Thursday, August 02, 2012

Three Reasons Why Tuition Fees Should Not Be Abolished

1.  According to Statistics Canada, there are about 1.9 million post-secondary students in Canada, including about 1.4 million full-time university and college students. On average, they paid $5,366 in tuition fees in 2011/2012. That's at least 7.56 billion dollars worth of full-time tuition that taxpayers would have to replace in order to eliminate tuition fees--well beyond anything that they are currently willing to pay.  Furthermore, in the absence of larger university grants, a tuition freeze would simply rob university Peters to pay student Pauls--resulting in a lower quality of  public higher education, and perhaps even (perversely) reduced access/supply if reduced revenue led to the closing of courses. That is why European countries that are tuition-free  have participation rates that are only about two-thirds that of Canada.We should therefore increase funding (either to schools for better programs at affordable prices, or to students for debt relief) rather than insist that provincial governments rely exclusively on price controls.

2.  Higher Education is not a universal public good like medically-necessary health care.  A case can be made that the first year or two of arts or science education is necessary or desireable for all capable citizens, in effect an extension of high school. In fact, there is some precedent for that notion in Quebec's CEGEPs and Ontario's Grade 13. Beyond that junior level, however, there should be no question but that there is an element of private cost and benefit.   This is especially obvious for post-graduate degrees and professional qualifications, with their wildly varying private and social returns.

3.  Freezing or abolishing tuition fees would heavily subsidize many people--those from affluent families or who have the luxury of living with parents while attending university--at the expense of  ordinary families. It would be far better to focus resources where they are most needed, i.e. to eliminate the most onerous instances of student debt.

Underlying each of the above arguments is the fact of scarcity.   Provincial governments are groaning under the weight of health costs that are growing twice as fast as revenues. But the federal government 's response to the alarming rise in student debt has been pathetic. The Harper government eliminated the Millennium Scholarship and then used the money it saved to increase grants--in effect, just taking the same pool of money and spreading it much more thinly.  The other thing it did was lift the ceiling on the amount of money that students could borrow under the Canada Student Loans program--and then patted itself on the back for enabling students to get even deeper into debt.

 To help remedy this  state of affairs, I suggest  a modest change of policy at the federal level. Currently, approximately 290,000 students receive a total of $589 million, for an average grant of about $1600. We should raise that total allotment to about $1 billion , in order to both increase the average grant size and the number of recipients, on the  condition that provinces regulate fee increases according to an acceptable CPI suitable to the post-secondary sector. Such an augmentation would have a singular advantage over other demands for increased government spending: any increase in taxes ( for those of us over 40 years of age who got great university educations dirt cheap) would be offset by reduced debt (for those new graduates who are entering the job and housing market with large student debts). Such an inter-generational transfer of wealth might even be in the enlightened self-interest of tomorrow's seniors, as they look to a shrinking base of  future taxpayers to support them in their old age.

On the provincial side, governments should consider a lower rate of tuition for a few core junior (first and second year) courses in arts and sciences. Government would pay universities a differentially higher grant to universities for students taking those courses, to make up the lower tuition revenue for those courses.  That would encourage high school graduates to at least try post-secondary education, thereby improving access and education levels.

Nevertheless, I would reiterate the three basic arguments against abolishing tuition:First is skepticism that aging population will want to cough up the $ 8 billion needed to replace tuition; another is equity (do we want working class interior families whose kids have to live away from home  to subsidize wealthy kids who live next to UBC?); and another has to do with quality and efficiency (it has been credibly argued with supporting evidence that an infusion of demand-side funds improves attention to teaching and students' needs).