Higher Education Strategy Associates

Author Archives: Alex Usher

March 08

The Coming Cost Debate in Ontario

Today I want to think about how the new Ontario system of student assistance is going to play out.  I think there is the potential here for quite an interesting and useful debate; but the timetable is somewhat tricky.

As you will recall, the Government of Ontario is rolling out a plan to provide enough grants to fully offset tuition in most university and college programs for students from families with incomes of less than $50,000.  That’s going to happen by 2017-2018.  But the really interesting thing they want to is what they call “net billing”.  It’s going to roll out sometime in early 2018 for students starting in the 2018-19 year.

Until now, student aid in Canada has worked on the fairly bonkers premise that you don’t need to know anything about your student aid package until after you’ve applied to and been accepted by an institution.  Mostly, that has to do with Canadians governments’ instinct to make things easier for themselves more than for clients.  You see students apply for college/university right around the time that governments make budgets (i.e. January-March).  Governments like to have the flexibility to change programs entirely at the last minute, and so prefer to make students wait until after budget season to apply for the next year’s aid.  What Ontario has done is say “that’s stupid”, and will now accept applications a few months earlier so that students’ aid request can be processed at the same time as their applications.  In effect the province has guaranteed that henceforth changes to aid are going to have to be announced a full application cycle before they take effect.  Result: henceforth, students will see on their acceptance letter what tuition is, what grants they will receive, and what “net tuition” is.

Now in the short term, this will work extremely well for the governing Liberals because by a COMPLETE COINCIDENCE (no, really), the next provincial election is scheduled for Spring 2018.  So tens of thousands of students and parents will be receiving these letters announcing clear, accurate (and low) net prices right before voting.  Amazing how that happens.

But in the slightly longer term – say the first twelve months of a new government, when some serious decisions are going to have to be made about paying off the province’s world-beating debt – there’s going to be another debate.  Because the data that feeds into those admissions letters will be in universities’ hands.  And they are going to show in excruciating detail how much public subsidy is going to people who don’t really need it.

Think about the histograms the Council of Ontario Universities will be able to produce.  They’ll be able to show, by income level and field of study, how little families are actually paying.  And they’ll be able to do it not just in reports for wonks like me, but also to parents in the actual acceptance letters.  “After grants, you pay: $1,000.  Actual cost of child’s education: $18,000.  Degree of subsidy: 94.5%”

For families under 50K, the average payment will be zero (which is about where it should be), and the figure will show 100%.  But families around $100K, whose net tuition payment might end up being $2000 or $2500, might be surprised to learn that they are being subsidized to the tune of 88-90%.  And families at $175,000, subsidized at perhaps 65%?  Hmmmm.

I don’t think many people – other than say, the Canadian Federation of Students and their wilder-eyed allies – genuinely believe that tuition for children of wealthier families should be free.  Most people agree that there should be some sort of net price slope, running from zero for students from poorer families and upwards as family income increases.  There’s no consensus about where the threshold for going above zero is, and no consensus about what the grade of the slop should be.  That’s mostly because we’ve never had data to look at the question properly before. 

But soon we will.  And that is going to kick start a discussion about who might be able to pay more, especially in times where governments are apparently no longer prepared to hand new money to universities and colleges.  Only this time, no one is going to be able to make misleading arguments about tuition and how it affects the poor, yadda yadda because  a) everyone will finally understand how little low-income students pay and b) because proposals to raise fees will explicitly be made in terms of net fees, and can be targeted specifically to on those families who can pay.  In fact, to start with they won’t be phrased as tuition increases at all, they’ll be phrased in terms of diverting some subsidies from (better-off) individuals to institutions.

And that’s all good.  We will -finally- have informed debate.  Expect the summer of 2018 to be particularly interesting, policy-wise.

March 07

What’s Next for Student Aid?

