HESA

Higher Education Strategy Associates

Author Archives: Alex Usher

September 07

Tuition Fees in Canada, 2017-18

So, yesterday was the annual tuition fee data dump from Statscan.  Probably worth it to go over the data just a bit to see what the story is.

The data everyone likes to focus on is the “average undergraduate tuition fee by province”.  This year, it looks like this (note that “fees” here do not include ancillary fees, only tuition proper):

Figure 1: Average Domestic Undergraduate Tuition Fees by Province, 2017-18

The other number that people always look out for is the one that shows increases over time.  For reasons that defy easy comprehension, Statscan always publishes these in nominal rather than real dollars which always leads to inflated estimates of tuition increases.  So I’ve put all the figures in 2017 real dollars in Figure 2:

Figure 2: Average Domestic Undergraduate Tuition Fees, Canada, 2006-07 to 2017-18

 

So, accounting for inflation, the increase in tuition fees is 25% over 11 years, or an average of 1.8% per annum.

Now keep in mind that what is being averaged here is tuition fees across all domestic undergraduate students, not fees across all undergraduate programs.  So where a program has one set of fees for in-province students and another for out-of-province students (e.g. Quebec, Nova Scotia) the two get averaged.  Also, even if there is no change in posted tuition, if more students enrol in more expensive programs (e.g. engineering) and fewer in cheaper ones (e.g. Arts) then that will still mean an increase in average tuition.

And tuition does vary a heck of a lot by field of study even at the undergraduate level.  This is actually a nuance of Canadian tuition fee data which is not well understood outside the country, where variable tuition by field tends to be quite rare. Here’s the national average by field:

Figure 3: Undergraduate Average Tuition by Selected Field of Study, 2017-18

Note here that the presence of a few very expensive professional disciplines drags up the average substantially.  In humanities and social sciences, average tuition fees are 12-15% lower than the national average, and in education it is 29% lower.  This is one of those cases where the average price is somewhat higher than the median price – something to keep in mind when thinking about affordability.

There was some other interesting data in yesterday’s release with respect to domestic graduate student fees (up 1.8% in nominal terms, vs. 3.1% for undergraduate fees) and for international students fees (surprise surprise – up 6.1% in nominal dollars), but the above covers the main points of interest.  Nothing terribly exciting, but worth re-capping and putting into context nonetheless. 

September 06

Canadian University Finance Statistics (2015-16 Edition)

The 2015-16 version of Financial Information of Universities and Colleges Survey (which, confusingly, doesn’t include community colleges) was released over the summer.  As in previous years I’m going to do a little summary of what it tells us about how income and expenditure has change over one year and five years.  Just so we’re all clear, all figures here are in real (i.e. inflation-adjusted) dollars.  And – caveat – comparisons with 2010-11 are a little weird because Quebec universities changed their fiscal year-end that year and only reported 11 months of data, meaning that nationally, reported expenditures for that year are probably about 1.5% lower than they normally would be.  This means that 5-year averages are probably inflated slightly compared to reality.

For starters, let’s look at total income by source, which was $34,385 million.  That’s down nearly 5% from the previous year, though the a little over 75% of the drop is due to a fall in endowment income (apparently everyone got hammered in 2015).  Income from governments fell by a little under 2%, nearly all due to reductions at the provincial level.  Over the past five years, revenue from government is down by a stonking 12.6%.  However, rising fee income mostly compensates for this: it rose by nearly 5% over 2014-15 and 27% over 2010-11.  For the most part, these increases are not coming from domestic student fees, they are coming from increases in international student enrolment.

Figure 1: Change in Total Income by Source, Canadian Universities, 2015-16

What’s really interesting about the total income numbers is how small the government numbers are becoming.  Already as of 2014, the university sector as a whole took in more money from non-governmental sources (fees, donations, sale of goods and services, etc) than it did combined from the federal and provincial governments.  On current trends, income from student fees will surpass provincial government grants to universities in 2020-21, and will pass combined federal and provincial contributions in 2024-2025.  At which point it would be fair to say we will have moved from a public university system to a publicly-assisted university system.

Now, on to the changes in income by Fund, which I show below in Figure 2.  This tells a slightly different story.  Operating income actually kept pace with inflation in 2015-16 and over a five year period actually increased by 8.8%.  Endowment income fell from about $1.5 billion to about 27 million, or a fall of roughly 98%, but this is an erratic income source and like I said last year was a bad year.  Capital expenditures are down substantially, but recall that in the base year of 2010-11 the feds were sacrificing billions to the Construction Industry Gods to keep the recession at bay; in fact, current capital expenditure is close to the 30-year norm.  The interesting piece is that sponsored research income is down 6% over the past five years.

