The easy case to be made against free tuition is that it benefits students from richer backgrounds. That’s because they are more numerous in higher education than students from poorer backgrounds and so, on aggregate, would receive more aid. But that misses a more important point: because of the interaction between student aid and tuition, students from wealthier backgrounds would also receive a bigger benefit on an individual level.
Let’s take a really simple example from Ontario. Take two students, Adele and Diana. Both live with their parents and attend university in the same Arts program, but Adele’s family’s income is $40,000, while Diana’s is $160,000. Currently, both pay $6,957 in tuition. Both also receive $2,163 in tax credits. But Adele receives $5,000 in grant money, meaning her all-inclusive net tuition is -$206, while Diana’s is $4,794.
Now imagine the province gets rid of tuition entirely. Diana, the rich kid, sees her sticker price go to zero, and her all-inclusive sticker price fall to -$768 (that’s the value of the monthly “education amount” tax credits, which would presumably still remain even if the tuition fee tax credit disappeared). In this scenario, Adele’s sticker price falls to zero; she would also retain the education amount tax credit, and would keep her $2,000 Canada Student Grant. But she would lose all her provincial grant funding, which is based on tuition. Her net tuition would thus fall to -$2,768.
Think about that: adopting free tuition means that the kid from the poor family would benefit by about $2,500, while the kid from the richer family would be better off by $5,562. And, of course, as we noted earlier, higher education enrolments tilt towards the better-off (this is true both in free-tuition and positive tuition countries) – meaning free tuition is a double give-away to the rich. There’s more of them, and they get more back from a free tuition policy.
Remind me why this is a good idea, again?
Poor students from colleges receive even less of a benefit. Students there have tuition of $4,032. But if tuition were eliminated, that $4,032 savings would be offset by a loss of $2,016 in tuition-related grants, and a little over $800 in tax credits. Net gain: less than $1,200. While the kid from the $160,000 per year family in university gets an extra $5,562.
But where it gets really gets crazy is with respect to single parents. Take Joe, a college student with one child, living on student aid. In the current system, Joe would receive a little over $7,000 in pure loans, and about $10,000 in remissible loans (i.e. loans that are forgiven each year). If tuition were eliminated, however, he’d lose the remissible loan (i.e. a delayed grant) almost dollar-for-dollar. Plus, on top of that, he’d lose $825 in tuition tax credits (the lower tax credits for college are because of lower tuition, in case you’re wondering). So Joe would actually pay more, in net terms, after a reduction in tuition. While the kid from the $160,000 per year family in university would get an extra $5,562.
How is this fair? How is it progressive? How is it in any way a good use of money?
If you substitute in different students or different provinces you’ll get slightly different results, but the basic point remains: net tuition is already free (or close to it) for many people in this country – particularly, poor dependent students and single parents. Reducing nominal tuition does little or nothing to help these people, and in some cases can actually hurt them. Our student aid debate would be much better if more people understood this.