Saturday, February 02, 2008

NDP deserves a B for their new post-secondary aid policy

Recent B.C. premiers have deserved failing grades on the issue of post-secondary funding. When premier and Minister for Youth Glen Clark obliged student demands for a tuition fee freeze, he helped accessibility but at the cost of compounding a revenue shortfall for our universities. When Gordon Campbell heard the universities' cry for financial help by relaxing the ceiling on tuition fees, plus making a few well-publicized funding announcements, he damaged student accessiblity to the point that British Columbia now leads the nation in student loan debt per capita, at $27,000 for a four-year program ($3,000 above the Canadian average).

The most basic lesson from both the Clark and the Campbell years is therefore fairly obvious.That is, a policy that focuses on regulating or deregulating the price of higher education is really only half a policy: any government that simply addresses accessiblity through price controls damages the quality of universities, just as any government that simply deregulates tuition without a concomitant policy for student incomes damages access and equality of opportunity.

As a university professor from a working-class family, I am particularly attuned to the latter point. I often think that the 1970s and 1980s represented a high point for equality of opportunity in our society, at least for white males. But besides the barriers posed by tuition fees and the cost of living is a more hidden source of inequity: the highly regressive character of the funding formulas that are typically used to allocated funds to recipient universities. Since public universities are typically funded out of consolidated revenues (on a per-student basis), and because children of higher socio-economic groups are disproportionately represented in universities, the system of flat-based funding represents a regressive transfer from poorer to more affluent families. As Nicolas Barr puts it, "the taxes of poor families contribute to the consumption by the rich of a university education which helps to keep them rich." (The Economics of the Welfare State, 3rd edn Stanford, CA: Stanford University Press, 1998, p.324)

There are also numerous efficiency and quality arguments against such a reliance upon supply-side funding. Public universities have difficulty competing with elite private institutions for the best faculty and the highest levels of research funding; lower tuition fees are linked with higher drop-out rates, perhaps explaining why Quebec has not realized great improvements in access despite having very low tuition fees. And, as no less an authority than Adam Smith once observed, "Beyond some point the higher level of endowment to any university, the lower its efficiency."

But wait a minute--if supply-side funding out of general consolidated revenue is both inequitable and inefficient, doesn't that imply greater reliance on demand-side funding? And doesn't that mean--gulp--higher tuition fees? Yup. But that need not be a barrier to access, provided there is a generous income-contingent grant -and -loan program, or tied demand-side subsidy that is targetted to tuition fees. I suggest that at the federal level there be a $2 billion national tuition voucher scheme, giving a tuition voucher up to $5,000 annually to the 400,000 neediest students , as based on family income and/or existing debt load, that would both significantly reduce average student loan debt and simultaneously increase university revenues. It would differ from both existing policy and the NDP platform in that it would allow universities greater latitude to compete for students on the basis of quality (paid for by higher fees, up to a voucher-related limit) as well as on the basis of price.

It is good to see the BC NDP get away from its Clark-era fixation on simply controlling tuition fees, and it is great to see a leading political party proposing to do something about interest costs on student debt. But the NDP also needs to recognize that the purpose of increased university funding is not that it allows universities to reduce their reliance upon tuition income, in favour of even greater reliance on inequitable and inefficient supply side funding. A good balance between demand-side and supply side revenues will have benefits for efficiency, quality, and flexibility on the part of universities and choice as well as equitable access for students.


Kuri said...

As a student in BC during the last 2 NDP years and first 3 Liberal years, I can say (anecdotally mind) that the quality decreased significantly in the later (Campbell) half of my undergraduate degree. Class sizes increased and instructors were more likely to be sessionals, less likely to be full-time profs.It really made me wonder why I was paying more tuition for a lower quality experience than I had during the first 2 years. Therefore, I can't really support your conclusion that deregulating tuition has a positive effect on the quality of education in BC. In my experience as a student (and this was something that many of my peers would agree upon) the deregulation had either no effect or a negative effect on the quality of teaching.

Mark Crawford said...

Kuri: Thank you very much for your very fair comment. Could it be that I have been away from BC (or my nose has been in an economics textbook) for too long? Maybe.

I suspect the answer is that under the first three years of the Campbell government the increased tuition was only able to partially replace a shortfall in government funding. It was a time of foolish supply-side tax cuts, deficits, and retrenchment. SO universities weren't able improve quality, or perhaps even maintain quality in the face of rising costs. Hopefully that situation has improved since 2005.

Also take note: I don't believe in higher tuition fees UNLESS students have tuition vouchers and UNLESS the higher tuition results in greater net revenue for universities. Unfortunately for you--neither of those conditions existed in BC 2001-2004.

Anonymous said...

Thanks for this, Mark. I like your piece.

I am concerned that ordinary scholarship and bursary schemes don’t really compensate for higher fees, since the sticker-shock of the higher fees often prevent people from coming before they really learn about financial aid. But I do like the idea of targeted, pre-issued, bursaries/vouchers.


Mark Crawford said...

Thanks J.....--as my review of Trebilcock & Daniels book on vouchers shows (recent Canadian Public Policy, reproduced on my blog) I am not totally enamoured with vouchers as a panacea for all social services. But I think that they work rather well for post-secondary financial aid and labour market training.