Category Archives: tuition

April 19

A Two-Tier Tuition Regime in Quebec?

Things are getting interesting in Quebec. First Laval and now l’Université de Montreal are publicly threatening to leave the Conseil des Receteurs et Principaux des Universites du Quebec (CREPUQ). In the discreet and diplomatic world of Canadian University politics, this is like blowing a vuvuzela during a piano recital.

At one level, this is a delayed reaction to CREPUQ’s limp performance during last year’s tuition fee debate. At the outset, all institutions agreed to take a common position and speak through CREPUQ, a strategy fatally undermined by CREPUQ’s subsequent decision to spend the crisis hiding under a blanket. I don’t have any inside information, but reading between the lines, it seems that there was a split between the independent universities (McGill, Concordia, Bishop’s, Laval, Montreal, Sherbrooke) and the UQs, with the former mostly thinking the Charest government didn’t go far enough, and the latter – possibly with an eye on an incoming PQ government – being more ambivalent. The result was a deafening and damaging silence from the reform’s key beneficiaries.

The lesson Laval and Montreal seem to have taken from this is that CREPUQ and their UQ colleagues are no longer to be trusted. And so they are now out actively lobbying for a two-tier solution, which would promote their interests over those of the UQ system’s. Specifically, they are arguing for a two-tier tuition structure which would allow research-intensive institutions to charge a higher fee, while allowing the government to claim it is preserving access by giving students a low-fee option through the UQs.

I think there is some merit in a two-tiered solution. Clearly, a lot of (mainly francophone) students have made it known that they value cheap universities over good universities. So, fine, let those be the UQs. For everyone else, there’s a better-resourced solution, funded by fees rather than government.

But the specific details of the plan are a bit sketchy. First of all, the link between tuition and research is a bit ridiculous. What’s the value proposition: “pay us more, so we can pay less attention to you”? Even if it weren’t ridiculous, the idea that it would apply to just Laval, Montreal, McGill, and Sherbrooke is nuts. On any research measure other than, “do you have a medical school”, Concordia kicks Sherbrooke’s behind; for it not to be on that list is a transparent piece of linguistic politics and institutional snobbery.

If you’re going down the two-tiered road, it seems to me that there’s a logically solid case for restricting it to just two universities (McGill and Montreal, genuinely world-class and special) or expanding it to six by including all the “independent” universities (i.e. including Concordia and Bishop’s). Anything else seems arbitrary.

April 12

In Praise of Downward Mobility

One much-used trope, among those wanting to bash higher education, attacks the idea of “downward mobility”. Typically, a journalist finds a kid from a nice middle-class family, having a hard time making-it in the labour market, and uses this as a platform for a string of Wente-isms: “Higher education is supposed to be about upward mobility – but now graduates are downwardly mobile! Won’t somebody please think of the children?” Etc. etc.

But upward mobility is greatly overrated. Downward mobility is where our focus should be. And here’s why:

Part of the problem with the notion of upward mobility is that, with respect to education, the term gets used in two distinct ways. The first is a, “rising-tide-lifts-all-boats” interpretation, where everyone is upwardly mobile in the sense that everyone’s purchasing power is rising. Universities and colleges, through their enriching of human capital, and their contributions to the national innovations system, are seen to be key actors in this process – though, obviously, there are many other things which also go into economic growth. Right now, this kind of upward mobility is in short supply.

But even where there is little or no economic growth, upward mobility in a second sense – that of people changing their position within the overall social hierarchy – can still exist. But this type of mobility is a zero-sum game. Upward mobility can only exist to the extent that downward mobility does.

The book I discussed yesterday, for example (Paying for the Party), is full of stories about downwardly mobile middle-class kids (albeit mostly ones who don’t work very hard at their studies). That’s sad, but what’s truly appalling is the complete lack of downward mobility among the upper-class students. No matter how useless they are academically, mom and dad are always there to help them avoid the consequences of their inaction.

A fair society, one where social position is actually reflective of effort and ability, requires more downward mobility, not less. We need to be finding ways to take inherited privilege away, not re-inforce it. It’s why the rich need to pay more in tuition (and why the poor need grants to offset it). It’s why legacy admissions and merit scholarships that don’t take social origins into account need to be fought. It’s why all those unpaid internships in so-called “desirable” fields (mainly media and publishing) are not just illegal but are also immoral, because they tilt the playing field to the trustafarians who can afford them.