On the day of the Ontario budget, I half-sarcastically lamented on twitter that since the budget adopted so many good ideas that I (among others) had pushed over the years that, what was there left to write about? But having now had a few days to think about it, it’s occurred to me that there is still a lot of room left to innovate in student aid. So, herewith, the policy agenda for the next decade or so:

1) Nine (well, eight-and-a-half) provinces to go
The federal liberals started this movement by agreeing to ditch some tax credits and re-invest them in up-front grants (we’ll see how that promise pans out in practice on March 22). Ontario went a step further by taking all its back-end subsidies (loan remission, tax credits) and putting them into up-front grants and setting up a system to tell students their net tuition at the time of acceptance. That’s fantastic, but what about the rest of the country? Sure, Quebec is part-way there (they’ve got rid of back-end subsidies but haven’t got round to doing the net-price thing yet), but everywhere else is still stuck in the old system. It’ll take 4-5 years to get everyone on board with the nex orthodoxy. That’s job one.

2) What about mature students?
In the recession of the early-mid 90s, governments were falling all over themselves – rhetorically at least – to help lifelong learners. You know, people in their 30s and 40s who are trying to improve their lot through education and need help. But it’s been years since any help went their way: instead, all the dough has been going to students 18-22 years old, in large part because these investments are blatantly framed as ways to buy their parents’ votes. But the pendulum has swung too far: barriers are substantially higher for older students than younger ones, and it’s time to redress that balance.

3) Fixing Interest Rates
Currently, Canada charges students zero interest (i.e. negative interest in real terms) while they are in school, and then charges 250 basis points above prime (or about 400 basis points over the government cost of borrowing) while in repayment. Think about who wins and loses in that scenario: people who repay quickly do very well, while people who take a long time to pay do badly. But there is a better solution: many European countries such as the Netherlands simply charge a single rate of interest equal to the government rate of borrowing (which is substantially below prime) throughout the life of the loan. Yes, it means students graduate with somewhat higher loan principals – but it also means those principals are significantly easier to service. We should do this.

4) Improving repayment
I’m pretty sure that eventually, we are going to end up with some kind of repayment through the tax system. It will be complicated because both tax and student aid policy are shared fed-prov, which will create the odd nightmare. And assuming that we want to keep positive interest rates for loans in repayments, there will be a lot of arguments about the extent to which repayment should be based on current mortgage-style amortization (which usually pays off the interest-bearing loan more quickly) and to what extent it should be a pure function of income, as it is in New Zealand, Australia and the UK (where income-contingent loan repayment may be insufficient to pay the interest on the loan, thus sometimes resulting in what is called “negative amortization”). But you know what? Who cares? At the end of the day, loan collection through the tax system is the only thing that will make all our attempts to help low-income borrowers in repayment actually work properly for all.

So, still lots of work to do after all. Keep those sleeves rolled up, good student financial aid people!

March 04

A New Logo for Canadian Higher Education

Last week, the government of Canada announced to great fanfare (Hip Hip Hooray! Caloo Callay!) that Canada has a new international education brand.  They actually meant “logo” not “brand”, but whatever – long past due because the old logo was terrible.  To wit:













Ridiculous, right?  “Education in/au Canada”?  Most students who want to come study in Canada do so in order to improve their English, and Ottawa comes up with a logo that requires you to already be bilingual in order to understand it.  Mercy.

Now, here’s our new logo:











Um… OK.  That’s a little bit better, I guess.  But who in their right mind thinks the Canada word mark and the CMEC logo belong on this thing?  Are they worried that prospective students in Izmir, Lagos, or Dnepropetrovsk would think less of us as a study destination if those logos weren’t there?  That some eager would-be student from Togo would begin to get heart palpitations about the potential quality of higher education in Canada if the word mark wasn’t there?  That a potential Colombian graduate student would interpret the lack of a CMEC logo as evidence of a scam?

But if you really want to shake your head in despair, take a look at the Study in Canada website, which is probably even dumber than the old logo was – note that despite the big announcement, no one seems to have found the time to actually update the logo on the website.  Anyways, the website is a monstrosity.  Fifty per cent of it is blank space, and its overall web sensibility would have been considered primitive even back in the MySpace era.  Literally, the only thing you can say about it is that it meets official federal government web guidelines.

