HESA

Higher Education Strategy Associates

Category Archives: Access

July 10

England has lost its damn mind over tuition fees

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

April 12

Access: A Canadian Success Story

Statscan put out a very important little paper on access to post-secondary education on Monday.  It got almost zero coverage despite conclusively putting to bed a number of myths about fees and participation, so I’m going to rectify that by explaining it to y’all in minute detail.

To understand this piece, you need to know something about a neat little Statscan tool called the Longitudinal Administrative Database (LAD).  Every time someone files an income tax form for the first time, LAD randomly selects one in five of them and follows them for their entire lifetime.  If at the time someone first files a tax return they have the same address as someone who is already in the LAD (and who is the right age to have a kid submitting a tax form for the first time), one can make a link between a parent and child.  In other words, for roughly 4% of the population, LAD has data on both the individual and the parent, which allows some intergenerational analysis.  Now, because we have tax credits for post-secondary education (PSE), tax data allows us to know who went to post-secondary education and who did not (it can’t tell us what type of institution they attended, but we know that they did attend PSE).  And with LAD’s backward link to parents, it means we can measure attendance by parental income.

Got that?  Good.  Let’s begin.

The paper starts by looking at national trends in PSE participation (i.e. university and college combined) amongst 19 year-olds since 2001, by family income quintile.  Nationally, participation rates rose by just over 20%, from 52.6% to 63.8%.  They also rose for every quintile.  Even for youth the lowest income quintile, participation is now very close to 50%.

 Figure 1: PSE enrolment rates by Income Quintile, Canada 2001-2014

PSE by Income Quintile

This positive national story about rates by income quintile is somewhat offset by a more complex set of results for participation rates by region.  In the 6 eastern provinces, participation rate rose on average by 13.6 percentage points; in the four western provinces, it rose by just 2.8 percentage points (and in Saskatchewan it actually fell slightly).  The easy answer here is that it’s about the resource boom, but if that were the case, you’d expect to see a similar pattern in Newfoundland, and a difference within the west between Manitoba and the others.  In fact, neither is true: Manitoba is slightly below the western average and Newfoundland had the country’s highest PSE participation growth rate.

 Figure 2: PSE Participation rates by region, 2002-2014

PSE by region

(actually, my favourite part of figure 2 is data showing that 19 year-old Quebecers – who mostly attend free CEGEPs, have a lower part rate than 19 year-old Ontarians who pay significant fees, albeit with benefit of a good student aid system.)

But maybe the most interesting data here is with respect to the closing of the gap between the top and bottom income quintile.  Figure 3 shows the ratio of participation rates of students from the bottom quintile (Q1) to those from the top quintile (Q5), indexed to the ratio as it existed in 2001, for Canada and selected provinces.  So a larger number means Q1 students are becoming more likely to attend PSE relative to Q5s and a smaller number means they are becoming less likely.  Nationally, the gap has narrowed by about 15%, but the interesting story is actually at the provincial level.

Figure 3: Ratio of Q1 participation rates to Q5 participation rates, Canada and selected provinces, 2001-2014

Q1 to Q5 participation rates

At the top end, what we find is that Newfoundland and Ontario are the provinces where the gap between rich and poor has narrowed the most.  Given that one of these provinces has the country’s highest tuition and the other the lowest, I think we can safely rule out tuition, on its own, as a plausible independent variable (especially as Quebec, the country’s other low-tuition province, posted no change over the period in question).  At the bottom end, we have the very puzzling case of Saskatchewan, where inequality appears to have got drastically worse over the past decade or so.  And again, though it’s tempting to reach for a resource boom explanation, nothing similar happened in Alberta so that’s not an obvious culprit.

Anyways, here’s why this work is important.  For decades, the usual suspects (the Canadian Federation of Students, the Canadian Center for Policy Alternatives) have blazed with self-righteousness about the effects of higher tuition and higher debts (debt actually hasn’t increased that much in real terms since 2000, but whatever).  But it turns out there are no such effects.  Over a decade of tuition continuing to increase slowly and average debts among those who borrow of over $25,000 and it turns out not only did participation rates increase, but participation rates of the poorest quintile rose fastest of all.

