Higher Education Strategy Associates

May 01

Scare Tactics

So, my blog posts on Net Zero Tuition got some attention last week, not least because Margaret Wente took up the cudgels on the issue.  The reaction to it was disheartening to say the least.

From ordinary students and recent graduates, the response was basically some variant of the “n of one” reaction: “I pay attention, I have debt; therefore, it is not be possible that, across the whole, non-repayable aid had doubled, or that this country spends as much on non-repayable aid as it collects in tuition”.

This is what I call Solipsistic Social Science (SSS): when confronted with evidence that conflicts with previous beliefs, the reaction is not curiosity (e.g. “how is that possible”? Or, “why might that be”? Rather, it provokes outright denial: “if it’s not happening to me, it can’t be happening at all”.  Understandable? Maybe.  But it’s a bit sad coming from people with post-secondary education, though. Were I in a cattier mood, I’d suggest it’s a kind of disgraceful that PSE graduates might suffer from it, and it reflects badly on institutions themselves.

The more interesting reaction, though, came from “official” PSE groups, where the “but whaddabout” reaction reigned supreme.  Aid dispensed as high as tuition collected?  But whaddabout living expenses?  Large numbers of students receiving more in aid than they pay in tuition?  But whaddabout “lived experiences of struggling students”?

Now, some of those points are valid (and indeed I raised some of these myself back here).  But the utter inability of everyone to even acknowledge the data existence was kind of incredible.  OCUFA’s dismissed Margaret Wente’s article as being “tone-deaf”.  You see, it doesn’t actually matter whether everything she said was factual or not, the problem was “tone”.  And the only acceptable tone, apparently, is CRISIS.  The fact that government aid has risen significantly in real dollars over the past 15 years, or that rises in student aid since 1999 have more than kept pace with real increases in tuition, or that since 1999, student debt has been flat, and student debt burdens (that is, the percentage of average after-tax income used to repay educational debt) have fallen by a third?  That’s all “ideological”.

Well, you know what?  The sector needs to grow the hell up.  The reliance on perpetual crises isn’t just childish – it’s dishonest.  A decade worth of good policy-making on student aid means that higher tuition – which has helped institutional finances immeasurably – haven’t had many negative consequences.  That’s something to celebrate, but instead Canadian PSE groups try to pretend it never happened because they prefer the crisis narrative.

I get that people think that political traction is hard to obtain in the absence of a crisis.  But no matter  how worthy the cause, it’s not alright to pretend to knowingly ignore the truth in the attempt to drum up support.  Especially in higher education.  Our sector is supposed to be about truth, honesty, and rigour.  Ignoring those rules in the hunt for more money is unconscionable, and in the long run does more damage than good.

April 30

Good and Bad Arguments Against Education Tax Credits

One of the things that has become clear to me in much of the commentary about the Net Zero Tuition material last week was that a surprising number of people really don’t understand how tax credits work, or what their distributive impact is.  Worth a review, then.

Bad Argument: Poor students don’t benefit from tax credits.  It is quite true that students whose income is not high enough to be taxable cannot use the credits themselves in the current tax year – indeed no credits get used that way.  But they can pass them on to parents or spouses who are supporting them, and who presumably find the tax relief of great benefit.  Nearly 40% of tax credits get distributed in this way.  Or, if their parents or spouses have no taxable income (rare), or if they just don’t want to give them up, they can carry them forward until such time as they have taxable income.  Fortuitously, this is usually about the same time their student loans start coming due.

Better Argument: Tax credits would be better if they were refundable.  No one would be better off in the end, but this way, at least, one could get rid of the carry-forward provision, and those students who currently have to wait to get their money could get it faster.

Bad Argument: The rich benefit more from tax credits than the poor.  This is a tricky one, because it has a different answer if you’re making this claim at the individual level, or on aggregate.

It is certainly true that some tax expenditures are worth more to the rich than the poor.  Tax deductions, for instance, reduce taxable income, which obviously is worth more if you’re in a higher tax bracket.  But our whole system shifted from deductions to credits twenty-five years ago.  And tax credits – by definition – are worth the same amount to everyone, regardless of their income.  The only case where this is not true is if someone has no taxable income – but that’s irrelevant for education tax credits, because of the carry-forward provision.