In a low-growth economy, allowing some to rise in social position means others must fall. We in higher education have a vital role to play in this, and we shouldn’t be squeamish about it.

April 01

A Persistent Problem with Truth

When it comes to the subjects of debt and tuition fees, the Canadian Federation of Students (CFS) is the least trustworthy source on earth. They lie. Constantly.

To see the latest collection, just look at this press release, which averages roughly one lie per paragraph. For instance:

“Since 2006, tuition fees have increased as much as 71 per cent in Ontario”. The words “as much as” are doing a lot of work here. For the vast majority of programs, the 5% annual increase has meant an increase of about 47%. And for full-time students benefitting from the 30% rebate, it’s only 17% – which is less than inflation.

“Average student debt after a four-year degree is $37,000 for debt from public and private sources”. No, that’s the average for the small proportion (12% or so) of students who have debt from both public and private sources. Across all students with debt, it’s in the $26,000 range. Across all students, it’s about $16,000.

“The Ontario Liberals committed to reducing tuition fees by 30 per cent in the last election…”. No, they committed, quite specifically, to a rebate of 30% for full-time undergraduate students from families earning under $160,000.

“… their Ontario Tuition Grant has reached fewer than one-quarter of students in the province”. As I pointed out, here, this is only true if you include 300,000 college part-timers taking less than one course per year, 60% of whom are having their education paid for by their employers. Which, since no one thinks they need a tuition break, is pretty dubious.

“… untold number of youth being shut out of accessing a college or university education every year”. Ontario has the highest rate of combined access to university and college of any province. If tuition has an effect, the one place it isn’t showing up is in access rates.

These aren’t honest mistakes made by idealistic youth who aren’t good with statistics. The CFS has many professional staff who are paid to know this stuff, some of whom have been around for decades. They know perfectly well what the real data says; they just think that that lies are acceptable so long as they’re deployed in service of their cause.

And really, why wouldn’t they think that? Ministers still meet with them. Journalists and opposition parties, thinking them a reliable source, regurgitate their lies uncritically all the time. Usually, when interest groups take this kind of liberty with the truth, they lose credibility and, hence, access to power. For some reason, CFS never face any consequences for telling lies.

But maybe, for the sake of restoring honesty to debate, it should.

March 06

Cross-Subsidies and Professional Programs

Canadian Lawyer magazine has an interesting little story about tuition rises at the University of Toronto. Apparently, tuition there has been rising at 8% per year for some time now, and students, understandably, are upset.

That’s a pretty run-of-the-mill story. More interesting, however, was Dean Benjamin Alarie’s defense of the hikes. To wit:

“The cost of satisfying our obligations increases steadily over time, and without corresponding provincial [government] increases to our funding, we need to find a source to finance those inexorable budget increases. The rate of increase of staff and faculty compensation is the product of a mix of collective bargains that have been struck and arbitration awards by labour arbitrators, and so there’s not much scope for the law school and the university generally to resist that part of the academic inflation.”

At one level, this is undoubtedly true. Costs – mainly labour – are rising faster than inflation, and government funding isn’t keeping up; short of increasing student-teacher ratios, tuition needs to rise in order to keep things level.

But those collective bargains and arbitration awards are campus-wide, so costs shouldn’t be rising faster in law than elsewhere. And the rest of the university gets by on something a little less that 5% per year.

So what’s driving those extra costs in law? Universities’ financial reporting is sufficiently opaque that it’s hard to know for sure, but one has to suspect that cross-subsidization might be involved. That is, institutions are taking advantage of the high demand for professional education to jack-up tuition, and funneling some of that money to other programs.

There’s nothing wrong with cross-subsidization, per se. We do this between lower-and-upper year students all the time. Arguably, the entire rationale to run higher education through universities (as opposed to a collection of discipline-based schools) is precisely to allow cross-subsidization between departments. But this gets progressively harder to defend as fees rise. If I’m paying 30% of the costs in my program, and someone else is only paying 25%, there’s an implicit cross-subsidy, but it’s not enough to necessarily get excited about. On the other hand, if I’m paying over 100% of program costs, I’m going to get a little tetchy. Students will pay it, of course – and gladly so, if the value of their degree is seen to be high. But in a recession, when the short-term value of degrees is questioned, it’s a really tough sell.

