HESA

Higher Education Strategy Associates

Category Archives: tuition

February 24

The Best Argument for Free Tuition

As you’ve all probably noticed over the years, I have little patience for most arguments for free or reduced tuition.  There’s not much evidence it improves access.  Sure, it reduces costs for poorer students, but there are cheaper and more progressive ways to do that than to simply provide aid to all, regardless of ability to pay.

The argument in favour of charging fees is threefold.  One is about fairness: people who gain a personal advantage from using a service (and private returns to education are still excellent, no matter what the “hell-in-a-handbasket” crowd says) should contribute towards its upkeep; the “positive-externality-of-education” argument is correct, and leads to the conclusion that there should be some public support of higher education, but not that it should be exclusively supported that way.  The second argument is about equity: this is a service used disproportionately by the wealthier elements of society, and so using public money for it is always problematic (unless, that is, you adopt the ludicrous arguments espoused by Hugh McKenzie, and the Canadian Centre for Policy Alternatives, that it’s still progressive to give more services to rich people on the grounds that they pay more taxes).  The third argument is simply pragmatic: there are masses of people who are affluent and willing to pay for higher education.  Why would you punt that?

The zero-tuition folks really only have one semi-effective rejoinder to this, which is that most of this is also true of secondary education.  Why free education for one and not the other?  The answer, of course, is that secondary education is compulsory and post-secondary is not.  But this answer is getting less obvious all the time.  A large majority of young people now do get some kind of post-secondary education, and we’re getting closer to universality all the time. If higher education is becoming universal, would it not make sense for at least some of it to be free?  Not all of it, mind you: the fairness and equity rules above would still apply.  But if it were introduced for higher education programs where the students aren’t disproportionately drawn from upper SES groups, and where the returns to education are fairly low, free tuition wouldn’t violate those rules.

An interesting movement is developing along these lines in the United States, with calls from both the left and the right to make two years of community college free.  In fact, the Governor of Tennessee (long a low-tuition state, like much of the South and West – it’s a legacy of 1890s populism) has put such a proposal in his State of the State address. Since US associates degrees tend to draw lower-income students, and lead to less well-paying jobs, it meets the fairness and equity tests.

Something similar wouldn’t make quite as much sense in Canada because more of our college credentials are longer, more specialized, and have high private rates of return; you wouldn’t want to do this with Sheridan’s animation programs, or SAIT’s pipeline technology programs, for instance.  But college ECE or pre-apprenticeship programs?  Free tuition there would be significantly more progressive than, say, grants to university students from families making $160,000.

Worth a conversation at least.

February 20

Why Can’t We Just Means-Test Tuition?

A couple of weeks ago, I had an exchange with a colleague who couldn’t figure out why tuition wasn’t means-tested.  It just makes sense, he said: make the rich kids pay lots of tuition, and make the poor kids pay very little.

I argued that it was means-tested.  If you didn’t have means, you’d get a grant, which would reduce tuition (though I allowed that this was done a lot less effectively than it could be, given how poor our targeting system in student aid is).  ”OK”, he said, “but why not cut out the middle-man and just vary tuition directly according to a student’s parental income?”

Now, there’s something to be said for this.  Clarity, for starters.   As we noted yesterday, there are already tens of thousands of low-income students attending for free, and nobody seems to know it.  If we could just re-package aid and fees into a single, easily understood figure, that clarity might go a long way to improving access.

It’s also not unprecedented: in 1998, when tuition fees were introduced in the UK, the fees were made variable based on income.  Students from families making over £30,000 were charged £1,000; those from families making between £20,000 and £30,000 were charged £500, and those from families making less than £20,000 were not charged anything at all.  Similarly, in a couple of the German states that introduced tuition after 2006, waivers were instituted so that poorer students paid nothing at all.