And – here’s the kicker – different provincial strategies on tuition appear to have had diddly-squat to do with it.  So the entire argument the so-called progressives make in favour of lower tuition is simply out the window.  That doesn’t mean they will change their position, of course.  They will continue to talk about the need to eliminate student debt because it is creating inequality (it’s actually the reverse, but whatever).  But of course, this make the free-tuition position even sillier.  If the problem is simply student debt, then why advocate a policy in which over half your dollars go to people who have no debt?

It’s the Ontario result in particular that matters: it proves that a high-tuition/high-aid policy is compatible with a substantial widening of access.  And that’s good news for anyone who wants smart funding policies in higher education.

March 28

The Western China Dilemma

The South China Morning Post ran an interesting piece recently on the roll-out of China’s Thirteenth Five-Year Plan for Education.  It suggested that in the central and western regions of the country – that is, the poorer, non-coastal bits – the bulk of the task of educational development , including higher education, is going to fall on the private sector.  And yes, this is communist China we’re talking about.

Now at one level this might look like a smart move.  Across most of East Asia in places like Japan, Korea and Taiwan, the private sector provides the majority of spaces in higher education, so why not China?  And besides, parents are prepared to save vastly more for education in that part of the world and so cost is less of an object.  With the economy slowing, the Chinese government is becoming warier about spending money (at least on non-infrastructure projects), so a shift to a model where educational expansion is driven more by the private sector makes a certain amount of sense, right?

Well, I’m not so sure.  I suspect this is just storing up problems for later.

Educational opportunity is distributed very unevenly in China.  It’s not just that participation rates are much higher in the rich eastern provinces than in the poorer central and Western ones.  It’s also that the most prestigious institutions are concentrated in a relatively few areas, particularly Beijing and Shanghai.  This wouldn’t be a problem if these institutions had control over their own student intake and could accommodate the best and brightest from across the country, but they don’t. Instead, each is required to guarantee that a large majority of its places goes to students from its own region.

As everyone knows, in Asia there are two types of private institutions.  A very few of them – those with histories going back a century or so – are pretty good.  Think Keio and Waseda Universities in Tokyo, or Yonsei and Korea Universities in Seoul.  But the majority are pretty weak academically.  And so, what Beijing is offering to the poorer provinces is a lot of lower-quality education; but absent any big new investments in the public system, they aren’t going to get new access to prestige education, which is what the emerging middle class always wants.

Beijing has tried to deal with this problem by making some provinces – notably Hubei and Jiangsu – give up some of their reserved spots at top universities to allow students from these poorer areas.  As Mike Gow, author of the excellent Daxue blog, noted last year these two provinces were made to give up 26% and 18% of their spots this past fall, mostly for the benefit of Yunnan, Tibet and Guizhou provinces.

This, needless to say, has seriously ticked off parents in Hubei and Jiangsu.  In fact, some observers in Hong Kong suggest that this is leading to a new political consciousness among those  in the regions’ middle classes.  Indeed, one suspects the Party knew that this might be the case when it selected Hubei and Jiangsu as the test sites for these policies rather than the more politically sensitive Beijing and Shanghai regions.

The only way to solve this problem in the long run is to start gradually building up some flagship universities in the underdeveloped west.  But this five-year plan is pushing the party towards a quick-and- dirty approach to education in those areas, not a higher-cost quality approach.  Eventually, that’s going to lead to serious political problems either in the interior regions (if mobility continues to be restricted) or in eastern provinces (if mobility is allowed).

Greater affluence leads to greater competition for status goods like education.  To the extent the Communist Party wishes to maintain popular acquiescence to its rule, it has to satisfy those demands.  As growth slows, that task is getting harder.  Keep watching this space.

March 14

The Free Tuition Impulse

A few weeks ago I presented yet more evidence about why free tuition was mostly a subsidy for the rich and was unlikely, on its own, to do very much with respect to equalizing access (scroll through here and here if you really want to read me on this subject, though I imagine most of you are pretty familiar with my spiel by now). Someone asked me: “why don’t people like the Canadian Center for Policy Alternatives (CCPA), the Canadian Association of University Teachers (CAUT) and the Canadian Federation of Students (CFS) get this?  Surely they can read the evidence, why would they persist in touting a solution which is manifestly regressive”?