Where this argument is true is with respect to aggregate spending.  On aggregate, upper income families do receive more money from tax credits, because youth from upper-income families are more likely to attend PSE.  For most people, that’s a good reason to dislike them.  What’s hysterically funny, though, is that at least some of the people who use this argument simultaneously argue for greater tuition subsidies – which have exactly the same distributional consequences.  Charitably, these people could be described as “confused” (less charitable descriptions include: “cynical”, “ridiculous”, “dumber than a bag of hammers”).

Good Argument: Money spent on tax credits would be better spent on up-front, need-based student aid.   There are too many people receiving it who really have no need of it.  Spread that money – that big chunk of over $2 billion/year – less thinly, focus on those who need it most, and our system would be much more effective and equitable.

April 29

That Overqualification Study

A couple of weeks ago, Statistics Canada published a study that looked at overqualification among university graduates (available here).  It’s a good-news story that deserves a bit more attention than it’s received.

The study uses data from the 1991 and 2006 censuses, as well as the 2011 National Household Survey, to look at the changing occupational profile of Canadians aged 25-34.  To digress briefly into the world of occupation statistics: every occupation in North America is given what’s called a NOC (National Occupation Classification) Code.  Each NOC code has a set of employment characteristics next to it.  A job classified as “A” requires university, “B” requires college, “C” requires high school, and “D” requires “on the job training”.  There is a separate category for managers, who are deemed not to have an educational requirement (sounds silly, until you realise that business owners – even those from corner shops – get classified this way).  In most overqualification studies (including this one) if you have a university degree, and you’re in an occupation listed as B, C or D, you’re considered “overqualified”.

Got that?  Good. Now figures 1 and 2 look at jobs by skill levels for women and men, respectively.

Figure 1: Distribution of Employed Women Aged 25-34 Across Skill Levels, 2011














Figure 2: Distribution of Employed Men Aged 25-34 Across Skill Levels, 2011














Interesting results.  Aren’t people always telling us that young people are getting blocked on their career path by oldies?  That sentiment doesn’t quite square with this data, which indicates that a greater proportion of under-35s are managers.  Further, the increasing proportion of youth in professional jobs certainly contradicts the idea that universities are overeducating a generation.

With respect to “overqualification” of university grads, specifically, the paper finds that 18% of university graduates aged 25-34 are in jobs requiring only high-school, and 40% are in jobs requiring college.  But a substantial portion of that has to do with transitions to the labour market – these numbers are a lot higher for students in their 20s than in their 30s, as figure 3 shows.

Figure 3: Overqualification Levels by Age, 25-34 Year-Olds














Now, this still looks like a pretty significant level of overqualification.  It’s slightly overstated with respect to graduates of Canadian universities; the presence of immigrant graduates of foreign universities, who tend to have much worse labour outcomes than graduates of Canadian universities, pushes the rates up by a couple of percentage points.  But that still leaves about 15% of graduates in jobs with high-school level requirements, and about 36% in jobs with college-level requirements.  Surely that’s evidence of over-production of graduates, right?

Well, no.  Or, at least, no more than usual.  Despite graduate numbers jumping by 50% between 1991 and 2011, the percentages of university graduates described as overqualified has remained rock-steady at these levels over 20 years, which suggests that expansion of university enrolments has been paralleled exactly by an expansion in jobs requiring graduates.

There is still the question of whether these numbers are too high, even if they aren’t increasing.  It’s hard to say for sure.  Some “overqualification” is structural – for instance, most Fine Arts graduates are, by definition, overqualified because NOC considers “artists” to require no more than a college diploma.  Some “underemployment” outcomes will be by choice.  And the rest?  They might represent failure – or they might represent the beginning of the up-skilling of specific occupations, and thus, in fact, represent success.

More research needed, as the saying goes.  But these results are encouraging.

April 28

Mobility Responsibilities

Saying that we should remove barriers to student mobility sounds like a motherhood issue.  But scratch a little deeper, and you’ll see that, in fact, Canadians are pretty equivocal on the concept.