Alarie says his challenge is to try to explain to students the university’s financial situation so they can better understand these cost increases. In fact, that’s a challenge for the whole sector: as tuition rises, so too must financial transparency – including on cross-subsidies.

January 31

UK Tuition Hikes Revisited

To recap: in 2012, average English tuition fees rose by 158% to roughly £8500, with no corresponding increase in grants. As we’ve seen previously, this resulted in a fall in English applications of about 8%. The effect was not evenly distributed among all groups: among 18 year-olds, the drop was 1-2% (depending on what base you use), whilst among applicants over 19, the decrease was 15-20%.

But of course, it’s never best to rely on one year of data, especially when the government announced the change a year and a half in advance; notably, some people will move up the start of their studies to take advantage of lower fees before the hike. This is essentially what happened in the UK after both the 1998 and the 2005 tuition hikes – a jump in enrolments before the hike, then a fall immediately after the hike, followed by a rebound in the second year after the change as the system returned to equilibrium.

As data released yesterday by UCAS shows, this is exactly what happened this year.

Application rates by Country, 18 year-olds 2007-2013

It’s not entirely clear what’s happened to over-18 admissions since the effective application deadline for mature students has not yet passed; however, initial indications are that application rates continued to fall for the over-25s, but improved, somewhat, for the 19-25 group.

A point of note is the fate of students from the lowest socio-economic strata. These are the students which one would have expected to be most vulnerable to exclusion by higher fees. In the first year after the hike, there were no disproportionate drops for poorer students – their application rates fell at about the same rate as all other income groups. So how did they do?

Application Rates from lowest income quintile, by country, 2007-13

This chart is interesting for two reasons. First, it shows that application rates from the lowest income quintile are now at an all-time high. In fact, if we were to go back to the time when students in this quintile had full tuition waivers (2005), we would see that application rates are up 65% since that time. Second, it shows the difference between England (where tuition is on average £8500) and Scotland (where tuition is £0). The free-tuition jurisdiction has lower participation from low-income students (13% vs 19.5%), and it also has seen slower growth in participation (4.8% vs. 6.7%).

Again, these are the actual effects of a tuition hike of $9000 with no offsetting increase in student grants. Send ‘em to your favourite student leader, plaster them to Pierre Duchesne’s head – there’s a prize for the first person who can read these and still make a coherent argument for why a Quebec-style tuition increase would have any effect at all on access.

January 21

The Effect of Tripling Tuition Fees: UK Latest

As most of you know, UK tuition fees more or less tripled this past year. The initial applicant/enrolment data from a couple of months ago (which I covered, here) indicated that applications fell by about 8%, but also that the drop came almost entirely from older students (among traditional-aged students, the drop was just 1%). Worrying, but not apocalyptic.

Last week, two new interesting pieces of data were released. The first was application data by race; though Black and Asian (i.e. Indian & Pakistani) students were often thought most vulnerable to changes in fees, data suggests they were actually less affected by tuition fee increases than were Whites. This year, applications from Whites were down almost 9%, compared to 2.7% for Blacks, and 4.4% for Asians. With respect to accepted applicants (see here for more information), the picture is essentially the same, except Blacks actually register a slight increase. Part of the explanation is likely that mature students – the ones most affected by the tuition hike – are just a lot likelier to be White than Black or Asian. Regardless, it’s not the nightmare outcome many predicted a year ago.

UK domestic applications by race (2007=100).

The other new data is on institutional enrolments. If you’ve read any English higher ed news in the last 72 hours, you’ve probably seen headlines about “wild fluctuations” in applications and enrolments. This seems overdone to me. Yes, the decision to make students pay more did change applicants’ behavior. But the average university in England always gets about six times more applicants than it has space for, so even if applicant numbers drop by 20% (which they did at a dozen or so universities), keeping accepted applicants (and, hence, paying customers) at roughly the same level isn’t difficult, as long as you tweak your admissions formula slightly so as to get a better yield. Anyone with major fluctuations in new enrolments simply blew their yield calculation.

