Higher Education Strategy Associates

Author Archives: Alex Usher

March 30

Why the US Free Tuition Debate is Different

Free tuition is a growing political issue in the United States.  Most of the free tuition plans out there (for instance in Tennessee and Oregon) are effectively variations of what was recently introduced in Ontario – that is, a re-packaging of student aid so that some students pay “net zero” in college – or at least community colleges.  The plan President Obama has presented to Congress over the past twelve months or so seems to be a bit more expansive – that is, actual zero-tuition for two years of community colleges rather than just a re-jigging of aid (personally, I don’t think the math adds up on the proposal but that’s as may be).  But it’s still just for public community colleges, which make up around a third of the system as a whole.

A more expansive set of proposals comes from the work of the University of Wisconsin’s Sara Goldrick-Rab and Nancy Kendall, who have produced an even more expansive proposal, which includes two years of free tuition (that is, no up front fees to anyone, not a simple re-jigging of aid to achieve “net zero”) at all public institutions – including 4-year universities – plus substantial financial aid for all.

(I am going to skip Bernie Sanders’ even more expansive plan for four years of free tuition at public universities.  That’s partly because I’ll be getting into that later this week when I look at the various presidential candidates’ higher education plans, but also because the Sanders plan isn’t costed in a serious way.  Basically, it involves raising revenue by imposing a Tobin tax on financial transactions and states suddenly agreeing to do spend a lot more on higher education, neither of which has a snowball’s chance in hell of happening. So I’m skipping it here to focus on the programs which are actually likely to be a part of public policy over the next couple of years.)

What’s worth noting about all these plans is that they all share one thing in common: they all restrict their ambitions to public institutions.  They all assume that private higher education, whether for-profit or non-profit, will go on regardless.  In international terms, that would result in a system that looks a lot like Hungary’s or Romania’s: a mostly-free public sector and a full-cost private sector.

This assumption insulates US free-tuition types from one of the arguments made by pro-tuition types (like me) – namely that free-tuition gives away too much to the rich.  In the US, the free-tuition types can dismiss that argument by saying – with some justification – that the rich don’t go to public institutions (two-year colleges anyway) because they prefer to seclude themselves in private ones.  That being the case, very little of the new subsidy would reach the top quartile, who are the prime beneficiaries of free tuition in countries where education is all or mainly in the public sector.

In fact, if you look at the Goldrick-Rab/Kendall proposal, it’s quite the opposite: the rich in the private institutions pay quite a bit.  Her proposal takes away $18 billion in need- or income-based financial aid from students at private not-for-profit universities – it also redirects effectively all existing grants and tax expenditures at both publics and privates as well (the assumption here is that institutions will re-deploy their own aid away from 1st and 2nd years to help upper-year students so that they don’t lose out, but it seems clear that to some degree students in later years might be more loan-dependent than they currently are).

Now, that said, this proposal is not as clearly pro-poor as some of the state policies.  By including all publics (including the big flagships), it provides money to a lot of people, many of whom are not what you would traditionally call needy.  Making attendance cheaper at prestigious public institutions while increasing net costs at privates may also significantly change enrolment patterns.  Almost certainly it will mean fewer low-income students at private universities (which may or may not be a good thing, depending on your point of view); it also probably means some upper-middle class kids will make the switch back to public universities which would to some extent dilute the progressiveness of this measure.  Goldrick-Rab and Kendall would almost certainly respond that in the US, only universality will get the middle-class to buy-into a program that would help the poorest; of course, in Canada, we’ve just had two big re-arrangements of student financial aid (in Ontario and federally) which show that our politics are quite the opposite.

The important points here are: i) free community college plans are cheap because they’re near “net free” already; and, ii) a free first-two years plan is at least fiscally conceivable if you completely defund the private system (which may or may not be politically feasible).  The former of these is pretty much true in Canada as well.  The latter is quite different and depends on a very different set of institutional factors that those at play up here.  Don’t assume that the arguments which make sense south of the border also make sense up here.

March 29

Who Won and Who Lost in the CSLP Re-Shuffle

(Warning to readers: today’s blog is a long read about student aid policy.  Skip it if this kind of wonkery isn’t to your taste.)

Last week’s historic changes to the Canada Student Loans Program – which saw the elimination of the Education and Textbook Tax Credits, and an increase of 50% in Canada Student Grants – is a very complicated piece of policy to analyze.  Remember that there is no new money in this set-up: any new money given to one set of students through grants is money taken away from another set of students in tax credits.  So it’s reasonable to ask the question: “who won and who lost?” because governments sure as heck aren’t eager to spell this stuff out.