For starters, while everyone loves inbound mobility (come here!  It’s a great place!), there’s a pretty deep streak of protectionism in Canadian provincial governments on the issue of outbound mobility.  The sentiment of “let’s keep our kids at home” runs deep in many parts of the country.  It wasn’t until the advent of the Millennium Scholarship Foundation that all student aid programs became portable in most provinces (though Quebec maintains a policy of not funding students to go out of the province, unless the program is not offered in the province, “and it is in the interest of the Quebec collectivity”.  Yes, really).

But whose responsibility is mobility in the first place?  In Europe, with respect to tuition and student aid, it’s the receiving country who bears the cost – no matter where they’re from, students pay whatever the locals do, and have access to whatever student aid program the locals provide.  In Canada, our default assumption is that host provinces are supposed charge equal tuition to all Canadians regardless of their place of origin, but the responsibility for mobility on student aid lies with the sending province.  One can move from Nova Scotia to Manitoba and pay Manitoba rates of tuition, but one still has to rely on Nova Scotia Student Aid.

But there are exceptions.  The most clear-cut is Quebec’s insistence on charging tuition fees to out-of-province students.  Less clear-cut (but still clearly discriminatory), are the cases of Nova Scotia and Ontario.  The former provides tuition rebates to Nova Scotia students, but not to other Canadians.  Ontario has a variety of subsidies that are only available to Ontario students attending Ontario institutions (the tuition tax rebate is one, as are the many provincially-mandated, institutionally-managed access funds – funded through a “tax” on tuition paid by Ontarians and non-Ontarians alike).  These are all anti-mobility measures: they effectively create a two-tier tuition policy within a province, and (in Ontario’s case at least) provide extra subsidies to students who chose not to leave.

Interestingly, while Quebec’s two-tier tuition system is usually portrayed as a piece of xenophobia and rank insolence to other Canadians who, through equalization, are partially picking up the tab for Quebec’s lower tuition, Nova Scotia and Ontario are given a total pass, despite their policies having almost identical effects.

What that tells us is that Canadians don’t mind mobility barriers as long as they are dressed-up as “affordability enhancements”. Ultimately, such measures are self-defeating; as with trade barriers, eventually everyone is left worse off.  But there are enough small-minded politicians out there to ensure that these kinds of tactics always have a potential audience.  As budgets get tighter over the next couple of years, there’s a good chance we’ll see more examples of discriminatory tuition fees, loans, and grants being made non-portable across provincial borders.  I hope that’s not the case, but history doesn’t give me huge grounds for optimism.

April 25

Nova Scotia Ditches a Bad Subsidy

About a decade ago, a really bad policy idea started making its way across the country’s “have-not” provinces.  I can’t remember if it started in Saskatchewan or New Brunswick, but within a couple of years it had spread to Manitoba and Nova Scotia, as well.  The details (and generosity) of this policy varied somewhat, but the gist of it was this: “let’s pay our graduates not to leave the province by refunding a portion of their tuition, via tax reductions, once they graduate”.  Sometimes this was dressed up as a “talent attraction policy”, in the sense that it would benefit people coming in from outside the province; in the main, however, it was understood that this money was mainly about keeping “our” kids at home.

Now this was a dumb idea from almost any policy perspective you can imagine, but the two most obvious ones are:

1)      Effectiveness.  Most youth, even in the most economically depressed provinces, tend to stay where they are: in the provinces where these programs were introduced, the “stay” rate ranged from about 75-85%.  So even if you bring the stay-rate up by 10 percentage points, that still means that for every student you successfully keep, eight others will get to keep cash for doing exactly what they were going to do anyway.

2)      Horizontal equity.  If you have a couple of tens of millions in cash that you want to devote to youth – and lord knows there isn’t much of that around – why in the name of all that’s holy would you hand that money over to the group of youth who are the most employable, and have the best prospects?  Especially if you’re not actually changing their behaviour, all this does is reduce the cost of education and make it easier for tomorrow’s upper-middle class to start accumulating assets.

Anyways, though it wasn’t much noticed outside the province, Nova Scotia dropped the tax rebate, largely because it was ineffective – young people continued to leave the province.  While it drained a lot of money, it simply wasn’t big enough to change many people’s minds about leaving.  And this makes sense: if the reason someone moves from Halifax to Toronto is a $10K/year difference in pay, a $2k tax rebate isn’t going to change their mind.