There are two possible answers to this question.  One is that in fact they have not read the evidence.  It exists, and they know it exists, but just haven’t read it.  As long as they don’t read the work which falsifies their notions, they can continue to hold these notions. To  paraphrase Upton Sinclair “It is difficult to get a man to read something, when his salary depends upon his not reading it”.

I actually got confirmation of this the other day on Twitter.  I was trying to get CCPA’s chief economist David MacDonald to explain why CCPA holds diametrically opposed positions on universal electricity subsidies (bad because they go disproportionately to the rich) and PSE subsidies (awesome, because they benefit the poor – which actually they don’t always, but that’s their story and they are sticking to it).  Basically, his two lines of defense were “it’s a public good” and “it doesn’t matter if most benefits go to rich because if we make education cheaper more poor students will go”.  The first, even if you assume he meant “there are positive externalities to higher education spending” (which is true) rather than “it fits economists’ description of a public good” (utterly false), is not a 100% sensible rationale as it arguably also applies to electricity to some degree (i.e. “there are positive externalities to people not freezing to death in their homes”).  But the second is ridiculous.  We know for a fact that tuition levels have almost nothing to do with access rates in part because targeted student aid actually works.  So I pushed him on it.  “Have you really read nothing about access problems in zero-tuition jurisdictions?  I asked.  Have you never looked at the rather substantive literature on finances and access”?  No reply.  Which, I think, tells you what you need to know.  People like David MacDonald and the CCPA simply do not want to know.  But that’s only half an answer: why don’t they want to know?  If they know that free tuition is ineffective as a remedy and regressive in distributional outcomes, why support it?  What other agenda is at play?

Well, a few years ago, when I was at a small event on Chile looking at the issue of tuition, I finally came to understand this problem.  A colleague and I were asking our Chilean counterparts: why do you want to make tuition free?  You must know it will make very little difference in access to higher education.  To which one of our counterparts replied:  the point is to get rid of the market.  The market must not decide in higher education.”

And so it is in Canada, I think.  The anti-tuition people are not fundamentally pro-access (though that is how they rationalize their position), so much as they are pro-state.  I suspect it’s partly due to a left-ideological stance which generally favours greater state involvement across the economy, but also partly to a naïve view about what would happen inside universities if the need to satisfy the market ever disappeared.  Such as: that public money would magically replace private money and continue to grow at a pace vastly outstripping inflation forever after.  Such as: nasty private sector Board member would be replaced by bureaucrats or more sympathetic public appointments or – better yet – make academics a majority on governing boards.   And magically, contrary to every bit of evidence from continental Europe, government running 100% publicly-funded universities would be less intrusive and meddling in institutional affairs than they currently are.

Once you realize that the free tuition argument is really a government vs. market argument and not a “how do we best equalize opportunities argument”, it becomes perfectly clear why evidence on the efficacy of tuition in promoting access doesn’t faze the usual suspects.  They don’t actually care about access.  They care about resisting the market.   The access stuff is just sheep’s clothing.

March 02

Bravo, New Brunswick

Readers may remember that about this time last year, I was giving the Government of New Brunswick a bit of stick for a botched student aid roll-out. Today I am pleased to give credit where it is due, and congratulate the folks in Fredericton for fixing the problem and developing a much better student aid system.

Let’s go back 12 months to pick up the story.  In February 2016, the Ontario government had come up with a fabulous new system which basically made a promise of grants equal to or greater than average tuition for students from low to mid-family incomes.  At family incomes above that, students received a declining amount of money out to about $110,000 at which point the grant flattens to a little under $2,000 (a remnant of the government’s ludicrous “30% tuition rebate” from 2011) and then falls to zero a little over $160,000.  With a bit of clumsiness this eventually, sort of, got branded as “free tuition for low- and middle-income students, which it isn’t, quite, but close enough for advertising.  Cue what is seen to be a major policy success.