If you want to refresh yourself on the details of the tax credit/grant switcheroo, go back to our budget analysis document and read pages 2-6.  Got it?  Good.  Then we’ll begin.

Winners and losers get divided up along three axes: by geography, by “family” income, and by full-time/part-time status.  We’ll start with geography, and move down from there.

Quebec: Every single full-time student in Quebec loses $558 from the disappearance of the tax credits.  What they will get back is uncertain. The Canada Student Grants program does not operate in Quebec, so no one will “win” by getting money from that source.  Instead, the government of Quebec will receive something in the region of $500 million from the government of Canada over the next four years in “alternative payments” (that’s a rise of about 40% on what the province currently gets).  Will the government invest all that money in student aid?  We don’t know because the government is being non-committal at the moment.  If it does, how will it do so?  Again, no clue.  So we have literally no idea who the winners and losers will be in Quebec.

The Rest of Canada, Bar Ontario: Again, every single FT student will lose $558 in tax credits.  If they are considered “low-income” (I’ll come back to this), they will – once the changes are fully phased-in for 2017 – get an extra $1,000 in grants and thus be “up” on the deal by $442.  If they are not at all eligible for grants, they will be “down” $558.  What happens to the students in between – the so-called “middle-income students” – is a little unclear.

First, who are “middle-income students”?  The definition varies by province and family size (see Tables 10A and 10B here), but if you’re a dependent student from a family of four, it means (roughly) those from families earning between $45,000 and $85,000; if you’re a single independent student, it means those earning between $23,000 and $43,000 (most independent students are low-income and eligible for maximum grants, but not all of them take advantage of the program).

Now, if all you look at is the 2016-17 changes to Canada Student Grants (+$400), and you subtract the $558 in missing credits, you might think “holy cow, these middle-income students are out $158!”  Which, to be honest, I did briefly on budget night.  But the program changes aren’t ending in 2016-17.  In 2017-18, CSLP wants to stop giving out these grants as a step function, and smooth the curve, roughly like so:

Figure 1: CSG Value by Income Level, 2015-16 vs. 2017-18















(Caveats on graph: that’s for a family of four in Ontario; mileage may vary by province and family size, and we don’t know exactly what the smoothing formula will look like.)

This is a very different kind of picture.  Those just above the low-income/middle-income cut-off become massive winners – their annual grant amount will increase by almost $2,200.  However, at the other end of the spectrum, those just below the middle-income cut off – say, families making about $80K – will see changes of less than $558, and so need to be counted among the “worse-off”.

But this still isn’t the final story, because there’s another CSG change scheduled for 2018-19, which will involve extending the middle-income cut out-off somewhat (my understanding is that for our hypothetical family it will be slightly north of $100,000/yr).  That won’t help the people just below $80k, but it will make “winners” out of a number of people in the $80-100K range.

Figure 2: CSG by Income Level, 2015-16, 2017-2018, 2018-19















(Caveats on this graph are same as previous, only this time we have even less idea what the exact formula will look like.  Think of it as an artist’s rendering of a bunch of vague statements in the Budget and the Liberal Manifesto.)

Based on this, what we can probably say is that all independent students will end up as net beneficiaries (if they bother to apply for aid), as will all dependent students coming from families with incomes below $100K (bar a few with incomes in the $75-80K range).  Above that line, there will be losers to the tune of $558/year.

Ontario: The situation in Ontario is a little more complex because in addition to the CSL changes there are the similar changes to the provincial program announced in the February provincial budget.  Because the province is killing both its own education amount tax credit and its own tuition tax credit, every student (and/or their family) is losing $1,176 in combined tax relief.

Now, who actually wins and loses is difficult to tell at the moment because we really have no idea what the provincial formula will look like.  Based on a tiny sliver of information contained in charts 1.16 and 1.17 of the Ontario Budget, my understanding is that dependent students from families making under about $80,000 are net winners – in some cases by a thousand dollars, or even a bit more.  Above $110,000 it’s all net losers – students from families above this level will keep the grants they currently have but lose all their tax credits.  In between, the best guess is that all will be net losers; however, the exact amount of the loss will depend on the nature of the CSLP 2018-19 changes.

That’s dependent students – what about independent ones?  Here, it’s *very* difficult to tell.  Unlike the federal grants, current Ontario grants are restricted to dependent students, and the language in last month’s Budget is ambiguous as to whether independent students will have access to the new grants. I think it’s telling that none of the examples given in this Ontario budget backgrounder are independent students; this implies that the province simply hasn’t yet figured out what the rules for these students will be.  So for the moment we simply show how the winners and losers will break out among independent students.