Of course, it would have been a lot better if the Nova Scotia Government had actually put that money back into some other youth-serving purpose – the community college, say, or student assistance (a category in which Nova Scotia remains among the most miserly in the country).  But with the province hemorrhaging money, it’s not exactly a surprise that this money is going straight to deficit-reduction, no matter how unfortunate that might be.

Interesting trend, though: first Quebec and now Nova Scotia have started dialling back on tax credits – with no apparent backlash.  Hopefully, this is the start of a trend that allows us to restore some sanity to the way we subsidise higher education.

April 24

Using Comparative Labour Market Outcome Data to Think About Education

So, recently, a colleague sent me some data produced by CMEC on the subject of labour market outcomes by educational attainment, among 16-65 year-olds.  Here’s the first one, showing outcomes for Canada.

Labour Market Status by Educational Attainment, 16-65 Year-Olds, Canada, 2012 (Source: The Programme for the International Assessment of Adult Competencies, 2012)













And here’s a similar one, showing the same thing for the OECD as a whole.

Labour Market Status by Educational Attainment, 16-65 Year-Olds, OECD, 2012 (Source: The Programme for the International Assessment of Adult Competencies, 2012)













(Just so we’re clear, when talking about the OECD as a whole, “College” means PSE below bachelor’s degree [ISCED 4/5B for higher ed data nerds], “university” means PSE bachelor’s degree or higher [ISCED 5A/6], and “PSE” refers to the two combined.  That’s not a perfect translation of what those qualifications mean in other OECD countries, but it’s close enough.)

If we compare Canada and the OECD, we notice two things right away. First, there are some pretty massive differences in education levels.  Fully 60% of Canadians have some kind of credential, compared to an OECD-wide average of just 36%.  Second, there is also a difference in employment levels: 75% in Canada versus 69% in the OECD.

An optimist (or at least a higher education lobbyist) would no doubt try to link these two factors, and say: Yay Canada!  Our higher attainment rate causes higher labour force participation rates!  And while that’s certainly one way to read the data, it’s not the only way.

Try looking at it like this: in both the OECD and Canada, exactly one-sixth of the PSE-educated population is either unemployed or not looking for work (6/36 in OECD, 10/60 in Canada).  In Canada, 35% of people with no PSE are either unemployed or not looking for work; in the OECD, 39% are.  Not a huge difference.  A much more pessimistic reading of this data, therefore, is thus: to a large degree, Canada educates people to no real purpose. The fact that we have a higher percentage of the population educated hasn’t appreciably increased the probability (at least vis-à-vis other OECD countries) that those with higher education are employed.

There is, of course, a third reading of the data: that education levels and employment levels aren’t linked statically in any meaningful way.  National labour markets develop in different ways over time, in response to varied economic conditions.  Countries with varying education/skill compositions can have similar levels of employment (though not necessarily similar levels of national income); conversely, countries with identical sets of skills can have quite different levels of employment and output, depending on a host of other institutional and environmental factors.  As a result, generalizing about economic outcomes based on educational ones is a bit of a mug’s game.

I’d kind of like the first option to be true.  But overall, my money’s on number three.

April 23

The Implications of Net Zero Tuition

Over the past two days, I’ve been explaining how Canada spends as much on non-repayable aid as its PSE institutions collect in tuition fees for domestic students – meaning, in net terms, that Canadian students pay zero tuition.  Today I want to explore the implications of this.

Let’s start with what it doesn’t mean: it doesn’t mean that many people are going to school for free.  All this funding is pretty lumpy. Many Quebecers and Newfoundlanders are receiving significantly more money than they are paying – ditto First Nations and students in Quebec CEGEPs.  On the other hand, education is pretty expensive in Alberta because of the way the provincial government chose to slash student aid funding at the outset of the recession.

Another group also making out pretty well is graduate students in non-professional fields.  They make up about 10% of the post-secondary student body, yet with their hold over the bulk of government and institutional merit scholarships, and their being nearly all independent students (and hence receiving more generous student aid packages), they are likely taking home something like 25-30% of the entire non-repayable available aid (of course, one could make the case that money for graduate students shouldn’t really be thought about in the same way as student aid, since it’s really support for research.  There’s no hard-and-fast line here, but it’s worth a debate).

