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Jeopardy, Jackpot, or Wheel of (Mis)Fortune?

September 13, 2013

3-minute read

It seems all that fuss being kicked up about tuition fees rising faster than inflation, significant levels of student debt, dismal employment prospects for young people, and parents having to postpone retirement to help shoulder some of the burden under which their kids are struggling has not gone unnoticed.

As we discuss in Degrees of Uncertainty, the average cost of tuition and compulsory fees for Canadian undergrads will rise by 13% over the course of their degree, from $6,610 this fall to an estimated $7,437 in 2016-17. Since 1990, average tuition and compulsory fees, even adjusting for inflation, have tripled since 1990.

Several provincial governments have taken baby steps towards what passes for up-front tuition fee reduction strategies. Ontario’s (not exactly) 30% Off Tuition Grant, PEI’s George Coles Bursary, and Nova Scotia’s two-tier tuition policy for in-province and out of province students (something that Quebec’s been working for years) seem to indicate a level of realization that the current system is growing increasingly unsustainable.

However, with the exception of Newfoundland and Labrador, provincial governments seem to have a real aversion to making universal commitments to affordability. If “relief” programs are offered, they are generally targeted to in-province students attending in-province universities in what looks a lot more like a student-retention-and-bad-optics-management strategy. After all, nothing says “follow your dreams” like tuition policy that prices local kids out of their hometown school.

So Nova Scotia and PEI make it a little less expensive for local students to stay in-province rather than go to Newfoundland and Labrador where tuition and other compulsory fees are cheaper. A lot cheaper. This fall, in-province PEI students will pay approximately $5,020, and in-province Nova Scotia students $6,258 (you pay way more, of course, if you’re from out of province). By contrast, those same students will pay just under $2,900 in Newfoundland and Labrador.

There is no doubt that government, in spite of steep declines (from 71% in 1990 to 55% in 2009), is still the most important funding source for universities. And clearly some provincial governments are directing money to offset tuition fee increases for some students in some situations in some provinces. But this has resulted in a system marked by increasing complexity, one that makes interprovincial comparisons far more difficult. It also undercuts any commitment to universality because it moves towards a system where the only students who can go away to university are the ones who can afford to do so.

Uncertainty is exacerbated by the fact that while provincial governments are fairly open about committing to fee hikes (and the percentage by which this will happen annually), assistance programs are far less predictable—they can be implemented, changed or canceled with very little warning, leaving students in the uncomfortable position of entering into an expensive proposition while being kept in the dark about what they will ultimately end up paying.

Certainly tax credits do provide some relief, but again this is assistance after the fact, long after tuition fees have been paid (turns out the Registrar’s Office doesn’t accept tax credits as payment), and their use can only be maximized once the student’s income is sufficiently high. And given the instability of today’s economic climate, this makes the usefulness of tax credits even less certain.

We would also do well to stop comparing ourselves solely to the U.S. where tuition fees are generally significantly higher (so what do Canadians have to complain about, eh?).  Canada has the fifth highest tertiary tuition fees in the OECD, and eight of the 26 countries with tuition data charge nothing at their equivalent colleges or universities. Alberta is the most expensive Canadian province in which to attend tertiary education, and if it were its own country it would also rank fifth out of 26. Contrast this with Germany and Finland where public investment in tertiary education is a clear priority (and provides significant social and economic returns).

There is no doubt: when university funding is shifted from public sources to private, individualized ones—tuition and other compulsory fees—it makes the entire system less progressive.

It would be much more efficient—and much less divisive—to apply government transfers up-front in the form of immediate tuition fee reductions…or even (gasp!) eliminating fees altogether. This would benefit all students regardless of their home province, or their income before or after graduation, or their ability to navigate provincial government websites to find the grants for which they might qualify.

It would also demonstrate a universal commitment to affordability—ensuring all students regardless of individual circumstance have the opportunity to broaden their educational horizons without being saddled with debt upon graduation—and to the recognition that the very high social and economic returns from higher education are collectively shared and well worth the investment.

Erika Shaker is Director of the CCPA's Education Project and co-author of Degrees of Uncertainty: Navigating the changing terrain of university finance

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