Figure 2: Change in Income by Fund, Canadian Universities, 2015-16

On to expenditures by type.  Total expenditures are roughly unchanged either over one year or five years. If you’re wondering how this is possible when income is down, recall that most of the income drop is in endowment, which has very little impact on year-to-year spending since it’s supposed to all be salted away anyway.   But while total expenditures are unchanged, some fairly big line items continue to rise, over the medium if not the short term.  Academic salaries by 7.5%, salaries to non-academic staff 8.3%, total compensation (including benefits) 8.3% and scholarships – three-quarters of which go to grad students – up by a whopping 16.4% since 2010-11.  Total scholarship expenditures are now just shy of $2 billion, which means institutions are giving back to students over 20 cents of every dollar they collect from students; from domestic students the figure is closer to 30 cents.

Figure 3: Change in Selected Types of Expenditure, Canadian Universities 2015-16

 

Now you may well ask yourself: wait a minute.  Total expenditures are flat, but salaries and scholarships are rising.  So how does this balance? Well, simple enough: non-salary, non-scholarship expenditures have fallen by 14% in the last five years in constant dollars.  Some of that is just buildings not getting built (no loss, in the eyes of some), but other things are getting squeezed, too; notably, renovations, travel and printing.

Finally, let’s look specifically at what’s going on inside the operating budget (that is, excluding ancillary, capital, research and the like) which accounts for about 60% of the total.  Figure 4 shows that overall, operating expenditures rose by 14.3% over five years.  How is this possible when operating income only rose 8.8% you ask?  Mainly, because universities have been trimming margins: universities were running surpluses five years ago and mostly aren’t any more.

 

Figure 4: Changes in Operating Budget Expenditures, Canadian Universities, 2015-16

The big expenditure increases are in ICT and student services.  In the case of student services, an awful lot of that increase is scholarships.  In ICT, interestingly, the cost of equipment purchased has actually gone down: the increases are in staff costs, consulting contracts, professional fees and equipment rentals.  Make of that what you will.  The biggest piece of the pie – Instruction and non-sponsored research (meaning basically what it costs to run core academic functions), which takes up about half the operating budget – is up 11.7 % over five years.

So there you go.  Don’t say financial reports aren’t fun.

 

September 05

Did CIBC Really Just Call for Lower Tuition?

Last week, HuffPost ran a story highlighting a newsletter from CIBC Economics about higher education.  It was actually a pretty meandering letter (CIBC Economics pieces on higher education are usually notable for their interesting use of data and somewhat shallow understanding of actual policy – here’s an earlier example).  The newsletter touched on a number of issues around educational supply and demand, but what HuffPost glommed on to was what a point about tuition in STEM programs and led with the headline “CIBC argues against “Free Market” education, calls for lower tuition”.

So, true or false?  Is CIBC joining CFS on the barricades?

Well, sort of.  What the newsletter actually said, after noting with approval that enrolments in STEM programs were rising (indicating, in their view, greater student responsiveness to economic signals) and that tuition fees are rising faster in high-demand programs such as Engineering, was:

(This) price appreciation can slow or even derail the positive momentum observed in recent enrolment trends. If Canada wants to have more graduates in STEM or any high-paying field, the country needs to work to make it affordable. This type of pricing only exacerbates already ingrained income inequalities across the country.

So, two issues here.  The first is that contrary to what HuffPost implied, CIBC is not blanket anti-tuition fees.  It’s against higher tuition fees in STEM programs (particularly Engineering) because it likes STEM programs (particularly Engineering) and is under the impression that lower tuition will attract more students to the fields.  HuffPost’s headline was thus misleading at best.

But there’s a second issue, too; namely, that CIBC’s argument is pretty much bollocks. Here are four reasons why:

First: it’s flat-out wrong about the nature of the problem.  The problem of filling more engineering spots was always about supply, never about demand.  Engineering is an expensive discipline and ramping up the number of spots is expensive and in the absence of new money from government, funds basically have to be wrung out of the system through various types of program/admin savings and retirements.  That takes time.  And it’s this, more than changes in student demand, that account for the lag in enrolments.  I know CIBC is used to markets that clear, but higher education is not one of those markets and they shouldn’t analyse it as if it were.

Second: Because adding Engineering spots costs money, fees are part of the solution, not part of the problem.  If you reduced fees in Engineering, I guarantee you there would be fewer spots.  And how would that help?

Third: there’s zero evidence that increasing fees, in the context of a fairly generous student aid system where grants are significant and loans are easily available, have had or will have any noticeable effect on demand. Indeed, as the paper itself notes, these programs are growing in demand as fees rise.  It’s a Yogi Berra-esque “nobody goes there anymore, it’s too crowded” kind of argument.