But here’s what it does mean: at over $7 billion in aid, 90-95% of it going to full-time students, we are spending something on the order of $5,500 per full-time student in non-repayable aid – and that includes those full-time CEGEP students who are paying $0 in tuition.  Pure and simple, it makes a mockery of the idea that there is some sort of generalized affordability crisis.   Nobody – absolutely nobody – is paying sticker price for tuition, and a substantial proportion of students are paying nothing at all (or very close to it).  The next time someone (say, the Canadian Centre on Policy Alternatives, for instance) tries to peddle an “affordability crisis”, they need to be refuted vigorously.  Insufficient student aid money is not the problem.

What is a problem is that not enough of this money gets to the right students.  Sometimes, this is because the money is geographically restricted (e.g. too much aid in Quebec, not enough in Alberta), but the main reason is that our tax credit system, which puts $2.5 billion in the hands of students and their parents each year, is a colossal waste of potential.  Re-distributing that money more according to need (as Quebec, in the one decent thing to come out of the Red Square movement, did back here) is long overdue as a policy measure.

That some students need extra funds is not in doubt, as all serious observers of Canadian higher education know.  What separates the serious people from the cranks and the dilettantes, however, is precisely the ability to believe this without concluding that the problem is a generalized one, or that the only solution is to freeze or reduce tuition.  Net zero tuition makes that position completely untenable.

April 22

Canadian Students Pay Net Zero Tuition

Yesterday, we noted that Canada hands out over $10 billion to its students each year.  Of that, $6.6. billion goes to students in the form of tax credits or grants; another $700 million is spent on savings incentives of various sorts.  All told,  over 70% of the $10 billion is non-repayable.

How does that compare to what students spend on tuition?  Well, this isn’t entirely straightforward.  We know from CAUBO/Statscan statistics that in 2011-12, universities collected $7.37B in fees from students.  What we don’t know is how much of this comes from Canadian students and how much comes from foreign ones.  At best, what we can do is approximate.  The Canadian Bureau for International Education (CBIE) says that in 2011, there were 131,500 international students in Canadian universities, of whom roughly 12% are doctoral students.  Stastcan says that in that year, international undergraduate fees averaged $17,500.  Let’s assume that the doctoral students among them are paying zero, but the rest are paying full freight.  That means: .88 times 131,500, times $17,500 = $2.025 billion in foreign student fees.   And by extension, $ 5.35Bn in domestic student fees.

What about on the colleges side?  That’s a little more fuzzy.  For starters, the latest college data I have floating around the office is from 2007-08 (it’s a free email, people, you get what you pay for).  It showed colleges collecting a little under $1.9 billion in fees  (in $2011) from all sources, including continuing ed and trade-voc programs.  Build in a wee bit of growth and we’re probably talking about something in the neighbourhood of $2.2 billion in terms of total fee intake.

What share of that is domestic?  Again, it’s fuzzy.  The CBIE data isn’t clear about colleges’ share of international students, but it’s probably the lion’s share of “trade” and “other PSE” combined, so call it about 18% of the 239,000 international students here in 2011, or about 43,000 in total (Colleges Ontario’s 2012 environment scan says there were 18,000 international students in Ontario alone in 2011, so that seems about in the ball park).  We have absolutely no idea what international student fees are in colleges because nobody tracks that, but let’s really low-ball it and say the average is $7,000.  That would imply international student fee income of about 300 million on the nose, and, by implication, a domestic tuition “take” of $1.9Bn.

So, just to tally things up here:





Total domestic tuition income in = $7.3 billion.   That’s almost exactly, on the nose, what goes out in non-repayable aid to students and their families each year.

Net zero tuition.  I’ll look at the implications tomorrow.


April 21

Canada’s Annual Student Assistance Bill: $10 Billion, Most of it Non-Repayable

Let’s just count up all there is out there, shall we?  Just for fun.

There’s loans, obviously.  In 2010-11, there was a little under $4 billion of those.  Of that, however, about half a billion was forgiven through loan remission, meaning  that “Net Loans” – was about $3.5 billion.  On top of that, there was about another $1.3 billion in up-front grants given out that year (roughly half from the feds, half from the provinces).

(How do I know this, you ask?  Because I’ve been doing surveys of provincial and federal student loans for over 10 years.  I have a database.  Well, CMEC technically owns it, but you know what I mean.)