(Nota bene: if you’re wondering why the Ontario change seems to have a worse winners-to-losers ratio than the federal one, it’s because money in the system is not conserved.  If you read the text of the budget carefully, you’ll note that some of the money from the eliminated tax credits is going to universities and colleges – students themselves will, on aggregate, receive less money in total after the change than before.  Less money = fewer winners.)

Part-Time Students:  You’ll notice that I’ve been focusing on full-time students: that’s because the calculus is quite different for the country’s half-million or so part-time students.  Part-timers receive a smaller amount of education and textbook credits: only $168 federally.  They all lose this amount; part-timers in Ontario will also lose an additional $100-200 or so depending on how much tuition they are paying.  The federal system makes up for this in a tiny, tiny way by increasing bursaries for part-time students – something which currently only about 13,000 students receive.  The Ontario system does not give money to part-time students at all.  So for this demographic, it seems that nearly everyone loses from the re-shuffle.

So, what do we conclude from all this?  Two things:

1)  Part-time students everywhere, and (possibly) mature students in Ontario, don’t do very well out of these changes.

2)  In the main, among dependent students at least, there will be a growing gap in net prices by family income.  In Ontario, families with below median incomes will see their net tuition fall by $1,000 or so; those with incomes in the top quartile will see an increase of nearly $1,200.  Basically, tuition is becoming a much more progressive user fee.  And that’s altogether to the good.

March 28

Metaphors and Similes

I recently came across this little blogpost from the UK bemoaning the fact that the Vice-Chancellor of Imperial College described professors as “like small business owners”.  The poster then went on to wonder: “if professors are small businesses, what kind of micro-state is the contemporary university?”

Interesting question.  The thing is, on our side of the pond at least, the idea that a university is something less than the sum of its parts has been pretty common for awhile now.  It was Robert Hutchins,  influential President of the University of Chicago from 1929 to 1945, who once described the university as “a series of separate schools and departments held together by a central heating system”.  This was an astute observation about the nature of universities and their relationships with the disciplines that inhabited them.

In the 18th and 19th centuries, universities slowly ate the sciences.  It was a pretty good trade: by joining the university system, scientists got other people to pay for the development and upkeep of their laboratories, whilst universities benefitted from the prestige of having scientists on payroll.  But there was a certain price exacted.  Universities stopped being small, unified institutions teaching liberal arts.  They had to share space in the minds of their staff with various “invisible colleges”, the global networks of scientists that form the backbone of what we call “the disciplines”.   By the early twentieth-century, the local branches of these invisible colleges were asserting primacy over the organizations to which they legally belonged.

But then, gradually, even the bonds of discipline weakened.  WWII and its aftermath created the research university, and that changed academic priorities.  By the 1960s, Clark Kerr, President of the University of California, described the university as a “federation of independent academic entrepreneurs held together by a common grievance over parking”.  That is: not only did universities have a weak centre, but now even the disciplines were not particularly an organizing principle.

More recently, in the wake of the internal credit-mill fraud at UNC, Kevin Carey of the New American Foundation called that university a “holding company that provides shared marketing, finance, and physical plant services for a group of autonomous departments, which are in turn holding companies for autonomous scholars who teach as they please”.  That’s actually a sort of mid-point between the Hutchins and Kerr positions, restoring some importance to departments/disciplines while still making clear the essentially independent nature of the professoriate.

There are other formulations of this basic thought – professors expect steady paycheques but otherwise act like independent contractors, etc.  Indeed, nudging us ever closer to the idea of professor-as-entrepreneur, innovation theorist Henry Etzkowitz made the point over a decade ago that research groups within a university have “firm-like qualities, especially under conditions in which research funding is awarded on a competitive basis”.

I’m not sure how many people would argue with Etkowitz on this point (I wouldn’t, anyway).  But the extension of the company metaphor to individual professors rather than “research groups”, as the Imperial VC did, seems to put some people’s teeth on edge.  Mostly, I think this is a field-of-study thing.  Professors in bio-medical sciences, physical sciences, and engineering probably “get” the business metaphor more than others because running a lab is a lot like running a small business: bills to pay, payroll to meet, this kind of thing.  Sure, the object is to make discoveries rather than profit, but the specific day-to-day managerial activities are recognizably similar.

Professors elsewhere in the university might kind of dig the “independent contractors” metaphor (because independence is cool even if there’s little or no money attached), but they’d resist the “small business” label because it comes with implications of “balancing books” and “paying for oneself”.  One could argue – as many in the life sciences might – that this is nonsense, because it’s always understood that the institution is kicking in money, at least as far as one’s own salary is concerned (true in Canada anyway – not so much in the US or UK).  But still, arts and social sciences profs tend to be very frightened of bogeymen like this, so they run like hell when it confronts them.