There are basically two reasons why we don’t do this in Canada.  The simple, technical reason is that in most parts of Canada, universities are still notionally in charge of tuition and admission, and universities don’t ask students what their income is.  In the UK, government agencies outside the university were in charge of both, so it was easy enough to achieve.  For us to do that here would require taking away at lest some institutional autonomy and/or making sure that whoever makes the admission decision also knows a student’s family background.  Ontario’s provincial university application centre (OUAC) might be the kind of organization to do this, but elsewhere in Canada it would be more difficult, as each individual institution would have to tool up a separate income-assessment system.  Not impossible, by any means, but difficult.

But the bigger issue is simple raw politics.  If government grants were folded into a single tuition price, how could the federal government get credit for all its tax credits and Canada Study Grants?  How could Ontario get credit for its Utterly Inane 30% Tuition Rebate?  And, depending on how rigid you wanted to be about this one price rule, it might also prevent universities from using their student aid and scholarship budgets strategically.

In short, the barriers to simple, easy-to-understand means-tested tuition systems are less technical than political.  It’s a case of the need to be seen to do good trumping the need to actually do good.  Sad but true.

February 19

Free University and We Don’t Even Know It

I’ve long believed that post-secondary education should be free for bright, poor kids.  And although there’s room for differences over what constitutes “poor” and “bright” (I’ve got a strict-ish definition of the former, less so the latter), it seems to me that this is a sentiment with which most people agree.

But here’s the thing: in actual fact, there are an awful lot of bright poor kids already going to university for free, and nobody seems to notice.  The problem is that we just don’t package it in a way that people recognize it as being free.

Take Quebec.  What’s that?  Lowest fees in the country, but kids still have to pay?  Pshaw.  Over 100,000 university students there receive grants.  The median grant is $4,500.  Average tuition and fees is $2,000 or so.  A quick look at statistics from Quebec Aide Financiere Aux Etudes suggests that at least 40,000 students are receiving more money from government than they are paying to go to school.  Unless you’re deliberately trying to be obtuse about it, that makes 40,000 people getting a free university education.

Ah, you say.  But what about mean old Ontario, where tuition and fees are now up around $7,000.  Well, actually, there are a substantial number of students getting free education there, too.  Thanks to the Ontario Tuition Grant, full-time dependent students from families making under $160,000 (yes, the limit’s an utter travesty – we’ll discuss it another time) get $1,730/year from the government.  Those from families with income under $40,000, or so:  they’re eligible for another $1,600 from the Canada Student Grant.  Add in another $2,300 or so in education tax credits, and we’re up to $5,600.  If the student is doing well at school – say, high 80s – that can qualify them for another $1,500 or so in entrance awards.  That’s $7,100 in non-repayable government aid – more than what they are paying in tuition.

Or, another combination: Imagine the same student from a family earning roughly $60,000.  Probably wouldn’t get the Canada Study Grant, but would get everything else, meaning they’d be receiving about $5,500.  If they left home to go to school, the likelihood is that they’d get a loan in the $9,000-$10,000 range – of which anything over $7,140 would be forgiven (that is, turned into a grant).  So, again, free tuition.

I could go on province-by-province (Saskatchewan and Manitoba do pretty well in this kind of accounting), but I’ll spare you. There are no numbers that would allow us to say for sure how many people are receiving this kind of money.  For what it’s worth, my guess, based on my knowledge of student aid in Canada, is that the number is probably in the 100-150K range, but it’s hard to know for sure.

You’d think that this would be one of those things about which everyone – especially provincial governments – would be standing up and shouting to the rafters: it’s a heck of a good news story.  And yet, absurdly, nearly no one even knows its even happening.

How did this state of affairs come about?  More tomorrow.

January 21

Karl Marx Talks Tuition with a Young Progressive Thing

Karl Marx: Jenny… Jenny… there’s a kid at the door… Jenny?  Oh all right, I’ll get it myself

<opens door>

Young Progressive Thing: Hi there, Mr. Marx!  I’m an idealistic Young Progressive Thing.  Want to sign this petition from the Canadian Federation of Students and the Carré Rouge types to make tuition free?

KM: (stares bemusedly).  Why on earth would I want to do that?

YPT: (startled). Well, it’s about helping the poor.  The workers.  You’re into that, aren’t you, Mr. Marx?