And this, in a very real sense, is the entire problem.  The logo, the website – pretty much everything about our  international education effort – is centred around what makes sense for governments and their bureaucracies.  It is not centred around students.  Go ahead, take a look at the Study in UK website, the Study in New Zealand website, the Study in Australia website, or even the German DAAD website.  Do you see a lot of white space?  In the case of DAAD – an organization partially funded by the Germans states (provinces), do you see any CMEC-equivalent logos cluttering up the visuals?

No?  Me neither.  Apparently, the awfulness of Canada’s efforts in this area are unique.  But as all those other efforts show, it doesn’t have to be this way.  We can do better.  It starts simply by asking: “are we doing this because it will make sense to students?  Or to governments?”

March 03

Income-Contingent Loans (Repaid Through the Tax System)

Every once in awhile, someone important says that what Canada/America really needs are income-contingent loans.  I usually reply, “we have income-contingent loans in Canada/America, that’s what the Repayment Assistance Program/Income Based Repayment program does”. To which the rejoinder is “no, no, that’s not income-contingent, what I mean by income-contingent is recovery of the loan is done automatically through the tax system, so you don’t run into all these messy issues around borrowers in repayment having not signed up for things”.

At this juncture, I could point out that the size of the loan payment and its method of recovery aren’t the same thing (I wrote a monograph about this about a decade ago), but I usually just keep my mouth shut because, really, my interlocutors have a point.  RAP in Canada and IBR in the US would both be much better programs if borrowers in trouble automatically received relief, instead of going through the tedious application/income verification process they do now, and the easiest way to achieve this would be to run repayment through the tax system, as they do in Australia, the UK, and New Zealand.

So why don’t we?

The New America Foundation investigated this question in a recent paper, and enumerated a number of challenges in moving to a tax collection system.  One of these reasons is specific to the US (they tax families not individuals, so setting the tax rate on an individual is awkward if he/she is marries), and need not detain us here.  The other reasons can basically be boiled down into two big categories.

First, how do you integrate employers – who do the tax-withholding in Canada – into such an operation?  How do they know how much to withhold?  How do they know when to stop withholding (i.e., when the borrower is finished repaying)? And are we actually going to require students to tell their employers about their outstanding loans?  Part of the issue here relates to people who do not have a single, full-time job that provides all of their income.  How does withholding work when students have two jobs?  Or when wages are not the sole source of income?   Of course there are fixes and workarounds to these questions, but every fix and workaround creates even more complication.  And complication is what ICR is meant to avoid.

(In Canada of course, we’ve got quite specific reasons why income-contingent loans are difficult: namely, most students are not receiving one loan, but rather two – one from the province, and one from the feds – and these don’t always have identical conditions.  You’d need to to align both levels of government across the country for this to work.  That’s not impossible, of course, but it’s tricky.)

But there’s one final reason why governments are reluctant to recoup debts through the tax system, and that’s for fear of damaging something called “tax morale”.  Basically, tax morale is a way of measuring one’s sense of moral obligation to pay taxes, or one’s belief that taxes contribute meaningfully to society.  A 2004 paper in the Journal of Economic Psychology examined the effect on tax morale of Australia’s Higher Education Contribution Scheme, which collects student debt (technically “contributions” rather than debts, but the distinction can be a bit fine). The result, perhaps unsurprisingly, was that students with HECS debt were likelier to have lower tax morale than those who did not.  That might sound trivial, but to governments, it is not.  Our system of taxation depends on voluntary disclosure and reporting.  Messing with that has big consequences; putter around with it at your peril.

None of this should be taken as a reason to not collect student loans through the tax system.  There are a lot of potential benefits to such a policy.  My caution here is simply that implementation will be complicated, may lead to different kinds of errors and difficulties (especially for individuals with multiple jobs), and have drawbacks in terms of tax morale.  For good reason, governments don’t undertake system changes with this level of complexity lightly; there would be a serious risk to service delivery if something went wrong.

Maybe, just maybe, this is the next big project in student aid, now that we seem to be getting the switching-tax-credits-to-grants thing right.  Just don’t assume that this would be a simple process.