Government Student Aid by Type, Canada 1993-94 to 2010-11, in ‘000s of $2011














Then there are the various federal and provincial tax credits for tuition, plus the education and textbook credits. These are calculated by using CRA taxfiler data (most recent years available here) to see how many credits have been claimed, and then multiplying out by federal and provincial tax rates to calculate the value of the credits claimed.  Altogether, that’s another $2.3 billion going to students and families for higher education (roughly two-thirds of it from Ottawa).

Canada Education Savings Grant?  Canada Learning Bond?  Another $700 million, or so, combined.  Then throw on another $350 million for provincial merit grants and tri-council scholarships.  All told, that $5.13 billion in non-repayable aid given out each year (call it $4.4 billion if you want to exclude the CESG/CLB, which, after all, is for future students), plus another $3.5 billion in loans.  Total?  $8.6 billion in assistance, only 40% of which is loans.

But wait!  We’re not finished here.  According to the annual Canadian Association of University Business Officers/Statscan Financial Survey, universities collectively gave out just over $1.5 billion in scholarships.  Toss in another $350 million or so in First Nations’ Band Funding under the Post-Secondary Student Support Program, and we’re up to $10.6 billion in aid going to individuals each year, fully $7 billion of which is non-repayable.  And that was three years ago.  It’s gone up since then by maybe another $300 million, all told  (mostly driven by Ontario’s 30%-off tuition grant, and increased institutional spending on scholarships).

$7.3 billion – or even the $6.6 billion if you don’t want to include the CESG/CLB stuff – is a heck of a lot of money.  It’s almost the size of the entire budget for the province of Newfoundland.  It’s more money than governments spend on our entire national college system.  And it all goes to students.  And it’s all non-repayable.

How about that?

An interesting question is: how does this figure stack up when compared to how much students pay in tuition?  Tune in tomorrow.

April 17

The Changing Face of Student Protest

You may have missed this story, what with disappearing airliners, annexations in Crimea, and whatnot, but there has been a major and quite unique student uprising going on in Taipei over the past month.

The “Sunflower Student Movement” was born in mid-March when the Kuomintang government decided to try to ram a new trade treaty with China through the legislature, without permitting a clause-by-clause review or substantive public hearings.  Since the KMT are known to favour (eventual) reunification with China, many in the opposition saw the reluctance to face any oversight as evidence of a potential sell-out.  The result was a student-led occupation of Parliament for a little over three weeks, which eventually ended in a partial climbdown by the KMT.

Historically, this kind of student protest is pretty common.  When you look at the phenomenon of student protests in the 50s, 60s, and 70s, what you mostly see are political movements.  In South Korea, the dictatorship of Syngman Rhee was overthrown by students (the next military dictator prudently relocated Seoul National University across the river from the centre of government); in conjunction with the military, students did similar things in Bolivia, South Vietnam, Sudan, and Ghana.  Even in the developed world, student movements of the 60s had broad political aims – protesting the war in America, for social revolution in France, and for the “nationalist” cause in Quebec.

However, something very strange has happened to student politics over the past thirty years.  During this time, as higher education massified, student movements and organizations became less political.  Today, these movements have become much more concerned with “student” issues, such as student welfare, tuition fees, etc  (in the literature, these are known as “etudialist” issues).

Back in the 60s, when big names in Political Science like Seymour Martin Lipset thought it worth their time to edit books on student politics, this would have seemed unlikely.  The expansion of educational opportunity to poorer students was widely seen as being likely to further radicalize the student body. Yet, in fact, what massification seems mostly to have done is to make the student body more like the world at large: big, diverse, and anything but homogeneous in political thought.  And while that makes them less likely to be vanguards for social or political revolutions, it doesn’t preclude them from uniting to fight defensive battles when they feel their interests are threatened (for example, on tuition fees).

Thus, most of the really large student protest movements in the past three years – Chile, South Korea, and Quebec – have all fundamentally been about fees.  Conversely, while there have been some enormous social and political protests in places like Cairo, Kiev, and Athens, students have rarely played the leading roles that their counterparts did 40-50 years ago.  Only in Taiwan and – to a lesser extent – Venezuela, where student groups have been at the forefront of protests against the chavista government of Nicolas Maduro, have we seen students in the kinds of political confrontations that were the norm only half a century ago.

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