The University of East Anglia, for instance, saw a 14% drop in applications, but still had an entering class 1% bigger than the previous year. Others were simply less lucky, or less astute, in calibrating their yields. Bradford, for instance, saw an 18% drop in acceptances, even though applications only fell 4%.

But the big question: did schools that raised their fees to the full £9000 do better or worse than those who kept their fees somewhat below that cap? Well, for the 117 public universities with over 1000 applications per year for which I could find both enrolment and fee data, the results can be seen below. There’s nothing obvious which indicates that higher fees make students go bargain-hunting, and that’s is probably why many institutions are thinking about raising their fees again, next year.

Average Institutional Change in Applications and Acceptances among UK Institutions, by Minimum Tuition Fee, 2011 to 2012.

October 30

Setting Tuition

Some interesting news out of Florida last week: Governor Rick Scott (or rather, a task force he created) wants to set tuition in so as to encourage enrolments in the sciences and engineering; so, basically, he’s proposing that tuition in those disciplines remain frozen for a number of years while at the same time allowing it to rise in disciplines deemed less “worthy” (arts, business, etc.).

There are some fairly obvious drawbacks to this idea: not everyone is equally skilled at these subjects and so cannot equally take advantage of the incentive, there are fairly large windfall gains to people already inclined to those disciplines, and – my favourite – if there’s really a need for those kind of skills, surely it’s the labour market’s job to adjust through rising wages, not the government’s to adjust through tweaking tuition.

Nevertheless, it raises a useful question: what’s the right way to set tuition? It basically comes down to just a few options:

Make it Free: A bad idea for a whole bunch of reasons, but it has the benefit of being consistent.
Equal Fees Across All Disciplines. Ditto. Simple to understand and implement.

Let the Market Rip: Also probably a bad idea (for first degree programs at any rate), but there’s an intellectual purity to it.

Differential Fees Based on Private Returns: Doctors pay more, social workers pay less. This is the Canadian model, to the extent institutions are allowed to get away with it (which is to say, with second-entry programs); otherwise we’re closer to the “equal fees” model.

Differential Fees Based on “Social Need” or Labour Force Planning: This is essentially the Florida proposal (Estonia has a version of it too, and some Canadian provinces use student aid to accomplish the same thing through the back door). Basic problems include working out what future needs (social or otherwise) really are and why public funds should be used to set market signals on employers’ behalf.

Differential Fees Based on Cost of Provision: This would have some of the same winners and losers as fees based on private returns, but not all. Law would be cheaper, fine arts a lot more expensive.

It would be nice if, once in a while at least, we could actually discuss these models and make conscious choices between them. It could get a bit confrontational, of course, but presumably grown-up societies can handle a bit of that. Sadly, being Canadian, we shy away from this and make tuition policy the way we always do (i.e. “whatever it cost last year, plus a couple of percentage points”). Score nil, again, for rational policy-making.

October 29

Pop Quiz

So, we all know that tuition is terrible because it’s perfectly obviousthat tuition impedes access. Right? I mean, come on. Who doesn’t know this?

Ok, try this on for size:

There have been four jurisdictions that have had major changes in tuition policy in the last fifteen years. Ontario in 1996 (a series of increases from 1996-99 of roughly 20% per annum), Manitoba in 2000 (a 10% cut in tuition with a freeze thereafter), Newfoundland and Labrador in 2000 (a 20% decrease in fees implemented over four years), and British Columbia in 2001 (a 55% increase over two years).

The graph below shows full- and part-time enrolment in those four provinces for three years before and five years after the policy change, indexed to the year of the policy change.

Figure 1 – Changes in Enrolment Near Times of Major Tuition Fee Changes in Ontario, Manitoba, Newfoundland and Labrador, and British Columbia

Amazing, huh? In all four cases, enrolment rose, and in three cases, the policy change made essentially no difference to the pre-change trend (in the fourth, it just preceded a change in the trend, but it’s pretty light).

Here’s the quiz: Match the provinces to the lines on the graph. Which provinces saw rises in tuition and which ones saw declines? Answers tomorrow in the grey box, but the first person who writes in and correctly identifies the four lines before then gets to choose the subject of a future One Thought.

In the meantime, do feel free to give this to anyone you know who’s insufferable about the evils of tuition. Especially if they’re wearing some kind of red square.