Of course, we don’t have to stick with business metaphors.  Some prefer musical ones (a good university is like jazz, on no account should it be thought of as a symphony orchestra, etc.).  But whatever metaphor one chooses, the point is to convey that universities are “loosely coupled” entities (possibly too loose in some cases, but that’s as may be).

Just don’t on any account suggest that “loosely coupled” has any financial implication whatsoever. That way a lot of unhappy and vocal professors lie.

March 24

The Continued Cheapening of the Term “Academic Freedom”

Exhibit One: A Canadian Association of University Teachers (CAUT) briefing note on outsourcing of IT services at universities contains the phrase “Academic staff can challenge access to their professional and personal data by providers of cloud services based on their academic freedom and privacy rights…”

Exhibit Two: A CAUT investigation” shows that at the University of Manitoba, one group of economics profs doesn’t like another group of economics profs, and the majority sometimes uses its democratic rights to make decisions that the minority dislikes.  This was called “a violation of academic freedom”.

Exhibit Three: Another CAUT investigation released just this month, this time with respect to certain events in the Laurentian University Faculty of Arts, related to hiring, selection of chairs, changing of students’ marks, and “failure to maintain a faculty complement” (i.e. not hire as many people as the Faculty Union would like).  According to the report’s conclusion, “the overall effect of these actions has been to create a feeling, at least among some portion of the faculty, that their academic freedom is under threat”.

Exhibit Four: This article in The Guardian entitled, “The Murder of My Friend Giulio in Egypt Was an Attack on Academic Freedom”.  ’Nuff said.

Let’s take these one by one:

Is it reasonable to suggest that outsourcing of some IT functions might have privacy implications? Sure.  Might those implications violate the terms of a collective agreement?  Possibly; depends on the wording of the CBA.  But academic freedom?  No, that’s ridiculous.  Whatever other rights might be at risk, one’s freedom to write and teach are not affected here.

Is it reasonable to suggest that the University of Manitoba’s Economics department might have been the scene of insalubrious sniping and score-settling among academics?  Maybe.  But that happens.  People within a discipline disagree within one another.  But does a department have to continue to behave democratically?  And what if your “side” loses?  Tough: that’s how self-governance works.  It’s no breach of academic freedom.  The freedom to write and teach were not affected.

Is it reasonable to suggest that there might be a management problem – even a violation of a collective agreement – if a Dean tries to stop a department from democratically selecting its own chair?  Of course (although one should note here that CAUT effectively argued the EXACT OPPOSITE in the Manitoba Economics case, demanding that majorities shouldn’t have the right to determine policy and selection).  Should one be worried about stories of (seemingly) capricious management, especially with regard to changing of student grades?  Yes.  But even if the worst of these stories is true, it amounts to bad managers, not a violation of academic freedom.  No one’s freedom to write or teach was ever in doubt.

Finally, is it reasonable to suggest that a grad student being murdered in Egypt is an attack on academic freedom?  No, that’s just deranged.  It’s an attack on life, part and parcel of a general attack on democratic freedom.

Allow me to gently suggest that if a particular concept of “freedom” stretches all the way from “not being murdered by a brutal military regime”, to “not having one’s university’s IT services outsourced”, it’s probably not a very useful concept.  If it encompasses everything, then it means nothing.

Not everything has to be about academic freedom.  Let’s save that term for the important stuff, shall we?

March 23

HESA’s 2016 Budget Analysis

The team at HESA towers was up late last night putting together – as we do every year – a review of the Government of Canada’s Budget 2016, specifically as it relates to higher education and training. You can read our full analysis, here. Below are some of our key takeaways and conclusions from Budget 2016.

It’s very difficult to call this anything but a very good budget for the higher education sector, albeit more so for universities than for colleges and polytechnics. That said, there is clearly a lot of clean-up work still to be done. If this analysis tells us anything, it’s that the new government remains not entirely in command of all its files.

On the student financial assistance front, the government did what it said it would do: axe the education and textbook tax credits, while increasing up-front grants to low- and middle- income students.  That’s excellent news, even though it creates some winners and some losers (and possibly more losers than winners, until 2017-18 at least).  The system will provide money to students faster and more transparently, and that can only be good for accessibility.  

On the granting councils, the news is extremely positive. Where the Liberal manifesto promised no new dollars at all, this budget provides the councils with the largest single increase in over a decade. In contrast to the previous government, the Liberals seem content to let the councils themselves decide what to do with the new money. Additionally, the Budget promises that the Minister of Science will conduct a comprehensive review of federal support for fundamental science. This will please many, but the lack of any specific support for applied research is sure to make colleges and polytechnics nervous.