March 02

Faculty Power and the Expansion of Administration

There was an interesting little op-ed in the Vancouver Sun the other day, to the effect that faculty are “waking up”, “realizing their voices matter”, and taking collective action to “effect substantive change at UBC”.  You can read it, here.

I think it is a fantastic piece.  It’s great when people in a community realise they have the power to change things, and begin acting together to effect that change.  My only question is: what was stopping them from acting on this before?

The answer, if we’re honest, is “nothing”, and the authors admit as much.  Canadian Senates – or academic councils, or General Faculty Council, or whatever they are called in your neck of the woods -  have an enormous amount of power to drive institutional policy; at the faculty level, things differ a bit from place-to-place, but there is no doubt that at most universities, the collective professoriate is able to develop and drive policy, if it wants to.

But the plain simple fact of the matter is that at most universities, most of the time, they don’t want to.  There was a time, when universities were much smaller, cheaper, and less complex, when academic staff could take on a lot of non-academic work as part of their day jobs, and universities could run more or less without professional non-academic staff.  But with massification and the growing importance of research in academia, staying engaged in senior levels of academic governance is a real struggle for many.  So they do what they are supposed to do: delegate to professionals, and hope these people do a good job.

And for the most part, they do.  Or at least they do it well enough that there is no concerted movement by professors to turn back the clock and put more academic oversight into the system.  It’s tacitly understood that a university that doesn’t hire good communications professionals, good fundraisers, and good government relations people is likely to be a smaller, poorer university.  We might bemoan this fact a bit, but everyone knows it’s true.  And so by and large, the expansion of administration over the last 30 years has tacitly been endorsed by faculty, because otherwise they are the ones who would have to do that work.  And, y’know, thanks but no thanks.

Where administration becomes an issue is when those professionals are no longer seen to be of good value: that is, they are paid too much relative to their value, or when they are perceived to put their own interests ahead of those of the academic enterprise.  And while rare, this does happen every once in awhile.  And when it does, there is nothing to stop academics re-taking the wheel.  Which is as it should be.

So in sum, it isn’t a matter of faculty “re-taking” power in universities.  Faculty have always had power in universities; they’ve just chosen for the sake of convenience not to use it very much.  If this is changing, and faulty  want to exercise power to a greater extent, as the UBC editorialists suggests, that’s perfectly A-OK.  Just remember that everything has trade-offs.

March 01

When is Free Tuition Free?

You would be forgiven, over the past 24 months or so, for growing ever more confused about when tuition is “free” and when it is not.  The reason, in part, is that “free” tuition is in the eye of the beholder.

You’d think it would be as easy as saying “no fees”, but it’s actually not that simple.  What if, instead of a fee, there is a variable “contribution” or a gradate tax?  What if fees are charged to a minority of students based on their high school marks (as in most of the former socialist countries in Europe, and parts of Africa)?  What if fees are charged to richer students but not poorer ones?  Or, what if fees are waived for a limited number of years and then kick in?

And that’s just the issue of fee setting.  What if tuition fees exist, but grants or other aid are distributed to help some students cover the costs?  Or, how about if fees exist, and are refunded after graduation in return for some service? And, finally, how do we deal with objections – such as those from American academic, Sara Goldrick-Rab – that free tuition isn’t actually free unless you also cover living expenses?

(This is about where some will say: “education is never free; it always has to be paid for by someone”.  Which is true, but beside the point that I’m making here, which has more to do with retail price.)

And so, forthwith, a quick cheat sheet to all the varieties of “free tuition” available around the world:

Manitoba and Saskatchewan don’t claim to have free tuition, but they actually do have it, subject to certain conditions: essentially, anyone who finishes on-time and stays within the province for a few years to collect their tuition tax rebates will actually receive more money in grants and tax rebates than they spend in tuition.