It was such a success that New Brunswick decided to copy it later last spring.  Like Ontario, they built on the change to Canada Student Grants and eliminated some of their own tax credits (including the egregiously wasteful graduate tax rebate) to fund a “Tuition Access Bursary”, which guaranteed a grant equal to tuition (up to a maximum of $10,000, which was more generous than Ontario) for students from families making under $60,000. Which is great, right?  Well, yes, except the problem is, there was no phase-out for the grant.  At $59,999 in family income, there you were raking in $6500 or so in grants and at $60,001 you got $1200 in grants (the federal middle-income grant) and that’s not great social policy.  Making it worse was the fact that families in that $60K to $70K would also be losing a lot of money in tax credits that both the federal and provincial governments were ending in order to pay for this new benefit; my back-of-the envelope calculation was that in this range, parents were going to be about $1,200 worse off as a result of the change.

In any case, because I and others pointed out this flaw, the government after a brief period of defensive blustering decided it was best to go back to the drawing board and revisit the formula.  They did so and last week came up with a new “Tuition Relief for the Middle Class”, which basically involved taking a sliding declining scale of grants for families earning between $60-100,000 onto the existing Tuition Access Bursary (which has been renamed the “Free Tuition Program”).  Arguably, the New Brunswick program is now somewhat better than the Ontario program because 1) it’s not just “grants up to “average” tuition”, a caveat which I suspect is going to leave a lot of people slightly cheesed off when the program starts and 2) It still manages not to subsidize people up to that absurdly high $160K + threshold that Ontario insists on maintaining.  Ontario gets points for making its aid portable, though – New Brunswick’s program is only available to students who study in-province, which I think is a shame.

The announcement – which you know, hey guys, it’s a good news story! – was marred somewhat by some media sniping about how the number of beneficiaries is about 30% short of what was estimated last year.  To me this is neither here nor there: government cost estimates on year 1 of a new program are often a matter of throwing numbers at a dartboard.  The good news is that there is still money to either raise the entry threshold for the Free Tuition Program or (better still) expand the debt relief program or top up the amount of money available to high-need mature students and parents through the New Brunswick Bursary Program.

Now, all we need for this to be perfect is for New Brunswick to come up with a smart, credible monitoring program to examine the effects of these changes on participation over the next few years.

(New Brunswick folk: that’s on the way, right guys?  Right?  Well, you know where to find me if you need a hand…)

Anyways, as I say, credit where it is due.  Well done, New Brunswick.

February 13

When Should the Education System Say “No”?

There’s an argument going on in the UK right now about re-introducing grammar schools.  Until the 1960s, grammar schools were a selective tier of the secondary system.  Everyone took exams at the age of eleven, and the most academically able were selected to go to these schools, the purpose of which (everyone understood) was to enable people to go to university.  Those who did not pass were essentially out of luck as far as further education went: their choices were circumscribed by the time they were eleven. Germany and some other central European countries still operate on this basis.  For some reason, the current government thinks it’s a good idea to go back to that system.

Like many others, I think it’s wrong for the education system to filter people at an early age.  Among other things, streaming – or any rationing by ability, really – is inevitably classist.  Yes, some poor kids will get through and get “a good education” and by some people’s lights this makes selection an “engine of mobility”.  But far more are consigned to the loser bin at an early age.  And that’s not good: you can’t ask the education system to kill people’s dreams off at such an early age.

But here’s the question: if not then, when?  Should the education ever say no to someone’s dreams?

We used to say “no” to people a lot.  We used to fail out a lot of kids from high school and that was OK, because hey, we had to have standards (I note with interest that Ken Coates and Bill Morrison, in their new book Dream Factories, have taken to calling near-universal high school completion rates an obvious example of “dumbing down”. Nice.) We used to restrict entry to university a lot.  Heck, 30 years ago we had fewer than half the number of students we had today, and the median student today would have had trouble accessing university in the late 1980s.  In some parts of Europe, even though they have so-called “open” admissions systems (everyone who passes the exit examination of the top-secondary school stream, such as the baccalaureat or the abitur) it remains policy to fail out large numbers of students after first year who “can’t handle the work” – that is, say yes, then say no.