Fourth: it’s wrong on equity grounds.  These are high-demand, high-reward occupations.  Why in God’s name would we want to increase private rates of return on these, when demand for spaces in these programs are already in excess of supply?  That would just increase windfall gains to the future wealthy.

In short: HuffPost exaggerated its headline.  But CIBC did make a suggestion about reducing tuition, one that suggests they don’t pay a whole lot of attention to the actual underlying dynamics of higher education beyond throwing a stat-heavy newsletter together on the subject once a year.

Do better, guys.

September 01

McMaster > McGill?

The Shanghai Rankings (technically, the Academic Ranking of World Universities) came out a couple of weeks ago.  This is the granddaddy of all international rankings; the one that started it all, and still perceived as the most stable and reliable measure of scientific hubs; essentially it measures large concentrations of scientific talent.  And there were some very interesting results for Canada, the most intriguing of which is the fact that McGill has fallen out of Canada’s “top 3”, replaced by McMaster.

So, first of all the big picture: Toronto was up four places to 23rd in the world (and 10th among publics, if you consider Oxford, Cambridge and Cornell to be public), while UBC rose three places to 31st.  McMaster and McGill rounded out Canadian institutions in the top 100 (more on them in a second).  Below that, University of Alberta stayed steady in the 101-150 bracket, while Université de Montreal was joined by Calgary and Ottawa in the 151-200 bracket, bringing the national total in the top 200 to 8.  Overall, the country stayed steady at 19 institutions in the top 500, though Université du Québec dropped out and was replaced by Concordia; that puts the country behind the US, the UK, China, Germany, Australia and France but ahead of everyone else (including, surprisingly, Japan, which has been doing terribly in various rankings of late).

But the big story – in Canada, anyway – is that McMaster rose 17 places to 66th overall while McGill dropped four places to 67th. This is the first time in any ranking (so far as I can recall) that McGill has not ben considered one of the country’s top three institutions, and so it raises some significant questions.  Is it a matter of McGill’s reputation going down?  An echo of l’Affaire Potter?  A consequence of long-term funding decline?  What, exactly?

The answer is it’s none of those things.  Alone among the major rankings, Shanghai does not survey academics or anyone else about institutions, so it has nothing to do with image, reputation, prestige or anything else.  Nor, by the way, is funding a credible suspect.  Although we’re always hearing about how McGill is hard done by the Quebec government, the fact of the matter is that McGill has done as well or better than McMaster in terms of expenditures per student.

Figure 1-Total Expenditure per FTE Student, 2000-01 to 2015-16

Source: Statistics Canada’s Financial Information of Colleges and Universities & Post-Secondary Student Information System, various years

So what happened?  It’s pretty simple, actually.  20% of the Shanghai rank is based on what is called the “HiCi list” – the list of Highly Cited researchers put out annually by Clarivate (formerly Thompson Reuters), which you can peruse here.  But Clarivate has changed its HiCi methodology in the last couple of years, which has had a knock-on effect for the Shanghai rankings as well.  Basically, the old method rewarded old researchers whose publications had gathered lots of citations over time; the methodology only counts citations in the past ten years and therefore privileges newer, “hotter” research papers and their authors (there’s a longer explanation here if you want all the gory details).

Anyway, the effect of this appears to be significant: McGill had five highly-cited researchers in both 2015 and 2016, while McMaster went from ten to fifteen – all in the Faculty of Health Sciences, if you can believe it – putting them top in Canada.    Those extra five researchers were enough, in a ranking which is highly sensitive to the presence of really top scholars, to move McMaster above McGill.

So let’s not read anything more into this ranking: it’s not about funding, or reputation: it’s about a cluster of extraordinary research excellence which in this instance is giving a halo effect to an entire university.  C’est tout.

August 31

Free Tuition Developments

One major trend of the last couple of years in global higher education has been the arrival of a wave of “free tuition” policies in jurisdictions that formerly charged them and which – in some cases – have substantial private higher education sectors.  But announcing free tuition is one thing: actually pulling it off is another.  Let’s take a quick look-in at how things are playing out in various parts of the world.

In the Philippines, President Rodrigo Duterte (Luzon’s answer to Donald Trump) declared education at all public universities free in the state budget earlier this year, and the policy came into effect this fall.  Of course, this only affects a minority of students because public universities only educate about 45% of Filipino students: the rest attend one of the country’s 1500 or so private universities.  And fees were never that high to begin with (in the region of $150/year at most state colleges).