Ontario has had “net free” tuition for poorer undergraduates for most of the last ten years.  Now, however, they’re actually calling it “free tuition” for dependent students under $50,000 (although there are a couple of caveats). This doesn’t change much in terms of dollars and cents, but the framing seems to matter.  At the same time, a substantial number of college students across Canada have this kind of “net zero” tuition due to a combination of low tuition and large tax credits.  As, indeed, do many students in cheaper 2- and 4-year colleges in the United States.  For instance, a number of US states, including Tennessee and Oregon, now have schemes to ensure that all students – in community colleges, anyway – who have financial need get grants that are at least equal to the amount of their tuition.

Chile goes a bit further than this.  Its new system of “gratuidad” actually waives tuition fees for university students (but not yet colleges or polytechnics) from families below the national median income, which accounts for about 25-30% of the student body.  Similarly, tuition fees in England between 1998 and 2005 were variable according to family income, and those with family incomes below £20,000 paid no tuition.

In most former socialist countries and parts of Africa, there are what are called “dual track” tuition systems.  Students who do well on matriculation or university entrance examinations are allowed to attend for free, while everyone else is charged a fee.

In France, there is an entirely public system of higher education, in which most institutions charge nothing; however, the “grandes ecoles” charge fees of €10,000 or more.  Ireland has “free tuition”, but still charges a whack of other fees, amounting to thousands of euros, which might as well be tuition.

In a whole bunch of countries too disparate to mention, there are public institutions that charge nothing, but also have significant numbers of private institutions that do charge tuition (Germany falls into this category, though the fee-charging institutions only educate about 5% of all students).  And sometimes, as in Romania, this overlaps with the “dual track” tuition system.

Australia does not charge fees, per se, but rather demands a “contribution” from graduates.  The amount of the contribution sure looks like a fee (it is a set amount of money per year of study, based on one’s chosen field of study), but if your post-graduate income never rises above a certain level (currently about $50,000/year), you never pay a cent.  (In a more roundabout way, this is also true in England, even though formally there are fees.)

Greece charges nothing at entrance, but provides essentially no assistance whatsoever with living costs.

Finally, Scandinavian countries charge nothing, and provide more or less all students with grants of varying degrees of generosity to cover living expenses (and loans to cover the remainder).

So there you have it.  Next time someone talks about free tuition, be sure to ask what they mean by “free”.

February 26

A Great Day for Student Assistance

I was going to stay off the blog this whole week (I need a reading week, too!), but there was a budget in Ontario yesterday.  A weird and wonderful (if somewhat under-documented) budget, which is going to change the way we think about student aid, tuition, and affordability in Canada for decades to come.

Here are the basics: all of Ontario’s different grants and loan remission programs are being merged together into one big up-front grant program (all the provincial education tax credits are getting merged in there too, though I haven’t seen that actually mentioned in there).

There is absolutely no new money here – in fact, there’s actually a slight reduction because some of the tax credit dollars are going to be diverted to institutions.  It is simply a re-casting and re-profiling of existing money, which – crucially – takes all those hidden, opaque and often-delayed subsidies and turns them into grants available at the time when tuition is due.   But what that means is that all those students who currently receive more in subsidies than they pay in tuition will actually be able to “see” this for the first time.  It’s mainly an exercise in re-packaging.

But boy, what a re-packaging.  The government is now announcing what we here at HESA have been saying for some time: in “net” terms, tuition is free for low-income students.  And now, all of a sudden, you have the government, the Toronto Star, and the Canadian Federation of Students all saying tuition is “free” for low-income dependent students.  It isn’t, of course.  Fees are the same as they always were, and the offsets are reasonably similar, too.  In most cases, students aren’t getting a whole lot of new money (to the extent students are getting extra cash, it seems to be mainly those in the $50-100K family income range, but it’s hard to tell because a lot of this is still pretty sketchy, and dependent on the federal Liberals following through on their promise to revamp tax credits and grants as well).  Ignore the hype: this is not about bold new investments, it’s about changing perceptions through simplification.