On innovation policy, there are a lot of fine words and a few large numbers as placeholders, but an astonishing lack of detail. From the specifics available, the sentiment of the Liberal policy largely follows from that of the previous government (though the promised funding to support “innovation networks” – whatever that may mean – could represent a different path).

On skills policy, the change in tone between this government and its predecessor is dramatic. Not only is there less money available, but the government also seems to not be terribly fluent with either the language or the issues. Again, colleges and polytechnics may react negatively to this (as indeed may employers’ groups). One announcement in particular allocates $73 million for “co-operative education,” but is so light on details that it’s not even clear if institutions or businesses will receive the money.

On infrastructure, there is plenty of money for universities and colleges, totaling nearly $2 billion over the next three years. However, as with the Budget’s innovation section, there is a serious lack of detail here about how the money will actually be administered.

If there is a false note in this budget, it is with respect to Aboriginal students, as the manifesto promise to increase funding to the Post-Secondary Student Support Program for First Nations by $50 million/year was not fulfilled in this budget.

In sum, the Liberal government has shown generally good instincts concerning PSE. On one hand, funding provisions are mostly generous to the sector. On the other hand, these provisions remain largely superficial in key areas, as the government struggles to get a hold of its own machinery and sketch in the contours of its policy framework. Details, we are told, are forthcoming. Time will tell. In the final analysis, this budget deserves a solid “A” grade for sentiment. On execution, however, the government might need to “revise and resubmit.”

March 22

Marketing “Free Tuition”

With a major student aid reform almost certain to be announced in the federal budget today, it’s worth pondering how the Ontario Liberals have managed to get themselves into a bit of a mess with how they’ve marketed their own changes to student aid.

The Ontario reform, as you will recall, was a shuffling of money rather than an infusion of one (note: some of the shuffling was federal shuffling, not provincial shuffling – that is, the provincial changes are predicated on the feds making changes in today’s budget.  Nobody said that last month, but it’s true.  So if you’re wondering how today’s changes will affect the provincial changes, the answer is they’re already baked-in).

The province finally noted that it was spending a heck of a lot of money on grants, loan remission, and tax credits; so much so that some students were getting more in aid than they were paying in tuition.  And so it decided – wisely – that instead of getting beat up for having high tuition all the time, it could re-purpose all those different piles of cash into one big up-front grant so that it would be more obvious that “net” tuition was zero, or close to zero.

If you read the Ontario budget papers, all of this was stated in quite careful terms.  It’s replete with sensible, cautious, and accurate phrases like “Ninety per cent of dependent college students and 70 per cent of dependent university students from families with incomes under $50,000 will receive grants greater than their average cost of tuition.”  However, the Finance Minister’s speech was slightly less cautious: “For college and university students who come from families with incomes of less than $50,000, average tuition will be free”.  By the time that made it into the newspapers it became “free tuition for low- and middle-income kids”.  And it got such a decent reaction that the Liberal Party (as opposed to the government of Ontario) immediately started crowing about “free tuition” and placing Premier Wynne in front of banners with those two words on it.

This is problematic, as the Liberals themselves are starting to discover.  It’s one thing to want to give accurate information to students applying for university and college about how low their net prices actually are; it’s another thing to knowingly over-promise something.  Inevitably, there will be some students who think tuition will be free, when in fact grants are just getting bigger and are covering a greater percentage of tuition.  It probably won’t be that many students – the actual implementation date is a long way off – but in this kind of situation, it won’t take too many confused souls complaining to the papers in order for people to level the claim that the aid re-vamp is a fraud, and thus sour an initiative that was full of promise.

Basically, political comms people are awful.  Under no circumstances should they be allowed to try to make hay out of changes to complicated social programs.  Let’s hope the federal Liberals will avoid this kind of mistake.

March 21

An Orgy of Bad Policy in Saskatchewan

Two weeks from today, voters in Saskatchewan go to the polls.  You may be forgiven for not having noticed this one coming since it has barely registered in the national press.  And that’s not just because of the usual central Canadian obliviousness, or because it’s a fly-over province; it’s also because this is one of the least competitive match-ups since…. well, since the last time Brad Wall won re-election.  CBC’s poll currently gives the Saskatchewan Party a 25 point lead over the New Democrats.