But what’s brilliant about the Philippines “free tuition” program is the packaging.  The budget for implementation is only P8 billion ($200 million Canadian or $160 million US), which is considerably short of what is needed to cover all students.  So to make up for it, they are i) putting an academic progress filter on the program (i.e. fail too many courses and you have to start paying fees) and more importantly ii) putting an income filter on it as well.  But, intriguingly, the law doesn’t say “targeted aid for the poor”; rather, what it says is “as a rule, fees shall be abolished” but that universities “shall create a mechanism to enable students with the financial capacity to pay…to voluntarily opt out of the tuition and other school fees subsidy or make a contribution to the school.”  In practice, what this means is that the funds will be distributed to institutions who in turn will provide fee waivers to students in order of financial need (a slightly more detailed explanation is available in this article from the Philippines Star).  Too rich?  No subsidy.  But the actual cut-off line will vary somewhat from institution to institution.

(I know that sounds weird, but running student aid through institutions rather than a national government is actually pretty common in southeast Asia).

Still, the government is sufficiently worried about extra demand that it is reinstating an entrance exam to keep growth in numbers down.  Which of course does make you wonder why they put free tuition in place in the first, if not to increase participation.

Over in Chile, President Bachelet has moved to expand the free tuition subsidy (“gratuidad”) to students from the sixth income decile starting this coming February; previously it was only available to students from the lowest five deciles.  In theory, the government is meant to nudge this up to the seventh decile by 2020, but the likelihood that the left will still be in power by then is pretty slim: polls right now have former centre-right president Sebastian Pinera well out in front, and he’s already more or less said he’s not committed to anything above the 50% threshold.

In the US, two states – New York and Oregon – brought in “free tuition” programs last year.  Oregon’s was a free community college plan, much like Tennessee’s; New York’s was a “targeted free tuition” system for 4-year colleges, which looked much like those in Ontario and New Brunswick only less well-targeted.  Now, both are slightly off the rails because of the weird way that legislation and appropriation happen separately in the US.  Despite “enacting” free tuition, neither state actually set aside enough money to actually make it work properly.  In Oregon, the short-fall means roughly 20% of students who should have been eligible will not receive benefits.  In New York, the demand for the new “Excelsior” scholarships exceeded the budgeted amount by a factor of three.  The best one can say for this situation is, as my colleague Robert Kelchen says, is that this is an unrivalled opportunity to test the “disappointment effect” in student aid.

Meanwhile, back in Canada, our two targeted free tuition programs – in Ontario and New Brunswick – seem to have started without much of a hitch.  For the moment, at least, we’re leading the pack in terms of coherent implementation.  Let’s hope it stays that way.

August 30

A Francophone University for Ontario?

On Monday, the Government of Ontario released a proposal for a francophone university in Ontario, saying, effectively, “it’s about time we had one”.  This came as a surprise to many, who wondered “well, what about University of Ottawa, Laurentian University and Glendon College?”

But of course, none of these are truly francophone. Well, U of O is in theory but it was swamped by anglophones long ago and now does a majority of its teaching in English.  Laurentian was from its founding a bilingual university rather than a francophone one, but in practice it has not always lived up to the ideal, much to the irritation of some of its francophone staff.  And Glendon – well, Glendon’s a francophone college, but it’s part of York University, which is about as anglo as it gets.

Where this new institution is supposed to be different is that it will teach only in French,  And it will be governed entirely by francophones.  Which, to the francophone community, makes quite a difference. And with over half a million francophones in the province, it’s not difficult to argue that maybe such an institution exist.   But the question is: will students actually attend?  Whatever the rationale for such an institution, can it compete with Ottawa/Laurentian/Glendon – let alone anglophone institutions?

Well, here’s where it gets tricky.  The recommendation in the report suggests that the new institution be set up in Toronto, which I think strikes many people as odd because the city is not exactly known as a francophone hub.  Supporters of the ideas can turn around and note that over a third of the province’s francophone population lives in Central and southern Ontario.  That said, there aren’t many employers in the region that would put much of a premium on French education, which may limit its attractiveness to students in the area.

Perhaps more to the point: if there were significant demand for French education in the city, you kind of think that either Laurentian or Ottawa would have met it by delivering programs there.  The fact that they haven’t may suggest that predictions of thousands of students flocking to a new institution with no track record may be based more in hope than reality.

(The report itself suggests 1,000 FTE students by 2023-2024 and 2,220 by 2030.  This is pretty much a fantasy, and I suspect it owes at least something to a piece of market research which was conducted on the idea about four years ago which was – and I am not exaggerating here – the actual worst piece of social science I have ever seen.  Among many other data atrocities – bar graphs adding up to over 100%, that kind of thing – it calculated potential attendance at a new university by asking students in francophone high schools in south-central Ontario if they wanted to go to university in French but never probed about alternatives to a new university such as Laurentian, Ottawa and Glendon.   SMH, as the kids say.)

