HESA

Higher Education Strategy Associates

March 24

The Continued Cheapening of the Term “Academic Freedom”

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

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

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

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

Let’s take these one by one:

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

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

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

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

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

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

March 23

HESA’s 2016 Budget Analysis

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

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

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

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

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

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

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

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

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

March 22

Marketing “Free Tuition”

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

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

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

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

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

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

March 21

An Orgy of Bad Policy in Saskatchewan

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

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

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

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

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

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

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

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

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

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

March 18

The Cultural Aspect of “Affordability”

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

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

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

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

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

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

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

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

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

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

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

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

Something to ponder, anyway.

March 17

A Moment of Truth

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

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

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

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

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

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

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

March 16

Parental Contributions: the Policy Implications

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

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

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

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

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

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

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

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

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

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

March 15

ECE Contributions vs. PSE Contributions

Morning all.  Today, HESA is releasing a paper called “What We Ask of Parents: Unequal Expectations for Parental Contributions to Early-Childhood and Post-Secondary Education in Canada”, by Jacqueline Lambert, Jonathan Williams, and me.  The gist of it is: “Holy cow, we ask parents to contribute a lot more to ECE than PSE – why is that?” You can click here to read the whole report, or you can see the short version as an op-ed in today’s Globe and Mail.  What I want to show you in today’s blog is the wonky background stuff, because we’ve done a couple of things in this paper that no one has done before.

The paper is really built around the key insight that you can create “expected contribution curves” for both early-childhood education (ECE) and post-secondary education (PSE). In PSE, you can do this simply by looking at the parental contribution tables embedded in student financial aid programs, and then add in the value of tax credits.  You’ve seen me do stuff like this before, but here’s what it looks like for PSE:

Figure 1: Net-After Tax Expected Parental Contributions for Parents of Children in PSE, Canada 2015

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You can see pretty clearly what’s going on here.  Below about $15,000 the expected contribution is $0 – no contribution required, but income levels are too low for any taxes to kick in, so no tax credits, either.   As income starts to rise, net contribution falls because of the value of tax credits.  But then, expected contributions from the student aid system kick in: at about $45,000 in the case of Quebec, and around $60,000 elsewhere (as a result, despite low tuition, Quebec is the place where parents are expected to pay the most, if their income is between $45,000 and $70,000).  The exception to this is Alberta, where no parental contribution is required at all.  I’ll come back to that.

Eventually, this graph shows that contributions flatten out at a level equal to tuition and fees, which is the maximum possible contribution in this exercise.  Now, I’m pretty sure this will tick a lot of people off because at least some parents also support students for their living expenses, and we’re excluding them, and hence making contributions look smaller than they really are.  This is true – and we do it in part because actual living expenses are quite variable and difficult to model.  But that doesn’t mean we’re exaggerating the difference between expected contributions to ECE and PSE – after all, parents of children in ECE are paying for their kids’ living expenses too.  So we just call all of that a wash and focus on what parents are paying in fees to daycares and universities.

Anyways, for early childhood education you can draw very similar curves to the ones in Figure 1 by taking the average child care costs and applying the subsidies available to low income parents according to the provincial formula.  No one seems to have ever done this before in Canada, but it can be done.  You have to do it three times, because outside Quebec, prices tend to differ by the age of the child (infants are more expensive than toddlers, who are more expensive than pre-schoolers), but it is eminently doable.  Here’s what the graph looks like for infants, after tax deductions are applied:

Figure 2: Net-After Tax Expected Parental Contributions for Parents of Toddlers in ECE, Canada, 2015

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As you can see, the story for ECE contribution is quite a different from the one for PSE.  For infants, the minimum contribution is almost never zero.  In most provinces, parents hit maximum contributions at between $45,000 and $70,000 in family income – a level where parents of PSE students are usually not required to contribute a thing.  To say we as a country are inconsistent in the way we pay for these two types of education is putting it mildly.

Anyways, in the paper itself (well, in the appendices anyway) we generate province-by-province comparisons like this one below, for Alberta:

Figure 3: Effective After-Tax Required Contributions for Parents of Dependent PSE Students and Children in Child-Care, by Family Income, Alberta, 2015

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Yeah, this graph is pretty crazy.  This is what happens when you say there shouldn’t be a parental contribution to post-secondary education, which Alberta did about five years ago.  At $75,000 in family income, the gap between required parental contributions for an infant and for a university student is a little over $14,000.  Madness.

And finally, by multiplying provincial values by each province’s share of population, we can generate some national averages.  To wit:

Figure 4: Average Effective After-Tax Required Contributions for Parents of Dependent PSE Students and Infants in ECE, by Family Income, Canada, 2015

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Fun, huh?

Tomorrow: the policy implications.

March 14

Guaranteed Annual Incomes: the Student Angle

One hot topic that seems to be on everyone’s social policy radar these days is the idea of a “basic income guarantee”, or a “mincome”, or a “guaranteed annual income” (GAI – the term I will use in this post).  A recently-announced pilot project in Finland got quite a bit of press; the federal Minister of  Families, Children and Social Development, Jean-Yves Duclos – who examined the idea thoroughly in his previous career as an economist at Laval – says the idea is “worth studying”; and, the ever-seeking-to-expand-public-expenditure Ontario Liberals say they want to run a pilot test or two on the subject.  This leads me to ask: how will all of this affect students?

