I'll just be highlighting some of the key points. The first is about the Canada social transfer. The federal government announced in Budget 2007 an $800 million envelope within the Canada social transfer for post-secondary education, but we continue to have what we estimate to be about a $3 billion funding gap from cuts that were made in 1995, in real terms, not accounting for increased numbers of students in that time. We estimate the actual gap to be closer to about $3.5 billion.
Additionally, there is no mandated federal reporting structure coupled to the Canada social transfer. Whether money is earmarked for PSE or not, the federal government is unable to inform taxpayers about how much funding is actually spent on colleges and universities, as opposed to other provincial and territorial initiatives. That is why we are asking for an increase of $800 million per year for the next five years, governed by agreements with the provinces to not reduce their post-secondary education spending. This dollar amount is to address both the funding gap that has accrued over the past 14 years and to place us in a better position to face the demographic crisis that Arati was referring to.
Secondly is the post-secondary student support program. We believe that aboriginal funding should be a critical area for future investment because they hold so much potential for increased participation. About one third of aboriginals are under 14 and will soon be at college and university age. Currently only 3% of the first nations population will earn bachelor's degrees or higher, compared with 13% of the general population.
In 2005, 23,000 first nations and Inuit students were funded from the post-secondary student support program, but that's down from 27,000 in 1996, when a 2% cap on program spending increases was put in place, forcing a small pot of funds to be spread among an increasing number of students. Furthermore, the structure of PSSSP prevents bands from being able to effectively run the program. INAC considers paying program coordinators to be a misuse of funds. Reserves with PSE coordinators can help young first nations and Inuit navigate PSSSP and other programs such as the Canada student loans program and increase the use of existing funds. CASA believes the 2% cap on increased spending for PSSSP should be removed and that program funding should increase by 10% to 15% to allow band councils to legally hire and fund on-reserve program coordinators.
Finally, I briefly want to highlight the student interest in funding the indirect cost of research. Every dollar that goes to funding the indirect cost of research is a dollar that need not be taken from the teaching and learning component of a university. The U.K. and European Union fund indirect costs in the range of 50% to 60%. Canada currently funds less than 25% of these costs, with the remainder carried by students through their tuition. Essentially, we believe the amount that students subsidize research in Canada should be reduced.
In closing, our thanks again to the committee for allowing us to present for you today. We look forward to answering any questions you may have.