Back in the early 1990s, there was an attempt to provide French-language college-level programming in Toronto, through a new institution called College de Grand Lacs.  It failed through lack of enrolments within about five years, with Collège Boréale eventually coming in to pick up the pieces.  That’s not to say this institution will necessarily suffer the same fate; but it’s not a great precedent and probably more consideration should have been given to it in the report itself.

Now low enrolments aren’t necessarily a barrier to creating and maintaining a minority language institution.  It’s really a question of how much you want to pay and what kind of programs you expect to support.  Could Toronto support something like Nova Scotia’s Université Ste. Anne or Manitoba’s Université St. Boniface?  Almost certainly, though getting up to the latter’s status might take more time than the report suggests (getting students to go to new universities is hard– no one wants to be a guinea pig).  And if that’s the ambition, then it’s probably do-able.

But if the ambition is something more Moncton than Manitoba, then that probably won’t fly.  Like it or not, Laurentian and Ottawa will be competing for these same students: and that’s a lot of fish in a not-terribly large pond.  Bottom line: this is a manageable project if ambitions are small, but the greater the ambition, the riskier this idea becomes.

August 29

Fundamental Choices on Fundamental Science

The federal government has been somewhat quiet on the subject of science funding since the release of the Fundamental Science Review (see previous blogs here here and here) back in April.  Within much of the scientific community, which for the most part fell head over heels in love with the Report, this has given cause for concern; personally, I think this is pretty much par for the course, and we aren’t likely to see much in the way of hints about the size of any possible investment until October or so.

The major good piece of news is that for the first time in a long time, economic growth is going way ahead of expectations and the likelihood is there’s going to be about $10 billion more in the fiscal framework than originally expected.  Now the likelihood is they’ll blow some of that on projects designed to keep Kathleen Wynne in power, some on daycare, and maybe a bit on deficit reduction just to show they haven’t totally forgotten their pledges around fiscal restraint, but there should be enough left in the till to put a decent amount of money towards science.

But the question is: will they?  And how fundamentally will they re-shape the system in the process?

To give you the research situation in a nutshell:  Apart from a brief blip in the 2016 budget, the overall granting council budget has been falling gently in real dollars since 2010.  The overall science budget has actually stayed steady or even increased, but a lot of that extra money is going to programs like the new Canada 150 Research Chairs, the Canada First Research Excellence Fund, etc.  And within the granting council budgets, and increasing amount of money has been diverted away from fundamental research.  Some of it has gone to more graduate scholarships, but there has also been an increasing focus on making research more focussed on end-use, creating partnerships with industry (which has a similar effect), etc.  Add to the fact that some granting councils (notably CIHR, whose management decisions over the last decade appear to be the result of sustained cane toad licking) have started substantially reducing the number of awards they give out each year in order to increase the average size of their awards.

This has varied outcomes from a political point of view.  A large number of individual researchers in basic sciences, particularly biology and medicine, are livid.  A smaller number of researchers with more strength in translational and applied research are doing just fine, thank you very much.  And the universities, who are still by and larger getting the money they want, recognize that many of their employees are unhappy campers; however, since they continue to receive money either way, the status quo isn’t intolerable even if it isn’t ideal.

Now, into this steps David Naylor and his fellow commissioners with a report on how to fix it.  They ask for a whole lot of money: $1.3 billion in funding for fundamental research phased in over four years.   But – and here’s the tricky bit – how to pay for it?  Do you ask for completely 100% new money?  Because that’s a lot.  It’s something like a 30% increase, which not many programs get these days.  Or do you say: hey, let’s undo all those bad decisions of the past decade and dismantle CFREF, the Excellence Chairs and whatnot, rejig the council funding so less of their money goes to translational research, etc. (Nassif Ghoussoub outlines one possible approach along these lines here). Basically, spend the money we have better before asking for more dollars.

If it were me, I’d take option two.  But that would create winners and losers and governments hate that even if the winners in this case would be very loud and happy.  So Naylor and co. went with option one: ask for all money to be new.  Well, they actually did kind of say all that other money (CFREF, CERCs) was bunk because there were a lot of “this program should be reviewed but it’s out of our scope” comments (not sure it was actually, but leave that aside) but they very specifically avoided saying “lets repurpose some money.“  It’s a higher risk strategy, I think, because you need to ask for a larger sum of money, but on the plus side: no losers.