And yet, the biggest change on the perception front was something that was not actually in the budget, but rather was signalled to stakeholders in the budget lock-up.  Starting in 2018-19, OSAP will be moving its processes forward in time so that students can have student aid decisions at the same time they get acceptance letters.  This means that institutions will be able to do “net billing”.  So whereas, now, students get acceptance letters, a bill for tuition, but then have to wait several weeks to find out what kind of aid they will get, in future they will receive a letter saying “Welcome to University of X; tuition is $6,500, and you have qualified for $7,000 in grants”.  The difference this will make to perceptions of affordability is enormous, and it’s a hugely positive step.  Every other province should adopt this step, immediately.

Not everybody wins.  From what I can tell, students from families above $110,000 in income or so will be slightly worse off due to the disappearance of tax credits, as will some part-time and independent students.  The first of these shouldn’t bother anybody, but the latter should.  And if you’ll allow me a small kvetch, yesterday’s announcement is probably too focussed on traditional-aged students (whose parents vote), and not enough on the mature students who are probably the least well-served by the current aid system.

But that’s for another day.  For the moment, let’s just admire this as a bold piece of policy, which renders transparent an already-generous student aid regime and thereby makes it that much more effective.  Congratulations are due to the folks at the Ministry of Training, Colleges and Universities for cleaning away a couple of decades of kludges, and bringing some much-needed coherence to student aid policy.

And to their counterparts in Newfoundland, Nova Scotia, New Brunswick, Prince Edward Island, Quebec, Manitoba, Saskatchewan, Alberta, and British Columbia: this is the future. What are you waiting for?

February 19

The Dollar Quandary

If you haven’t been hiding under a rock these last few months, you may have noticed that the US dollar is on a roll.  And it’s not just on a roll in Canada, where the price of oil has reduced the value of our own currency; since mid-2014, the US dollar is up over 20% against a trade-weighted basket of currencies. This creates some interesting conundrums and strategy options for pricing international education.

The change in the dollar’s status means that everyone’s price has been reduced vis-à-vis those at American universities. If you’re a university in, say, Sweden, it doesn’t matter much because practically all of your competitors are European. Basically: if your price isn’t changing relative to that of your main competitors, then the fall of the dollar is fairly meaningless.

However, if the fall in the value of your currency is greater than that of your competitors, then this does actually create some room to maneuver. I was in Russia last week, where the fall in the value of the rouble (76:1 USD, down from 37:1 USD at the end of 2014) means that their product is now much cheaper, relatively speaking, than that of their competitors, and that makes them a more attractive destination.  As a result, the Russians are now marketing themselves as a “bargain” product because, let’s face it, Russian universities have a brand image problem after the disasters of the 1990s. Their strategy is to go low price, high volume, and admit as many Asian and Latin American students as possible.

That’s one strategy. But there are others. If you are an Australian or a British university with a reasonable reputation, you might ask why you should keep your prices constant in local currency. If you think your main competitors for international students are American schools, you might also think it makes sense to take advantage of your lower currency, and increase prices a bit. It won’t necessarily hurt you with recruitment, and you can make a little bit of extra money in local currency terms. Basically, in these situations, universities have a choice between marketing themselves as a “bargain” institution (take advantage of low price to increase volume) or as a luxury institution (risk volume to increase price).

Now in Canada we have a somewhat different set of issues at play, for two reasons. First, we actually have a lot of American students, institutional pricing strategies need to take account of that market. Second of all, unlike European universities, Canadian schools can be very sure that US institutions are a major source of competition, and hence we have more scope to re-price based on currency changes. So here’s the question: should institutions take the “bargain” route and keep prices steady in local terms, or a “luxury” strategy that sees us raise prices, or perhaps even start charging in US dollars?

Essentially, this is the choice every institution needs to make over the next couple of months. I think there’s a pretty clear case for Toronto, UBC, and McGill to move to USD pricing, and keep last year’s fees constant in USD terms (that is, raise them by about 20% in $CDN terms). Will they lose some applicants? Probably. But they have the brand power to deal with that, and the students for which they are really competing are going to be paying more anyways to go to an American university. And the prize is a big whack of extra cash.