KM: You’re kidding, right?  Haven’t you read my critique of this?

YPT: Um… no.

KM: Where is it?  Must be here somewhere.  Ah, here we go.  Critique of the Gotha Programme, chapter iv: “If in some states… higher education institutions are also “free”, that only means in fact defraying the cost of education of the upper classes from the general tax receipts”.  Get with it, kid, this is a regressive subsidy.

YPT: But tuition itself is regressive!  Proportionately, it costs the poor more than the rich because their incomes are lower!

KM: But that’s true of all market-traded goods.  The poor pay proportionately more for housing than the rich.  Ditto beer, phones, milk, Pokemon cards: if that’s your argument for free tuition then you’re really saying we shouldn’t have a market economy.  Obviously, I’d personally  be cool with that, but last I checked you weren’t actually calling for it.

YPT: Well some of us at head office…

KM: <impatiently>. You’d never say it out loud in public because students would laugh at you.

YPT: OK, true.

KM: Exactly.  And without an historically unprecedented re-distribution of income, this makes no sense.

YPT: Hang on, wouldn’t a progressive income tax system counter your objection that free tuition mostly takes care of the rich?

KM: <blinks angrily> Where on earth did you get that talking point?

YPT:  Hugh McKenzie and a raft of Canadian Centre for Policy Alternatives publications.

KM: So, essentially, you’re saying that it’s OK to provide more services to the rich because they pay more taxes. (Gives YPT a suspicious look) Are you sure you’re a progressive?

YPT: (defiantly) Yes!

KM: Remember the bit about “To each according to his need”?  Explain to me how free tuition meets that test.

YPT: Well, all students are broke, so they all have need …

KM: Oh, for…  look, just because students all have low income, doesn’t mean they all have low access to wealth and money.  The “Bank of Mom and Dad” is a euphemism, but for many, many students it’s not the least bit fictional.  To pretend otherwise is to pretend that class magically stops replicating itself at age 18.

YPT: But not all parents will contribute the same amount…

KM: And that means we should make it free for everyone?  Just because I’m a Marxist doesn’t mean I believe in wasting resources.

YPT: <completely out of arguments> You’re just a neo-liberal reactionary!

KM: (shrugs).  Whatever helps you sleep at night, kid.

November 28

Some Free Advice for the Parti Quebecois

So I see that the Government of Quebec, far from hitting their zero deficit target this year, is in fact going to come in with a deficit of about $2.5 billion.  This means that, not only will the “reinvestment” in higher education – the money that was going to compensate institutions for not getting their promised tuition increase – not come any time soon, but it’s better than even-money that there’ll be cuts this year instead.

Two points:

1)      Hey, CREPUQ!  Still think the “playing it quiet” strategy in the spring of 2012 was such a hot idea?  Congratulations on such a well-executed plan.

2)      Man, Quebec universities need to find some revenue sources.

That second one is a bit of a problem, of course.  The PQ has indexed domestic tuition to some form of inflation, and, as I understand it, the Liberals have agreed to this policy as well – so that’s out.  It could charge differential fees to out-of-province students, but they already tapped that well back 1996, so that’s out too.

So what about international students?

There are two oddities about Quebec’s international student fee policy.  One is the policy of having regulated fees in some disciplines (e.g. arts, science) and de-regulated fees in others (e.g. engineering and business).  Institutions get to keep all the money they take from students in de-regulated programs, but in regulated ones, any money received over and above what domestic students pay gets clawed back by the Ministry (yes, really).  The second oddity is that international students from la francophonie pay Quebec tuition.

It’s clearly time for Quebec to get rid of both these policy oddities.  The first one can’t be eliminated on its own, as it will be perceived as favouring the anglo universities, and, you know, dieu nous en garde.  But if both are killed together, then there’s something in it for everyone.  McGill gets to cash-in on all the Americans who come to study Arts, and enjoy the more righteous legal drinking age, and U de M and Laval get to actually charge all those European and African students who come over for the Engineering and Business programs.