What will the outcome be?  If I had to guess, it’s that Naylor will mostly get his wish on funding because, fortuitously, money is available and they can probably get by without much re-purposing. But if that hadn’t been the case (and still may not be – still plenty of time for a Black Swan even between now and budget day), who knows what would have happened?  Because just as turkeys don’t vote for Christmas, you know there is literally no one in Ottawa willing to brief the politicians on the re-purposing option.

Which is too bad, because even with all the research money in the world, it’s still important to spend it properly.

August 28

Welcome Back

Morning all.  Hope you had a good summer.  To welcome you back, let’s take a quick look at state of play in the sector as we start the academic year.

In Canadian PSE, I don’t think there’s a whole lot of doubt about where things are headed this year.  Post-Naylor, we’re going to be talking research, research, research.  If you doubt this, take a look at Universities Canada’s recent budget submission.   As always, there are three “asks”; for the first time I can remember all three asks are about research.  It’s clear that scientists – particularly those in health-related fields who have been jerked around the most in recent years – have been making their voices heard and that University Presidents at least are responding to that pressure by making this issue central to higher education lobbying for the next twelve months.

(I think this is poor form, actually.  Less than two years on from the Truth and Reconciliation Commission and not an enormous amount of progress immediately evident, I’m not sure how appropriate it is to not have something on indigenous education this year.  But I’m not in charge.)

“Superclusters” will probably get a lot of mileage as they get announced in the run-up to the budget next winter.  Apparently the competition – which is supposed to have five winners – received 50 applications, each of which was supposed to have at least one post-secondary education partner.  However, we’ve also been told that only 20 PSE institutions’ names were attached to these proposals.  From this we can deduce that i) it’s likely that a handful of institutions’ – no prizes for guessing which ones – are on three or more proposals (rumour has it one is on no less than 18), and either ii) almost none of these proposals have more than one participating PSE institution or iii) there are a lot of the same institutions over and over again.  If it’s the latter then the program has basically abandoned the idea of clusters being geographic in nature and this program basically is back to Network Centre of Excellence but with some private enterprise attached.  Which defeats the purpose of this stuff, in my view.  No self-sustaining cluster gets by on research alone. It gets by more than anything on having lots of trained workers of various kinds.  And that means colleges and polytechnics *have* to be part of the mix.  If they’re not then this whole thing is a conceptual failure from the get-go.

(But hey, this is Ottawa.  No one’s ever going to measure the results.  And even if by some miracle the policy’s was found officially wanting, presumably they can always claim that it’s because they didn’t spend enough money.)

While much of the attention will be focussed on Ottawa, remember we live in a federal country.  For most institutions, the real game this year will be in provincial capitals.  2018 is going to see elections in Ontario (June) and Quebec (October).  Combined with a minority legislature in British Columbia, what we have is a situation where the country’s three largest provinces – all of whom have budgets which are more or less in balance – are going to be in spending mode for the next twelve months.  Not everyone is going to share in this bounty, of course. My guess would be that Manitoba, Newfoundland and Saskatchewan are going to see continued or intensified restraint and from what I hear Alberta is about to find out exactly how miserable a tuition freeze combined with zero funding growth can be.  But still, for the sector as a whole, what we have right now is possibly the best alignment of the constellations we’ve seen in about a decade.

Outside Canada, I think the big stories are going to be in Brazil, Russia, where the lingering effects of the commodity price collapse have left state budgets in very weak shape to fund higher education; in England the chaotic combination of Brexit and a historically incompetent/cowardly government will surely provide some entertainment, while in the US the twin topics of free speech on campus and the dismantling of many Obama-era improvements in student policy – particularly in the area of oversight of private colleges – will get top billing even if President Trump’s own ideas about student aid are surprisingly generous.

Here on this blog, I’m hoping to shift topic areas slightly this year.  Often last year I felt I wasn’t adding much to discussions beyond what I had already contributed in the previous five years, and I do worry sometimes about the blog feeling stale.  I hope this year to be able to focus a little bit more on areas I’ve dealt with less fulsomely in the past: particularly, colleges & polytechnics and on international PSE (the latter with a bit of a data focus).  Also, at some point this fall we will be moving to accept advertisements. We’ll see how all that goes.

And with that: have a good year, everyone.  Let’s get to work.

July 10

England has lost its damn mind over tuition fees

Ok, I said I wouldn’t write over the summer unless someone of importance said something titanically stupid.  Andrew Adonis, architect of former UK Prime Minister Tony Blair’s education policies crossed that line on Friday with a – yes – titanically stupid column about tuition fees, so here I am.