Normally, when provinces go to the polls I do a detailed look at their post-secondary platforms.  It hardly seems worth it here.  Neither the Liberals nor the Greens have a chance of taking a seat so frankly, who cares?  The NDP has released a platform full of promises large and small (my particular favourite: on page 34, they pledge to put more refrigerators in public liquor stores in order to provide more cold beer options), but did not even bother to put out a costing document, which suggests not even they think they have a hope in hell of winning on April 4.  For their part, the Saskatchewan Party has put out a manifesto, which basically says “elect us and the good times will continue to roll”: no strong vision of the future, just a recounting of past glories and four small promises that add up to a total of $110M over four years.  The only manifesto I can think of that comes close to this in sheer complacency is the Liberal Red Book from the 2000 federal election.  Which, given that oil is still around $40/barrel, is quite something.

But hey, when you’re writing a daily blog, sometimes you need an easy target. So here goes:

The Saskatchewan NDP platform on PSE is pretty awful.  They want to “improve funding for post-secondary institutions” (By how much?  Who knows?  There’s no costing document).  They want to offer everyone a $1,000 rebate on tuition, which everyone knows is regressive.  They also want to convert all provincial loans, but this actually isn’t much money since Saskatchewan aid is mostly grant.  But, get this: they also want to get rid of interest on outstanding provincial loans, which is just a whole mountain of dumb since it has no effect whatever on access, and rewards people for choices they made years ago.  Offering to help borrowers in distress is sensible; a blanket interest subsidy for people who have already finished their studies implies the manifesto-writer has suffered some kind of head trauma.

Still, in some ways, the NDP platform looks good in comparison to what the Saskatchewan Party is offering.  As some of you probably know, for the past decade or so the Government of Saskatchewan has offered a generous set of tax credits to graduates who stay within the province.  Essentially, if you are a university graduate you can reduce your payable provincial taxes by $2,000/year for the first four years that you live in the province, and $4,000 per year for the next three (if you don’t earn enough in a given year to use all of that, you can carry forward to a future year; amounts are reduced slightly for college graduates).  Add to this the usual panoply of federal and provincial tax credits, and you realize that Saskatchewan graduates who stay in the province are receiving more in tax benefits than they ever pay in tuition.

If that formulation sounds familiar, it should – it’s exactly the way Ontario finally figured out it could market itself as having “free tuition” to low-income students without spending a penny.  But the Saskatchewan Party, instead of following Ontario and transferring money to a more front-ended set of incentives, has decided to double-down on the back-end.  Their big post-secondary-related pledge is to allow graduates to take up to $10,000 unused rebate money and use it as a down payment on the purchase of a house.

Yes, I am serious.  Check it out.  Page 8.

I mean, in a way, it’s genius; a twofer tax credit, combining the middle-class’ two fondest wishes: that government subsidize both their education and their house purchases.  And if you assume the basic premise that graduates need financial inducements to stay in the province, why not make that financial inducement in the form of a housing subsidy, which physically ties graduates to the province?

But in another, deeper, way it’s a travesty.  If the Saskatchewan Party has done such a fantastic job managing the economy, why does the province still need this financial inducement to get people to stay in the province?  If the argument is that “young people need a break”, why give so much to those likeliest to succeed (i.e. university grads) and nothing to those least likely (those who never make it to PSE)?

So, yeah, Saskatchewan.  Yet another province with a bi-partisan consensus that all the specified PSE goodies should go to students and graduates rather than, you know, the actual institutions who provide the education.  Raspberries all around.

March 18

The Cultural Aspect of “Affordability”

In tuition policy circles, there are a lot of “grass is greener” perspectives: that is, people arguing about affordability based on foreign examples of either high or low tuition.  But one of the problems with looking at “affordability” of higher education in cross-national contexts is that affordability is a matter of perspective.  What’s affordable in one country often isn’t in another.  I don’t mean this simply in the trivial sense that some countries are richer than others.  Obviously a $3,000 tuition fee is more affordable in Canada than it is in Zimbabwe.  Rather, I mean it in the sense that students and families in different countries with similar standards of living have different views about what kinds of sacrifices they are prepared to make in order to send their kids to school.

So here’s one example: East Africa.  There, you have four countries with fairly similar higher education systems.  Each has one obvious “flagship” institution, and a mix of private and public institutions.  The private sector teaches about a third of all students in Tanzania, and about half in Uganda and Rwanda; in Kenya, the figure is between 10 and 15%.  I can’t show you average fees in each country because they don’t exist, but here’s a selection of fees at each country’s flagship institution, in USD, at current exchange rates, which gives you a rough idea of the relative fee levels across the region.

Table 1: Tuition Fees at East African Flagship Universities, 2015-16, in USD






Now, let’s express those fees in terms of GDP/capita to get a sense of how “affordable” these fees are.  For comparison, tuition + compulsory fees in Canada are about 13% of GDP/capita.