To a considerable degree, widening access is about learning how not to say no to people.  But to some extent this just puts off the day of reckoning, because after education comes the labour market and the labour market is under no obligation to say “yes” to anyone.  There are more people who want to be professors than there are tenure-track jobs, more people wanting to be lawyers (crazy but true) than there are positions at law firms, more teacher-wannabes than teaching positions.  “No” comes, eventually, at least for some.

Now some people will argue that because the labour market says “no”, the education system also needs to say no – especially when it comes to professional schools. To these people, the expansion of law school (or Master’s degrees in education, take your pick) is a travesty. All those people paying for an education which doesn’t necessarily bring in a huge rate of return?  What we need to do is reduce the number of incoming students so as to raise average rates of return!  (There is a similar argument with doctoral students: there are never going to be enough academic jobs for these students, so why let them in in the first place)?

I get that argument, but to me it doesn’t wash any more than early selection washes.  Yes, there are more wannabe lawyers and teachers than available positions.  But why should anyone but law firms and schools be the ones who say no?  Why should higher education institutions be the gate-keepers?  Until you’ve actually given people a chance to succeed at a professional school, how would you know who the best lawyers/teachers will be anyway?  And how, in practice, will institutional gate keeping not simply re-introduce the class-based outcomes?

The only legitimate argument in favour of limiting enrolment, it seems to me, is if public money is at stake.  At some point, a government which feels it is not getting a good return on its investment because graduates are not getting jobs would be within its right to stop funding new places.  But if students are spending their own money, as they do for law school, why should anyone want to stop students from spending their own money to pursue their desired career?

Yes, consumers need to be protected from mis-selling, obviously; institutions shouldn’t be allowed to mislead people about the odds of someone eventually saying “no”.   But other than that, the moral case for institutions as gate keepers isn’t much better than that for bringing back grammar schools.

December 05

A Wish List for Budget 2017

A few days ago someone asked me what my wish list would be for the federal 2017 budget.  The science/innovation part of my answer will take a couple of posts to summarize (I’ll start addressing some of the issues related to the Science and Innovation Agendas over the next few days); but today I thought I’d give you my thoughts on the student aid part of the equation.

Briefly, I have three wishes.  They are, in order:

1)      Implement the promise on Aboriginal student funding.  In the Liberals’ 2015 manifesto, there was a promise to increase funding to the Post-secondary Student Support Program (the program which provides funding to bands across the country to send their members to post-secondary education) by $50 million per year.  For whatever reason (I explored this a bit back here), the Liberals chose not to implement that promise in the last budget.  Now, there is lots not to like about this program, and lots of ways it could be improved.  But the funding challenges for First Nations students are real, and we shouldn’t give them short shrift because of a desire to wonk around with program design first.  Fulfill the promise, increase spending on PSSSP by $50 million, wonk later.

2)      Increase Aid Limits for Mature Students.  Canada has a not-very-stellar record of adults getting training.  Part of it has to do with the way we support them while they are in school.  Provincial training programs usually cover programs of less than a year in length, and they tend to provide decent (though not lavish) support for living expenses.  If the program’s longer than a year then you tend to get pushed to provincial/federal student aid programs where the basic assumption is that everyone lives like an 18 year-old.  That’s wrong. People who return to education from the labour market tend to have houses or live on their own in digs considerably above the student norm.  They have credit card debt, they have cars.  Yet student loan rules basically says they need to chuck all that an find a roommate to live with.

 There’s a way to fix this.  As far as calculating student resources, we already have a two-tier system: less four years out of secondary school (or less than two years in the labour market, we assume parents are contributing to a student’s cost of attendance.  After that, we don’t, and students become eligible for more money.  There is no reason we could not do the same for calculating student resources, giving older students higher allowances (and higher aid limits).  I wouldn’t stick the dividing line at four years: I’d probably put the line at doctoral studies or three consecutive years in the labour market or something like that.  But either way: if we want to encourage more adults to return to school, something like this is necessary.