October 22

Wages for the Unskilled and Access

The theory that rising tuition affects access rests on one of two premises. Either the rise in price is leaving students liquidity-constrained (that is, they don’t have enough cash on hand to meet the costs) or they have decided the investment is no longer “worth it.” If the only issue is liquidity constraint, then the problem can be solved with student loans, but since anti-tuition types rarely make that argument, one has to assume that what they believe is that students drop out or avoid PSE because they don’t think it is “worth it.”

The “worth it” argument is best summed up through the handy little graph below, first sketched by Nobel prize-winning economist Gary Becker. Becker’s theory basically says that people decide on making human capital investments by comparing the short-term costs – tuition (C) plus foregone income (B) – to the long-term income benefits (A) that come with higher education. Nothing says that students have to be able to accurately measure A, B and C for this to work; just that whatever the approximations the students are using for costs and benefits, A must be larger than B plus C or a student will not attend.

Human Capital Theory makes some testable empirical predictions, such as the one that older students (who have much less time to recoup their investments) are much more likely that younger ones to respond to an increase in tuition by dropping out or choosing not to pursue higher education. This prediction was spectacularly borne out in the U.K., recently, when a tripling of tuition fees barely affected 18 year-olds, but reduced older applicants by 20% or so.

So, HCT works, right? Tuition increases, if they are significant enough, can affect enrolment. Well, yes. But look at what the theory also implies: that increases in foregone income will have the same effect as increases in tuition. Or, to put it more bluntly: a rise in minimum wage should have the same effect as a tuition increase in terms of deterring access.

This kind of makes sense. We sometimes talk wistfully about how easy it was for our parents’ generation to afford education – how they could easily earn a year’s tuition in a summer of working on the roads or in construction, or what have you. But maybe that’s one of the reasons access was so much weaker then than it is now: if wages and foregone earnings are high, what would have been the incentive to go to school?

So, just remember: if you’re anti-tuition fees because deter access, you should also be against raising the minimum wage because the effects on access are the same. Look for that message on the CFS’s next press release.

October 09

Left-Wing, Right-Wing

One of the oddest things about the politics of higher education in Canada is the way that it seems to transcend divisions of left and right.

You might think, as a rule of thumb, that left-wing governments tend to keep tuition low while right-wing governments are more comfortable with letting tuition rip. Globally, that’s more true than not, but there are significant exceptions – in the U.K. and Australia, for instance, tuition was introduced by Labour governments (though in both cases, Conservative governments followed up with still-larger increases). But in Canada, the politics of tuition don’t quite look that way. Parties of both left and right are obsessed with “affordability” and describe it in the same terms.

(Pop quiz – which provincial political party’s platform contains the words “Tuition rates are among the highest in Canada, saddling graduates with excessive debt loads while scaring away many others from pursuing higher education entirely.” Answer at bottom.)

Right-of-centre parties in Ontario and Alberta, for instance, seem to be interested in freezing tuition because they view it as a form of taxation, another way that governments stick their hands in citizens’ pockets. Among centre-left parties the ostensible reason is a concern about accessibility; but since the research is pretty clear that the effects of tuition on access is close to zero, one has to conclude that these parties are either illiterate or they are pandering to the same middle-class constituency as the right under a fake veneer of “progressive” social policy.

Where there is real daylight between left and right in Canada is in the way they treat institutions during a recession. And the difference isn’t, for the most part, in whether they cut higher education budgets – that’s as much a function of government tax receipt than it is of ideology – rather, it’s in how they choose to cut it. Where right-wing governments tend to be pretty hands-off (“Here’s your five percent cut, guys – best of luck”), centrist- and left-wing governments tend to want to tell institutions exactly how and what to cut. Exhibit A for this is Glenn Murray’s recent consultation paper which, converted into simple language, basically says “we’re cutting your budgets but it doesn’t matter because I, the Minister, have a bunch of great ideas which you institutions were too stupid to have thought of on your own.”

So, Canadian higher ed politics in a nutshell: the left-centre thinks it knows how to run universities and colleges better than university and college staff, and the right doesn’t really much care how they are run. And everyone’s skittish about asking the middle-class to pay more tuition.

*Answer: Alberta’s Wildrose Party. But it could have been the Ontario NDP, too, no?

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