It’s hard to make judgements about possible GAIs because they come in so many different forms (this CCPA paper on Guaranteed Income is quite a good guide for the un-initiated).  Some are universal in that monthly cheques get sent to everyone, and others are simply income top-ups for the poor.  The size of the benefit may vary significantly, as may its integration with/replacement of other benefits, such as pensions.  At the high end, giving everyone over the age of 18 $800/month in a guaranteed income payment works out to about $268 billion, or 14.7% of GDP (that would be offset by reductions in spending OAP, social assistance, and unemployment insurance, but those three programs don’t come close to covering that amount, so it would require a whacking great tax increase).  At the other end, there are much more moderate and targeted systems, which I’ve seen costed in the $30-40 billion range.  Projected clawback and tax rates matter a lot here, and there’s simply not enough information to even speculate reasonably.

But one thing that seems certain is that there will have to be some major policy discussions around students and student assistance during the design phase of a GAI.  Would students be excluded because student financial aid programs already constitute a targeted form of assistance?  Or would they be included because the whole point of a GAI is that it is universal?  If students were included, what would happen to their student aid?

This would be an interesting challenge.  Student aid for dependent students is based on the idea that families should contribute something to their children’s education.  But what if everyone over 18 were getting some “income” of their own, or at least given an income floor?  Would we still keep these rules?  Would the grants we currently distribute disappear, in part to pay for the cost of the GAI?

One could imagine a very simple system in which the GAI is presumed to take care of living expenses, and student aid is left simply to take care of tuition costs.  However, a GAI would have to be very high for that to make sense: student aid living maxima average around $1,000/month in Canada.  If it were set lower, such a scheme might make students worse off.

Another question: if GAI *were* set sufficiently high so as to take care of living expenses, what would be the continued argument for any kind of student grants?  At that point, why not just ditch need assessment altogether and make loans available to all to cover 100% of tuition?  It would certainly make loan administration easier.

As you can see, the adoption of a GAI would have significant knock-on effects for student aid, which would need to be carefully thought through.  And this is not just a concern for a distant horizon: it’s also important in the near term for anyone doing a serious pilot project.  One of the serious problems with GAI pilots is that they provide participants with a set of new benefits, without making the adjustments to taxes and “other” benefits that a real GAI would require.  Results thus tend to reflect less the specific effects of a certain GAI design, and more the effects of giving people a bunch of free stuff paid for by outsiders.  This indeed was the principal critique of the well-known Manitoba “mincome” experiment in the 1970s.

A serious GAI pilot would almost certainly have to deny any student participants a part of their student aid entitlement, which politically might be quite difficult.  These are considerations well worth pondering as this social policy field moves forward.

March 11

How Much is a Brand Worth? Evidence from Doha

The Washington Post had an absolutely fascinating article earlier this week regarding the sums that the Government of Qatar is paying various American universities to be part of its set up at Education City.

For those who are unfamiliar with Education City, a slight diversion.  About 15 years ago the Qatari royal family got frustrated with the state of local education and hit on the idea of creating a world-class educational facility by inviting top US universities to come in and each run one faculty.  So Virginia Commonwealth was invited to set up a visual arts school, Georgetown came in to run the school for the foreign service, Weill Cornell did the medical school, etc.  (Northwestern, Carnegie Mellon, and Texas A&M also have campuses there).

Now this wasn’t your typical branch campus arrangement.  These institutions were not over there to make money by offering degrees for high prices.  Rather, the Qatari Royal Family was paying them big dollars to educate their students in situ (there’s a similar arrangement in place for the NYU and Sorbonne campuses in Abu Dhabi).  The universities themselves had nothing at risk: each one received its own gorgeous building fully paid for by the Qataris.

But nobody knew exactly how much they were getting until the WaPo article this week.  Using tax records, Department of Education data and freedom of information requests, the paper managed to lift the veil on the financial arrangements.  As it turns out, the Qataris are paying them, collectively, just under $405 million per year to operate their Doha campuses.  Weill Cornell rakes in the most (hey it’s a medical school) at $121.7 million, and Virginia Commonwealth the least at $41.8 million.

On their own, these are eye-watering figures.  But to truly get a sense of how insane this is, you have to look at what this translates to in per-student terms.  These are actually pretty small operations – according to the data I was able to piece together the six campuses collectively only educate about 2000 students.  So the actual expenditure per student is actually just over $205,000. 

Qatari Government Expenditure per Student, Education City Campuses

ottsyd 20160310 Doha Brand

In other words, these schools are making out like absolute bandits.  Free buildings, six figure per student incomes – this is heaven.  But the question really is what on earth possessed the Qataris to pay this kind of price?

It’s instructive here to look at what the Qataris are paying the College of the North Atlantic to run their community college a few kilometers away from Education City.  It’s the same deal – Qataris built the campus and pay an annual fee to CONA to run the place.  Details on the post-2013 CONA contract are scarce, but the first ten-year contract was worth $500 million so let’s just say it’s worth $50 million/year (the CONA Annual report gives figures in the $10-11M range, but I’m fairly sure that’s profit not operating).  But CONA educates more students than all the Education City campuses combined: with roughly 3000 in total – I make that out to be $16,500 or so per year – or about an eighth of what the cheapest institute at Education City is getting.

Now obviously, that’s not a bad deal for CONA (In comparison, the college receives about $84 mil in provincial grant in aid and tuition to educate its 8888 students in regular programming back in Newfoundland, which comes to about $9400/student), and obviously there are some differences in delivery costs for college and university programs, but they aren’t that big.  Georgetown’s campus is a pure social sciences operation, and at Canadian universities those rarely cost more than $15,000/student.  So where’s that extra money going?

Well, to student amenities, partly.  These places are like little educational wonderlands(check out Georgetown’s student life page).    But mostly, this is pure rent.  Unlike CONA, these American institutions have global prestige.  And that in a nutshell is what the Qataris are paying hundreds of millions a year for – the right to be associated with these institutions’ prestige.

That’s what brand is all about.  And apparently, it’s worth up to a couple of hundred thousand dollars per student.  Nice work if you can get it.

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