 3)      Improve Repayment Assistance.  As I noted last week , over the income range from the mid-$30,000s to $50,000 and at average levels of indebtedness, Canadian student loan borrowers are paying more on a monthly basis than loan borrowers anywhere else in the world (I didn’t actually include the whole word in that post, but trust me the five countries I did show are the ones you need to care about as debt tends to be higher there than in other jurisdictions).  There’s a simple solution here: tweak the Repayment Assistance Program (RAP) to limit the amount borrowers have to repay to 15% of income rather than 20% over the repayment threshold of $25,000.  For borrowers making less than $25,000 this will make no difference (they still pay zero), and for borrowers making over about $50,000 it won’t change anything either (which is fine because by an large they’re quite capable of repaying loans), but in-between (which is the income-range where most borrowers are for the first couple of years after leaving school) it would make a big difference.

Over to the folks in the Langevin Block.

November 28

Canadian Enrollment Data, 2014-15

Statistics Canada published the 2014-15 enrollment data last week and I thought I would give you a bit of an overview.  The data is based on snapshots of enrollment taken in the fall, so we’re talking a 24-month lag here (most other OECD countries can do this in 12-18 months), but this is Statscan so just be glad you’re getting any data at all.

The headline news is that enrollment in 2014-15 was up – barely – from 2.048 million to 2.055 million students (i.e. by 7,000 students), which puts enrollment at an all-time high. As a percentage of the Canadian population, students are thus now 5.8% of the Canadian population.  Just to put that into perspective: that’s roughly the population of Saskatchewan and Nova Scotia combined.  if students were a province, they would be the country’s fifth-largest.  Students make up roughly the same proportion of the population that works in education, law, social services and government services occupations combined, or roughly 5.5 times the number of individuals employed in natural resource occupations.

Figure 1: Enrollment by Level and Intensity, 1994-95 and 2004-05

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But while enrollment increased at both universities and colleges, there are some interesting dynamics if you poke around a bit under the hood.  The main one is that part-time enrollment fell substantially for the second year in a row at universities and third at colleges.  Full-time and part-time enrollments are going in completely different directions at the moment.

Figure 2: Changes in Full- and Part-time student enrollments, 2010-11 to 2014-15 (2010-11 = 100)

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The other really interesting trend in enrollments has to do with international students.  Over the past five years, total full-time enrollment at colleges and universities has increased by 126,000.  48% of that increase is accounted for by international enrollments.  Or, to put that another way: domestic student enrollment has increased by about 5%, but international student enrollment has increased by 56%.  These figures are shown below in figure 3.  Apologies for lines not being distinct, but that’s a factor of the trends being almost identical in both the college and university sectors.

Figure 3: Changes in Domestic and International Full- time enrollments, 2010-11 to 2014-15 (2010-11 = 100)

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That last graph is especially important when you think about institutional finances.  Assuming (at a high level of generality) that tuition income from international students is about three times what it is for domestic students, that implies that over 75% of the increase in tuition revenue over the period 2010-11 to 2014-15 comes from international students.   I’ll try to get into more detail on this at some point before Christmas, but by my back-of-the-envelope reckoning that makes international student fees responsible for almost exactly 50% of total increase in operating funds over those five years.

Let that sink in for a bit.  Fifty percent.

There are a lot of implications to that number.

November 21

The “Poorly Educated” and the US Election

Morning all.  Hope you’ve been well.

During the US election and its aftermath, a lot of the discussion has focused on the issue of education.  Specifically, many pollsters noted large shifts in favour of the democrats among college-educated whites and even larger shifts rightward from less-educated whites.  Trump’s statement in June that he “love(d) the poorly-educated” was in retrospect quite significant.  From this, many on the left have deduced that “education is more important than ever”, a statement which is almost perfectly calculated to feed every piece of Republican paranoia about leftist indoctrination (and hence likely to make higher education a real target in the 25 states where the Republicans control both houses and the Governor’s mansion).

But I think there’s an important caveat to the education story.  Check out the map from NYT’s excellent The Upshot, which shows in green the counties which showed the biggest democrat-to-republican shift between 2012 to 2016.