(This is where someone says: “but they’ll lose students if they charge more!”  Irrelevant.  The only issue is whether they make up the attendant lost revenue through higher fees.  Which shouldn’t be hard.)

The benefits of the francophonie tuition policy are minimal.  Heck, one of its main consequences is that the Quebec government is currently subsidizing over 700 French students each year to study in English at McGill.  So why bother?  For the Quebec government, killing it would be a cost-free way to help universities with their funding issues.  It should be a no-brainer.

October 28

Debt, Tuition, and Inequality

A few weeks ago, I noted on Twitter that back when I was in student politics (24 years and counting) we opposed tuition hikes because we feared their negative effect on access.  Back then, fees hadn’t increased in real terms in almost two decades, so there wasn’t much evidence either way on the issue.  More than two decades on, the evidence has accumulated, and, on the whole, it turns out that what we believed back then was mostly mistaken: despite much higher tuition, more students than ever are attending PSE, and more low-income students than ever are attending PSE.

As a result, it’s increasingly ridiculous to use access arguments against tuition increases: basically you’re reduced to slogans like, “tuition reduces access!  And it’s a disgrace more people are paying it every year!”  Given this, I asked Twitter peeps what the best grounds were for opposing higher tuition and debt.  The most common answer was some variation of “tuition/debt causes inequality”, on the grounds that graduates with debt accumulate assets more slowly than students without debt.

Superficially plausible, maybe, but still wrong.  Inequality doesn’t exist “because of” borrowing.  Everybody pays equal tuition fees; debt is incurred by those who don’t have the cash up front to pay for it.  Blaming student aid for inequality is just blaming student aid for the fact that some students come from poorer families, and others from richer ones.  You don’t have to condone inequality to realize that it’s a silly proposition.

So, students who go in rich don’t accumulate debt, and therefore end up richer at the other end; students who go in poor do accumulate debt, and therefore remain poorer at the other end.  But that would be true regardless of how fees are set.  If you reduce fees for all, everybody is made better by the same amount.  Poorer families end up with less debt, richer families get to keep more cash-in-hand.  For the abolition of fees to reduce inequality, it would have to create some kind of behavioural change among richer parents that would make them less likely to pass that extra money on to their kids.  And how likely is that?

These are all pretty basic observations, yet they rarely make it into the debate about tuition and debt.  Partly, it’s because inter-generational transfers complicate the analysis, but I think it’s mostly because debt makes people squirrelly.  As Margaret Atwood and David Graeber have pointed out in recent books, the concept of debt is tied-up with an enormous amount of cultural baggage, which makes it difficult to talk about in purely economic terms.  For the next couple of days, I’ll be unpacking some of these cultural issues, and how they affect our discourse on debt.

More tomorrow.

October 01

How the Zero-Tuition Crew Could Learn to Love Tax Credits

So, let’s say you’re among those who clings to the idea that tuition isn’t just a massive give-away to upper-income families.  Let’s say you really, really believe that tuition – sticker-price tuition, none of these “net price calculations”, thank you very much – affects access.  How would you go about gathering evidence for your point of view?

Ideally, of course, there would be some data showing that, as fees went up, participation went down.  Problem is, the data doesn’t show this.  To wit:

Tuition + Ancillary Fees (in $2013) and Participation Rates, Canada, 1993-94 to 2012-13

 

 

 

 

 

 

 

 

 

 

 

 

Well, OK then.  Maybe if you’re desperate to prove a point, you might relax your scruples about counting grants against tuition.  Maybe it’s all the extra student aid pouring into the system which has made a difference?

Tuition + Ancillary Fees (in $2013), Net Fees (i.e. Minus Grants) and Participation Rates, Canada, 1993-94 to 2012-13

 

 

 

 

 

 

 

 

 

 

 

 

Well, no.  Damn!  Now what?