Table 2: Tuition Fees at East African Flagship Universities, 2015-16, in USD (*Source: World Bank 2013)







Finally, let’s talk about availability of student assistance.  All four countries have student loan programs.  Uganda’s is very small – only a couple of thousand loans per year, starting in 2015 – while Tanzania’s is the largest, serving somewhere between a quarter and a third of all students.  The other two countries are in between, though Kenya’s system more resembles Tanzania’s, and Rwanda’s is closer to Uganda.

Now, based on all that, what do you think access rates look like?  Most people would probably put Tanzania (cheapest, best student aid) at the top, and Uganda (expensive, least available student aid) at the bottom.  But here’s what enrolment rates actually look like:

Figure 1: University Students per 100,000 of Population, East Africa, 2015 or Latest














A couple of caveats about the data.   Tanzania’s numbers are different from the others because nearly a quarter of its student body is enrolled at the country’s Open University, many of them in education programs.  Uganda’s numbers are somewhat lower because compared to the other countries, it has more tertiary students in non-university institutions.  But that aside, the real story is that Tanzania (richer, cheap tuition, better loan availability) is a lot closer to Uganda (poorer, more expensive, almost no loans) than it is to Kenya in terms of access rates.  And if you spend any time in the area, you’ll quickly learn something else: universities in Tanzania are far more likely than those elsewhere in the region to say they can’t expand without loans; the claim is that students simply won’t come if fees rise or loans aren’t expanded because “students can’t afford it”.  But on the face of it, that’s nonsense, as the costs for students elsewhere in the region are manifestly higher, and they are not thought to pose quite so severe a barrier.

The difference is entirely cultural, and has to do with collective saving mechanisms.  In Uganda, it is normal for a family to hit up their neighbours and co-workers for a few dollars each semester to help their kid get through school, which everyone does because they know that when it’s their turn to put a kid through school, the donation will be reciprocated.  In Tanzania, people will do the same to cover the cost of weddings or sometimes hospital fees, but not for tertiary education.  Locally, most people attribute this difference to the after-effects of the long period of socialism under President Julius Nyerere.  This view says that Tanzanians simply got used to government paying for everything, and citizens haven’t entirely adapted their thinking to the post-1990s reality.

I have no idea whether or not this is true, but it does beg some interesting policy questions: What’s the right policy to follow if a population has sub-optimal savings and investment habits?  Is there any practical  way to nudge a country from a Tanzania-ish state to a Ugandan one?  If not, are you stuck with permanently high tertiary education subsidies because households can’t be depended upon to contribute?

These are some serious questions, which have real implications here in Canada, too.  After all, wouldn’t Quebec universities be better off if Quebecers were a little more Ugandan and a little less Tanzanian?

Something to ponder, anyway.

March 17

A Moment of Truth

So, next Tuesday, federal Finance Minister Bill Morneau will announce the new Liberal government’s first budget.  What should the PSE community expect?

Well, it’s going to be a deficit budget, we know that much.  Underlying weakness in the economy means that tax receipts are lower than expected, and the projection for a balanced budget in 2016-2017 that the Tories presented last year has now turned into a $12 billion deficit, even before an extra dollar was spent.  They’ll inflate that by another $6 billion in “prudence factors/contingency funds” (this will make subsequent recovery look better in, say, 2019-2020).  Next, add in the $10 billion in additional spending that was promised in the election, which they seem unlikely to walk back.  Then, add a couple of extra billion because certain promises weren’t costed accurately, and you’re pretty close to $30 billion in the red.

How much of that will end up heading towards PSE?  If you simply look at the Liberal manifesto (which I dissected here and here), pretty much nothing.  There will be some big, welcome changes to student aid worth noting – less tax credits, more grants, better repayment assistance – but the reform is specifically designed to be cost-neutral.  The manifesto promised exactly $0 new dollars to the granting councils, and a bit of money on commercialization, which would go to incubators, etc., rather than universities.  Transfers to provinces will go up exactly as they would have done under the Tories (and that was baked-in several years ago, so it’s not really a “new” expenditure).  Similarly, money for some programs like the Canada First Research Excellence Fund were projected to go up over time anyway – don’t be fooled by announcements of increases from the new government.

Where universities and colleges might be able to cash in on the Liberal Manifesto is in construction.  The new government has promised new infrastructure spending, and it’s possible we could see a carve-out of some of this money for “knowledge infrastructure”, in much the same way the Tories did with the KIP program back in 2009.