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If there was an education issue at work here, it was a pretty particular one – one which seems to have manifested itself mostly around the Great Lakes.  It’s the rust-belt, more or less.  Places where the economy has been in either relative or absolute decline for 50 years or more.  It’s not about trade deals; think back to movies set in this area from the 1970s like Slapshot or Breaking Away.  When this area complains about the economy, it has little to do with Obama’s policies or even trade deals. These places were already in deep trouble long before anyone even dreamed of NAFTA. This is about communities that have been falling apart for 50 years.

In the region’s glory days, it was one of the wealthiest regions of the entire globe.  And during that period, it had an unbelievably low education-to-wealth ratio; maybe the lowest of any place in the world, at any time.  Higher Education?  Who needed it, when well-playing manufacturing jobs were a dime a dozen.  Human capital was for suckers.  And that, unfortunately, is an attitude which has endured.

Times changed, of course.  Underinvestment in capital put paid to the steel industry, titanic incompetence the auto industry, while energy costs reduced the competitiveness of pretty much every other sector.  Result: de-industrialization.  There’s nothing unique about this process.  It’s happened in many places around the world Flanders, Lancashire, Eastern Germany.  What’s unique about the US rust belt is mostly how rich it was before the fall.

There was a lot of post-election commentary about how the Rust Belt’s swing to Trump was really a way of saying “we’re upset because no one listens to us” but that’s not strictly speaking true.  People listen.  It’s just that literally no one knows how to effectively reverse de-industrialization.  Americans have it worse because for a variety of reasons (most of them rooted in racism) they lack much in the way of a social safety net.  And as American scholar Toney Carnevale is fond of saying, when a country lacks social programs, education actually becomes the safety net.

But there’s a problem with that.  In declining economies, education is no guarantee of a job because hiring is low.  So the ones with education leave (to California, say, or New York) leaving the remaining population with lower average skill levels, thus making economic regeneration even harder.  People come to see education as a vehicle for personal salvation, but also potentially as an agent of community destruction because while they are creating human capital, they are also priming it for export.  I’m sure many readers in Atlantic Canada will know that feeling.

And to top it off, you have to remember that what people in the area really liked about the old days wasn’t just the middle-class jobs, but the fact that mental toil wasn’t necessary.  JD Vance, in his recent book Hillbilly Elegy (this fall’s de rigeur read for those wanting to “get” Trump voters) notes with some sorrow that the people of his home communities in Ohio and Kentucky lack much in the way of desire for self-improvement through education.  “We don’t study as children and we don’t make our kids study as parents,” he says. “We hillbillies need to wake the hell up”.  That awakening may happen, but it didn’t on November 8th.  In the key states that swung the election, Trump’s promise to “Make America Great Again” was taken up by the people with the subtext “We Want Jobs That Don’t Require College Again”.

In short: more education, on its own, won’t solve the problems of de-industrialization.  And even if that weren’t true, it’s not clear that more education is a medicine everyone wants to take.

November 07

Student Living Standards

Last month, a group called Meal Exchange, an inter-university student anti-hunger group, in collaboration with the Ryerson School of Social Work, published an interesting paper called Hungry for Knowledge: Assessing the Prevalence of Student Food Insecurity on Five Canadian Campuses.  People are mostly drawing the wrong conclusions from it, but it’s worth examining nonetheless.

Meal Exchange surveyed 4500 students at five campus across Canada using a battery of questions on food purchase & consumption identical to those used in Statistics Canada’s Canadian Community Health Survey.  These questions, and the percentage answering “yes” to each are shown below.

 

Question % Yes
I/we worried whether my/our food would run out before I got money to buy more 37.7%
The food that I/we bought just didn’t last and I didn’t have money to buy more 28.4%
I/we couldn’t afford to eat balanced meals 44.4%
I/we regularly relied on a few low-cost foods in order to avoid running out of money to buy food 58.0%
I skipped meals because there wasn’t enough money to buy food 27.4%
I/we did not eat for the whole day because there was not enough money to buy food 11.0%

 

On the basis of these questions, the authors ascribe each respondent a food security score.  If they answered positively to one or fewer of the six questions they are considered “food secure”, from 2-4 they are “moderately food insecure” and 5 or more means “food insecure”.  This is similar to the method Statistics Canada uses for its calculations of food security.  Based on these results, Meal Exchange determined that 61% of students were food insecure, 8.3% had severe food insecure and 30.7% had “moderate food insecurity”.