For everybody else, it’s a trickier proposition. Some institutions – particularly if they are experiencing recruitment shortfalls (say Trent, or any one of a dozen Atlantic universities) – will probably see more benefit in going the “bargain” route, and aggressively going after students looking for a “cheap” North American experience. Others – Windsor, perhaps – might decide to take that pitch directly to American students. The institutions with the trickiest task are the other U-15 universities. They might be tempted by the USD route, but may be unsure if they had the brand power to make it work. Expect a period of experimentation, not all of it successful.

In any case, for those interested in looking at price elasticity as a function of institutional prestige, the next couple of years promise to be quite interesting.

February 18

Consumerism Dragging Down Student Achievement? Not so Fast

So, there was an interesting article from Studies in Higher Education making the rounds on social media yesterday. Written by a trio of UK researchers, the article is entitled “The Student-as-Consumer Approach in Higher Education and its Effects on Academic Performance”, and is – miraculously – available ungated, here. The short version is that students who have a consumerist attitude towards education tend to have lower academic performance. For those who bewail the encroachment of consumerist attitudes in higher education, this obviously was like a delicious, refreshing glass of I-told-you-so.

Upon closer inspection, though, this study isn’t quite all it’s cracked up to be. The basic set-up here was that the authors asked a group of students across a number of UK institutions to fill-in a questionnaire. The questionnaire asked a number of demographic questions, a set of questions about “learner identity” (basically attitudes towards learning, which in North America would be called “engagement”), and a set of questions labelled “consumer orientation”. It also asked about field of study, whether a student is paying for tuition him/herself (under the UK’s income-contingent system, only 20% said their parents were paying for their fees), and what their target grades were. The conclusion was that all of these things had some kind of significant effect on grades, but that a consumerist attitude had a mediating effect on all of them, all in a negative direction.

The most obvious problem here is that the dependent variable is a self-report of academic achievement. Anyone who’s ever worked with self-reports of grades will tell you: that’s a pretty iffy data source.

The next problem is that “consumerism”, as a notion, was constructed in a questionable way. The researchers asked students 15 questions, and based on their answers created an index of consumerist orientation. Some of those questions seem alright, for instance: “I think of my university degree as a product I am purchasing”, or “I am entitled to leave university with a good degree because I am paying for it” (a “good degree” in the UK means a degree with a high classification, which is sort of the same thing as a high GPA over here). However, some of the questions that make up the consumerist ranking are, to my mind,  indicators of having a utilitarian rather than a consumer outlook (e.g., “I only want to learn things which will help me in my career”, “my lecturers should round up my final grade a point or two if I am close to the next grade boundary”), and some of them are actually indicators of financial uncertainty (e.g. “I regularly think of the financial cost of my degree”). Throw all that together in a single index and it’s not clear to me that this is actually all that useful.

And this leads to the final problem: there are no family background demographics in the survey. Which means we don’t really know how much of the engagement and consumerism variables are really just reflections of class background and cultural capital. It’s fairly safe to assume that students from lower class backgrounds in the UK – especially first-generation students – would be more likely to be financially insecure, and more likely to have a utilitarian attitude towards school (that is, they attend for specific career goals). By lumping all of those factors into the “consumerist” category, what the authors may simply be picking up is that grades and class origins are positively correlated. Which we already kinda knew.

In other words: interesting hypothesis, but this study isn’t all that persuasive. Case unproven – so far, at least.

February 17

Some Curious Student Loan Numbers

Every once in awhile, it’s good to go searching through statistical abstracts just to see if the patterns you take for granted can still be taken for granted.  So I recently went hunting through some CSLP annual reports and statistical abstracts to see what I could find.  And I’m glad I did, because there are some really surprising numbers in the data.

So here’s the really big take-away: the number of students borrowing from the Canada Student Loan Program rose from 365,363 in 2008-09, to 472,167 in 2012-13.  In just four years, that’s an increase of 29%.  Which is kind of staggering.  It’s therefore important to ask the question: what the heck is going on?  Where are all these new borrowers coming from?

