tuition plus rent.
Alex Usher: That depends on what you’re comparing to. If you compare to 60 years ago, absolutely. People could work on highways or cut down forests in the summer and make enough to pay for school.
One reason was that professors made less, so the cost of providing education was lower. Another reason was that only 10% of people went to university—it’s easy for the government to fund higher education when only 10% go, but much harder when 40% go. We funded that massification by shifting some costs onto students. They still make money over their lifetime, but it takes longer to get started.
Cara Stern: How do we solve this? Should universities stop requiring four-year degrees and go back to three-year degrees? How do we get out of this problem?
Alex Usher: There’s no simple way, because credential gatekeeping kicks in fast. But there are a lot of accreditation agencies in health, engineering, and other fields where we could simply decide we don’t need to keep adding years on.
Does it really need to take eight years to become a doctor? In other countries, it doesn’t. Does a bachelor’s degree need to be four years? In Europe, it’s three.
Cara Stern: That makes me think of teachers in Ontario! I remember when there were too many teachers, so they increased how long teacher’s college takes to two years. Then we had a shortage, so recently I heard they decreased it back down!
Alex Usher: That’s a perfect example—it’s ridiculous!
No degree is an automatic guarantee of a job, and that hasn’t been true since the 1973 oil crisis. Youth and graduate unemployment rates today are pretty close to where they were in 1976.
What’s better now than 20 or 30 years ago is student aid. Tuition was lower back then, but we give out far more non-repayable grants, scholarships, and tax credits now—about three times as much as 25 years ago.
The worst time to be a student was actually 1994 to 1998, with tuition rising, grants being cut, and students graduating into a terrible economy.
Before the recent OSAP cuts, Canada actually gave out more money in non-repayable student aid ($13 billion) than it collected in domestic tuition ($11 billion). We have what I call “net-zero tuition” on a system level. We have a generous system, even if the way we hand out the money is opaque.
Cara Stern: I’m looking forward to having you back once we have more answers about these OSAP cuts. It’s really frustrating to see a government see a problem coming, do nothing about it, and leave students facing all this collateral damage.
Alex Usher: Yeah, and it’s even sadder that there doesn’t appear to be a lot of accountability for it.
Cara Stern: That’s what you’re here for!
Thank you, everyone, for watching and listening. The producer of this episode is Meredith Martin—who, for full disclosure, our guest happens to be dating! And it was edited by Canadian Civil, who our guest is not dating.
If you have any thoughts about how your degree helped you or didn’t, post them in the comments on YouTube. And we’ll see you next time!
Additional Reading/Listening that Helped Inform the Episode:
The Contemptible OSAP Cover-Up
Court records show Ontario’s ‘serious concerns’ about three career colleges
This Ontario career college has suspended classes. Here’s why
$385M in OSAP grants sent to students at 7 career colleges last year, documents show