First, some background.  Prior to 1998, the UK had a free tuition system.  From 1998 to 2006 it had a system of varying tuition fees – £1,000 if your family made over £30,000 per year, and then a sliding scale down to zero if family income fell below £20,000.  From 2006 to 2012, it was a flat £3,000 (rising with inflation) accompanied by the (re)-introduction of means-based grants for living costs.  Loans were available to all to cover fees, meaning no one need pay a cent up-front (“free at the point of delivery” in the UK parlance), and said loans were recovered via the tax system as in Australia and New Zealand.  Required repayment rates were a modest 9% of income above the threshold, which started at £10K in 1998 and rose to £15K in 2006.  Loans not repaid within a given time frame were to be forgiven.

(If you’re trying to work out what those numbers mean in Canadian dollars, for most of the past 15 years PPP equivalent has been pretty close to £1 =C$1.70, so just multiply everything in this piece by 1.7 and you’ve got it).

Shortly after the 2006 went into effect, the bottom fell out of financial markets, and one of the worst-hit countries was the UK.  Anticipating that major reductions in public spending were going to be necessary, then-PM Gordon Brown convened a commission to look at university finances and tuition fees which, conveniently, would not report until after the 2010 election.  The resulting Browne (not the PM, another guy) Review became the basis for the post-election Tory-Liberal coalition government’s policy of i) reducing government funding to universities by over 40%, including a total elimination of per-student subsidies for teaching in the social sciences and humanities and ii) allowing universities to raise fees to up to an eye-watering £9,000 per year.

What this meant was that between loans for tuition and loans for living costs in in ludicrously-pricey London, “debt” for a three-year degree could quite easily end up at over £50,000.  But to “compensate”, loans were made more generous with the repayment threshold jumped from £15,000 to £21,000 while retaining the debt forgiveness policy.  In other words, the government increased student debt massively while simultaneously it harder to recover (see here for a comparison of repayment burdens in UK vs. other countries).

The results of this were predictable.  Though student “debts” rose enormously, these debts were in some sense purely nominal; most predictions showed that something like three-quarters of graduates would never repay the debts and hence the government would assume their balances.  What most students were signing on to was therefore not a loan but a marginal tax of 9% on income over £21,000 lasting 30 years; that is, a so-called graduate tax.  The problem was that no one knew in advance whether they were signing on for a graduate tax or a loan – that would only become apparent a decade or two into one’s working career.  Oh, and government would eventually end up picking up about half the total cost of loans.

Remarkably, this proved unpopular among students.  So much so that Labour leader Jeremy Corbyn’s pledge to abolish fees altogether – a move which while wiping away some obvious policy lunacy would also be a massive gift to the future wealthy – was widely credited with a big upswing in the youth vote which in turn was widely credited with denying Agent Teresa May a majority in last month’s election’s, despite the fact that Corbyn’s stance on Europe and Brexit is diametrically opposed to theirs.  And now that Corbyn no longer looks vulnerable to an internal coup, various Blairite Labour types are now busy re-writing the history of the last two decades to justify a 180 on a fees policy they either wrote or agreed with in spirit.

Which is where this Andrew Adonis article in last Friday’s Guardian comes in.  Adonis helped draft the ’98 and ’06 fee policy changes, and he would surely have agreed with the direction (if not the full extent) of the post-Browne Review changes.  Yet now, apparently, fees must be abolished.  Why?  Because the beautiful Labour vision, in which allowing tuition fees to rise “up to” £3,000 (up to £9,000 post-Browne) would create a functioning market in which institutions would compete like mad and multiple price-quality points would emerge was stymied by evil university vice-chancellors (i.e. Presidents) who “formed a cartel” in which all of them charged the maximum, thus stifling competition.

This is a strange and bewildering argument for two reasons.  First, in none of the three fee hikes was quality-enhancing competition a primary policy goal.  System expansion (and to a lesser extent, increasing per-student resources) was the primary goal in ’98 and ‘06; income maintenance in the face of swingeing public cutbacks was the goal in ’12.  The policies succeeded very well in both instance without damaging access for lower-income students.  Inter-institutional competition might have been a secondary goal in 2006 and a rationalization (though not a rationale) in ’12, but never the central aim.  To advocate dismantling policies because they didn’t meet some secondary goal is…bizarre.

Second, and more importantly, WHAT IN GOD’S NAME DID YOU THINK WAS GOING TO HAPPEN WHEN THE FEE CAP WAS LIFTED?  Higher education is a Veblen good, for God’s sake: in the absence of obvious measures of quality (rankings notwithstanding), consumers tend to judge the quality of education on things like cost and so cost and demand are not negatively correlated – in fact in some ways, higher costs drive higher demand (look at George Washington University’s fee policy and admission rates over the past couple of decades if you don’t believe me).  For Adonis’ competitive fantasy to have taken place, there would have had to have been institutions eager to signal that they might have lower quality by pricing significantly below the rest of the herd -and what university would want to do that?  Perhaps Adonis should name the institutions that he thought should have adopted a Walmart pricing policy.