The real question is whether there is anything in there for universities and colleges if the Liberals decide – in the name of stimulus spending – to ramp up the deficit beyond $30 billion.  I don’t have a good sense of how likely this is, but there have certainly been some hints that the government may go this route.  And if this happens, all bets are off.  They won’t be constrained by the manifesto, and can do what they like.  In that case, we may see some larger investments in certain areas (personally, I’d be surprised if they didn’t find money to boost granting council spending by at least inflation, but that’s just a hunch).

However, I think we are unlikely to see two things.  First, we won’t see any new programs that weren’t clearly signaled in the manifesto (like the stuff around commercialization).  The new government simply hasn’t had time to think about more than fulfilling what they promised in the fall.  Second, I think we’re unlikely to see much of what I have called the “Fourth granting council” announcements.  Under the Harper government, we regularly saw one-off funding for specific scientific projects outside the tri-council structure.  My guess is we won’t see that on Tuesday.

If it is a minimal budget, it will be interesting to see how the PSE community reacts.  I mean, the Harper government usually received pot-shots even when it *was* investing in the area (see here for a recap, if you’ve forgotten).  Will the Liberals be given similar treatment?  I wonder.

March 16

Parental Contributions: the Policy Implications

So, yesterday I showed you some of the data comparing expected parental contributions for Early Childhood Education (ECE) and PSE, and how much more we ask of younger, poorer parents compared to older, generally wealthier ones.

This is frankly somewhat perverse.  Parents of children in ECE are usually at quite an early stage in their careers, and have little in the way of cash reserves.  They are often brand-new homeowners, or saving up to buy their first house or condo.  And then we ask them to shell out thousands of dollars – often over 20% of their disposable income – to put their kids in ECE.  In contrast, parents sending their kids to university tend to be older, more financially stable, and they also have the luxury of nearly two decades to plan and save for their children’s education.  Basically: why put so much burden on a section of the population that can’t pay, and so little on a population that can?

There are a few reasons for this.  One, it’s a generational politics thing.  If anyone can be counted on to vote, it’s the over-45’s, so politicians looking to attract votes at election time naturally find ways to create subsidies that appeal to this constituency (the on-going farce of the Ontario government providing grants to PSE students from “needy” families making $175,000 per year or more would be an example of this).

Two, it’s a lack of policy and coordination.  ECE and PSE are always run by different ministries, and each ministry develops policies around contribution rates without reference to the other.  But in some ways that’s just a symptom of a larger political issue; namely, that many people don’t frame ECE as a form of education, but rather as “babycare”.  Under that framing, ECE is a benefit to the parent, not the student, and that justifies the higher costs.

A third possible rationale is that for PSE, parents split contributions with their kids, so the lower amount makes sense because the total contribution is about the same.  That’s true on the face of it, but doesn’t work in terms of our comparison.  Our study looked at expected contributions specifically towards fees, and those are simply lower at the PSE level.  There’s just a lower ceiling on costs in PSE.

But here’s a little thought experiment.  Imagine you were designing a system to help parents financially throughout their parenting careers.  Is there any way you would front-end the highest costs?  No.  In fact, you’d likely do the opposite and give the larger subsidies to the younger, less affluent and less housing-secure.

Why can’t we do this?  Basically, it’s because we don’t design programs to help people across their life-courses.  We don’t think about how to trade-off benefits across programs that people will use across their lives.  We probably should – it would be kind of cool if some government could just yank some money from its PSE budget and transfer it to help parents with ECE costs; but that’s not the way bureaucracies work.  Budgets are based on what bureaucracies do, not on how citizens and clients live their lives.

So there’s no simple way to equalize expected parental contributions.  One way to at least alleviate some of the pressure would be for governments to let parents of children in ECE pay their costs over a number of years (something I wrote about back here).  For reasons of optics, you’d probably want to call it an extended payment plan rather than a “childcare loan”, but at least it would allow parents a bit of breathing room.

More ambitiously, one could imagine allocating parents a big pool of notional money at the time their child is born – imagine a mega-Canada Learning Bond – that they could use for any type of non-formal education.  Want to use it up for ECE?  Knock yourself out, but be prepared to pay more in net terms come time for college or university (presumably, loans would still be available for PSE students to cover basic costs).  Conversely, if you’re prepared to suck up big costs when your child is young, you’ll have more money left over to reduce costs for PSE.

Generally, I’m not a big believer in the Trudeau Liberal concept of a “squeezed middle class” (see Stephen Gordon’s columns in the national Post for more on that), but if any part of the population meets that definition, it’s young parents, particularly in Ontario, Alberta, and British Columbia.  If we want to think about helping that squeezed middle, we might want to think more about how to help that segment of the population, rather than giving yet more benefits to families earning over $100,000 as their kids go off to PSE.

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