Well, here’s one possibility.  Check this out:

Real Tuition + Ancillary Fees, Minus Grants and Tax Credits, as a Percentage of Average After-Tax Family Income

 

 

 

 

 

 

 

 

 

 

 

 

If you add grants and tax credits, and adjust for inflation, and then adjust for median family income, you get to the point where you realize that, in fact,  fees were more or less constant in terms of affordability over the last decade or so.  So voila!  That damnable rise in tuition fees that so inconveniently accompanied the increase in participation rates?  Turns out it didn’t happen – at least if you properly count subsidies.  In fact, one could now convincingly argue that the lack of a relationship between fees and participation is a huge hoax, and that the rise in participation was actually fuelled by the massive infusion of tax credits and grants over the past fifteen years, which effectively netted out the impact of tuition.

There’s a slight problem with all this, of course.  And it’s that the zero-tuition crowd has a long track record of claiming that subsidies have no effect whatsoever, because sticker price is the only thing that matters.  No one thinks tax credits have any effect on participation, and the more hardcore of the zero-tuition crowd don’t believe grants matter either (True story: a long-time student leader informed me the other day that the whole concept of net tuition was bogus, and that grants should never be included in discussions about affordability, because “grants don’t reduce tuition, they just help you pay for it”.  Yes, really).

So the zero-tuition crowd has three choices here:

  • They can keep their beliefs about subsidies, but accept that participation has risen along with tuition, and admit that, perhaps, their views on tuition are wrong.
  • They can renounce everything they’ve ever said about subsidies, run with the idea that affordability has not been deteriorating, and arguing that this is what has fuelled the rise in participation.
  • Ignore all empirical evidence, and continue their evidence-free approach to the whole question.

No prizes for guessing which is likeliest.

September 26

Getting Medieval on Tuition

Here’s a great story you may have missed: at the University of Toronto, students have created their own exchanges where they can pay students who are enrolled in a class which is full to drop out, thus opening space for themselves.  In other words, a secondary market in class spaces has spontaneously emerged (as markets do).

Most people’s reaction to this is either shock/horror (costs to students, more inequality, yadda yada), or mild amusement.  But I think it raises some interesting questions: other than administrative convenience, why do we have a single price for all classes in a faculty, anyway?

From time immemorial, until sometime in the nineteenth century, professors actually charged their own tuition with no interference from “the university”.  They charged whatever the market would bear, which often wasn’t very much.  But it kept a market discipline on the profession.  Professors who couldn’t help students pass their exams didn’t just get bad teaching reviews – they got less money.

(Just once, when someone talks about how neo-liberalism is eroding the eternal values of the medieval concept of the university, I want them to include guaranteed professorial pay as one of the modern vices that needs to be rejected in favour of its medieval antecedents.  Just once.  Please.)

It’s interesting to think what would happen if we went back to that model.  Why not link professorial pay to the number of students taught?  Or, go a step further – allow professors to set their own price-per-class.  Really good professors could charge a lot, and thus (perhaps) limit their teaching load by reaching their desired income through higher average fees.  Either way, we’d be lining up incentives with teaching rather than research, and there would be real incentive to teach those big intro classes.

When you think about it, there’s lots of intriguing ways that demand-based pricing could be applied.  For instance, imagine what would happen if institutions decided to generate a set amount of income per class (say, $50,000).  Students would pay the class fee, divided by the number of students.  In smaller classes, students would see their price-per-class rise; students in big classes would get a break.  As a bonus, low-demand courses would cancel themselves out within the first week or two – if students saw prices rising because of low enrolment, they’d probably skedaddle before the add/drop period.

(If you think these pricing schemes are unfair, just remember: they’d follow exactly the same pattern as subsidies do now – much greater for smaller classes than for big ones.  If one’s unfair, so’s the other.)

It’ll never happen, of course.  But thought experiments like this help us to think through what we pay for in higher education – and why.

September 24

Education is a Right… So?

I dig those little buttons you see sometimes.  The ones CFS hands out saying, “Education is a Right!”  What I don’t get, though, is why anyone thinks that kind of a slogan actually means anything with respect to education funding.