Now to be fair, Adonis is hardly alone in his delusions about higher education competition.  England is one of those rare places where the term “neo-liberal higher education policy” actually makes some kind of sense.  There is a touching faith among policy makers there that a genuinely functioning competitive market is just one set of transparency tools around the corner.  League tables and key information sets didn’t create a functioning market in which quality is rewarded with greater pricing power?  Well, then, we’ll create the Teaching Excellence Framework (TEF), in which government will decide what quality is, and create a fee regime which will gradually create differentiated pricing by fiat.  Take that, Thorstein Veblen!

But the difference between Adonis and the TEF crowd is that the latter isn’t trying to roll back two decades of policy to ingratiate themselves with Jeremy Corbyn.  They aren’t running away from a policy which has been mostly effective just because they’ve suddenly realized students don’t like fees and debt (which of course is nonsense – they don’t pay up-front fees and for the most part they sign up to a 9% graduate tax/contribution not “debt” per se).

Does English fee policy need changing?  Of course.  The 2012 changes and subsequent amendments were as dumb as a bag of hammers.  But it’s a hell of a leap from that to “time to abolish tuition”, at least for someone with pretensions to being taken seriously in policy debates.  If that’s not something Adonis aspires to any more, that’s his business.  But the fact that this step is being considered seriously not just by Labour but by Tories as well should be worrying to everyone.  It means reasonable policy making is being thrown out the window for reasons of currying short-term favour with specific voter demographics.

In this policy field as in so many others, England appears to be losing its mind.

 

June 15

School’s Out!

This is my last blog of the academic year.  I may post once or twice during the summer, if something big happens or if someone important says something titanically stupid and I need to vent, but otherwise I’ll keep your inboxes unsullied for a couple of months.  For those of you who have trouble drinking your 7AM (EST) coffee without reading this blog, my apologies, but it’s time for batteries to re-charge.

When I return on August 28th, it will be in a new format, with advertising.  I know, I know, but six years of doing this thing every day for free is probably enough.  If you have something – a conference or a service or a product – that you want to promote to a large and attentive higher education audience, do get in touch at info@higheredstrategy.com.

This was a below-par year for higher education, globally.  Brexit and Trump (and Xi, and Erdogan) called into question  some of the basic ideas underpinning internationalization.  No major government (to my knowledge, anyway) did anything particularly new or exciting in terms of investing in research and core funding, though there are some US states which seem to be upgrading their investments a bit.  We seem to be at the end of a long cycle of global higher education expansion and – Africa excepted, maybe – the focus is instead moving to efficiency and value for money.

In Canada, government support to institutions hummed along just below inflation while staff pay settlements kept growing at above inflation.  Cue more international students to fill the fiscal gap.  We’re so far into this cycle it seems impossible to ever stop.  But at some point, governments will call a stop to it and this ride is going to come to an end.  The fact that Agent May has been busted (three years ahead of schedule) in London and UK universities might once again be free to swing for the fences where international students are concerned should be a source of concern for everyone.  We’re about to have competition again, folks.   You ready?

Are things going to get better?  Well, on research the answer is probably yes.  It seems like the Government of Canada, in response to the Naylor Report, is going to spend more money on fundamental research, which is good.  The questions for next year are really: i) do the feds have the intellectual capacity to hold two thoughts in head at same time and invest both in fundamental and applied research at the same time and ii) how crazy is the super-cluster competition going to be?  But on the fundamental question of core funding for institutions, I think the answer is no.  Governments across the country and the political spectrum are wedded to the idea of starving institutions and giving more money to students.  Newfoundland is only the most egregious example.

But I’m optimistic.  I see more and more universities and colleges being increasingly strategic about their budgeting and operations.  I see money coming open internally as that long-delayed wave of retirements slowly starts to happen.  I see faculty associations (mostly – there are exceptions) moderating financial demands in light of prolonged financial difficulties.  And as always, I am constantly amazed at the dedication, brilliance and inventiveness of the tens of thousands of people who work in our post-secondary institutions.

And with those happy thoughts, I bid you all a good vacation.  And if you have any comments about the blog and how it’s been over the last year – what I should change, write more/less about – please do get in touch with me at alex at higheredstrategy dot com.  I am always eager for feedback.

Now, go play in the sun.

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