Now, the most important thing to note here is that the survey sample isn’t even vaguely scientific.  Students were recruited “via social media advertising, institutional survey committees, student associations, university health promotion departments and paper fliers distributed across Canada” – or, in simpler terms, “anyone they could find”.  Even the authors concede this may overstate the number of food insecure students. But leave that aside for a moment. Assume the numbers are right.  What do they mean?

Well, in some ways they arguably understate the issue.  Something like 40% of undergraduates live at home with their parents.  It is unlikely that very many of them are experiencing food insecurity.  The problem, such as it is, is concentrated in the 60% or so of students who live away from home.  That implies that something close to 2/3 of students living away from home are, broadly-speaking, food-insecure.

If that sounds a bit off to you, it’s probably because in fact the definition of “moderate” food insecurity is pretty expansive.  If you answer yes to the questions not eating balanced meals and relying on low-cost food (e.g. pasta, ramen), that makes you “food insecure” according to the study.  And while that might make sense for the majority of Canadians, it’s trickier for students.  For most of them simply leaving home means they have less access to nutritious food because mom and dad aren’t doing the shopping anymore.  That doesn’t actually mean they are malnourished or “can barely afford to eat” (as this quite disastrous Vice headline implied.  “Moderate food insecurity” as Statistics Canada defines it is basically just another way of measuring low-income status and doesn’t indicate hunger in a sense most people would recognize.

The fact that most students are low-income isn’t (or shouldn’t be) news. Check out the Canada Student Loans Program’s monthly living allowances:  these differ by province, but range between $968 (New Brunswick) and $1,408 (British Columbia) per month.  Now compare these amounts to the various Statscan measures of low-income status.  There’s the Low-Income Cut-Off (LICO), which is $1,420 per month in cities between 100-500K population and $1,680 for larger cities; the Low-Income Measure (LIM), which is about $1,737 per month, and the Market-based Measure (MBM) which varies by city, but tends to run between about $1,600 and $1,800.  Take any measure of student expenditure you want, there simply aren’t that many students living on their own who are spending more than that.  They’re low-income.  Period.

And Canadians for the most part are OK with that.  Our income-support programs are not designed to take people out of low-income status.  And with respect to students specifically (traditional-aged ones anyway), we don’t really believe they deserve to be particularly comfortable.  Call it “paying your dues” or whatever, but our view of how students are supposed to live is pretty ingrained.  They’re supposed to be studying so they should live simply; they’ll make money (good money, for the most part) soon enough.  And for a significant proportion of students – not all by any means, but a healthy percentage – there is a certain “Common People” aspect to their poverty: “if you called your dad he could stop it all” – J. Cocker.  Though they are living away from home, many have the option of improving their standard of living and food security simply by moving back in with their parents.  For these students, government intervention beyond what is already available is for the most part simply not required.

Now, predictably, the usual suspects are pushing the idea that 39% of students are “food insecure” (that is, they are combining the “severe” and “moderately” categories and calling them all “insecure”).  But that’s just the usual chicanery one expects from lobby groups: saying 40% are food insecure makes it sound like there’s some kind of major public health crisis rather than the same old story about students having low incomes.  And that’s a shame because the real story isn’t the re-packaging of low-income as food insecure – it’s the 8% of respondents who have severe food insecurity.

Even if that number is on the high side (and my guess based on our previous research on this subject we’ve conducted at HESA  is that it’s not wildly out of line), it’s still very worrying.  There really are students – mostly older, many with families – who don’t eat for 24 hours at a time, who really do have to choose between spending on food and spending on medicine or shelter, and don’t have other family resources to fall back on.  We don’t do a good job of identifying these students, and we clearly don’t do a very good job of supporting them.  These are the ones we really need to help, and urgently so.

Bref, ignore the sensational headlines suggesting widespread hunger.  Focus on the smaller but more important numbers which really do indicate that we have a problem.

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