You’ve probably been in this discussion once or twice in your life.  Chatting about tuition, or funding, or whatever, and someone takes the position that there should be no fees/greater funding/etc.  You debate the merits of the point for a while and then that person – often with a tone of smug moral superiority – lays down the trump card: Education is a RIGHT!  And then dares you contradict him/her.  After all, you’d have to be some sort of monster to constrain a right, wouldn’t you?

Of course, this is horsepucky.  Education is not the only economic and social right which has been enumerated by international convention; how would those other “rights” look if we presumed that: if “X is a right” then “X must be provided free of charge”?

1)   Housing.  Shelter is of course a right under the Universal Declaration of Human Rights (article 27, for you treaty nerds). Now maybe I’m not paying close enough attention, but I don’t see anyone arguing that housing should be provided free of charge by the state just because it’s in the UDHR.  It’s been done of course – many communist countries went down this route – but one of the results is that housing providers tend to want to make provision more uniform.  And of low quality.

2)   Food. Even North Korea doesn’t make food free.  Subsidized, yes; free, no.  That’s because even the most hardline communists recognize that different people have different tastes, and have the right to use the fruits of their labours to construct their own consumption baskets.

3)   Health.  Most countries buy some of their health-care collectively though some sort of insurance function, which makes it free in the sense that the zero-tuition crowd would like education to be.  But not even Canada pays for all its health care this way – between eyes, teeth, drugs, elder care, and sports medicine, private expenditures still make up 30% of all health care dollars in Canada.   The difference of course is that this is insurance – protection against random catastrophic loss.  Education doesn’t work in quite the same way.  One rarely hears of young people being randomly and catastrophically educated.

In short, the “rights” argument is the start of a conversation, rather than the end of it.  In no other social and economic fields does the fact that something is a “right” make it automatically free to all.  Rather, it means that it needs to be available to all, and selectively subsidized where necessary.  In other words, the status quo.

September 17

Why Public Higher Education Should be Free…

… is the unfortunate title of a new book by Robert Samuels, a professor at the University of California, and president of the University Council – American Federation of Teachers.  The title is unfortunate because the book’s not really about free tuition; the subject doesn’t really get a look-in until about three-quarters of the way through.  Rather, Samuels’ book is mostly about (as he puts it in the title of his first chapter) why tuition goes up and quality goes down.  When Samuels focuses on this issue, it’s an excellent book.  When he strays, it’s not.

Let’s start with the good stuff.  Chapter 2, “Where the Money Goes in Research Universities,” is genius.  Not because it’s saying much that people don’t already know – pack in the undergrads, teach them using underpaid sessionals, reserve “real” profs for graduate students and research – but because it’s very rare anyone on the inside of universities exposes this strategy in stark naked terms (ok, yes, Ian Clark and co. have also done it, but Skolnik aside they aren’t academic lifers). I mean, sure, people like me talk about it all the time, but within institutions themselves there’s an omertà about it all.  Samuels is a rare bird in stating that while reductions in government support haven’t been helpful, a lot of higher education’s wounds on the undergraduate front are self-inflicted.

Where he’s less good, frankly, is on actual issues of money.  The chapter on university endowments – which focuses entirely on bad risk management practices leading up to 2008, without bothering to consider university long-term investment practices, or the recovery of endowment positions since 2008 – is either inept or mendacious, I can’t tell which.  And Samuels makes no serious attempt to prove his claim that, with just a few revisions of mission, tuition could be made free.  It’s not that he doesn’t have good ideas for making institutions less costly, it’s that the extent of possible savings is not quantified, and he can’t seem to decide if such savings should go to improving the plight of sessionals by making them full-time, or passing the savings on to students.  It’s a a lot of hand-waving, frankly.

As for the touted benefits of free tuition?  Basically, it’s that poorer students would be better off if it were so.  This is true, but could just as easily be achieved with grants.  Why governments and institutions should provide windfall gains to millions of students from better-off families in order to make it free for poorer ones isn’t addressed.

So, briefly: 9 out 10 for the first three chapters because it’s an unusually clear and concise statement of the problems and of the current political economy of universities.  After that, it’s about a 5 out of 10.

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