Well, for one thing, we know it isn’t being led by a new wave of students in private, for-profit institutions.  In fact, the increase occurred across all types of institutions, with a slightly more pronounced growth among students in community colleges.

Figure 1: Growth in Number of Student Borrowers by Type of Institution, 2008-09 to 2012-13













It’s a different story when we look at borrowing growth  by province.  Here, we see a more straightforward – and somewhat puzzling – story: borrower numbers are up fairly substantially everywhere west of the Ottawa river; however, numbers are even, or down slightly everywhere in the Atlantic (note: because we are looking only at CSLP borrowing, there is no data for Quebec, which has opted out of the program).

Figure 2: Growth in Number of Student Borrowers by Province, 2008-09 to 2012-13












One thing that Figure 2 obscures is the relative size of the provinces, and thus the portions of growth in borrower numbers.  Ontario, where growth in borrower numbers has been 38%, actually accounts for over three-quarters (77%) of all growth in borrowing within the CSLP zone; in total, Ontario now accounts for nearly two-thirds (64%) of the CSLP loan portfolio.

You can’t explain Figure 2 in terms of economic fundamentals: neither the recession’s effects nor education costs were that different in the Atlantic.  To a considerable degree, what Figure 2 is really showing is population change: youth populations in the Atlantic are shrinking, and that is primarily why their borrower numbers are going down (Newfoundland is falling even further because of real declines in costs and – probably – because family incomes rose quickly in this period thanks to the oil boom).

To get a better look at changes in the borrower population by province, we need to look at changes in the percentage of full-time students who are borrowing.  Now, it’s difficult to do this because CSLP itself doesn’t calculate this figure, and doesn’t quite break down figures enough to do it accurately.  So below in Figure 3 what we show is the number of total borrowers (including at private vocational colleges), divided by the number of students enrolled full-time in public universities and colleges.  This will slightly overstate the percentage of students borrowing (borrowers at private colleges make up about 10% of the borrowing population, so mentally adjust the numbers downward if you would); also, the denominator is total students enrolled in the province, not originating in the province, so Nova Scotia’s figure in particular is an undercount because of all the out-of-province students there.  With those caveats in mind, here are the percentages of students borrowing across the country:

Figure 3: Percentage of Full-Time Students with Loans, by Province, 2008-09 and 2012-13














The percentage of students borrowing grew in every province except Newfoundland, Saskatchewan, and New Brunswick. But the real story here is Ontario, where the percentage of students borrowing jumped by nine percentage points (from 44% to 53%), which led to a national rise of seven percentage points (42% to 49%). It’s not entirely clear why there was such a jump in Ontario.  The recession there was not that much more severe than elsewhere, and student costs, though high, were not rising that much more quickly than elsewhere.  Part of the answer may be that in the last couple of years the new Ontario Tuition Grant has been in effect, which enticed higher-income students into the student aid system with its outrageous $160,000 family-income cut-off line.  But that can’t be the entire story, as growth in numbers was actually fairly steady from year-to-year.

What might be going on? My guess is two things.  First, student numbers are expanding in most provinces.  Almost by necessity, if expansion is happening, it is going to happen disproportionately among those who we traditionally call “underserved” (that is, the poor, students with dependents, etc.), who by definition are more likely to be eligible for student aid.  This is to say, what we are seeing here is not evidence of a problem, but rather evidence of student aid working exactly as it should, to expand access.

The second factor is what I call delayed recognition.  Back in the 2000s, student aid eligibility for dependent students was expanded enormously.  Essentially, we went from a situation in 2003 where most families saw eligibility for student aid end at around the $85,000-$90,000 mark in family income, to one in 2006 and thereafter where the cutoff rose to about $160,000 (the number varies a bit by province and family size, but that’s roughly the scale of the change).  However, much to everyone’s surprise, take-up rates barely rose, presumably because CSLP didn’t go out of its way to advertise the changes much.  What may be happening is that families across the country – but especially in Ontario – may finally be cluing in to how much assistance they are entitled to under the post-2006 rules, and acting accordingly.  In other words, this could just be an improvement in take-up rates rather than a deterioration in family and student finances.

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