Higher Education Strategy Associates

Category Archives: Tuition

March 09

A Back-to-Basics Tuition Policy

Whenever I hear people whine about some allegedly soul-destroying atrocity in the academy and wondering what happened to the “heart” of the university and its ancient ideals, I always smile. I for one would totally be up for a return to the 18th-century university. Starting with pricing policies.

Back in the day, the administrative purpose of universities as corporate entities was mainly one of certification: masters would sit together and decide which students were worthy of degrees. The bureaucratization of the teaching function didn’t really happen until the 19th century; prior to that, professors made deals for instruction individually with students without the intermediation of the institution. The price of instruction was whatever the market would bear; professors who were in demand could charge more than others.

The standardization of prices and regularization of academic compensation was part and parcel of the massification of higher education; as student and professor numbers grew, it was simply too complicated to keep the pre-modern arrangements. Or at least it was before computing power became cheap. Nowadays, it’s quite common to differentiate prices between students via student aid and there’s no technical reason we couldn’t vary price by course/professor, too.

It needn’t be a free-for-all. Sure, it’d be fun to see what each professor could charge and it would create incentives to keep course offerings relevant and lively. (What’s that? What’s to prevent a race-to-the-bottom of pandering to students in search for money? As in the eighteenth century: professional ethics.) The main drawback I see is that it would privilege the individual course over the integrated program, which might not be great for learning outcomes.

But one could still use pricing tools to send important messages to departments. In those institutions that link departmental budgets to tuition income in some manner, why not consider some kind of variable pricing scheme based on teaching quality and research output? For instance, say you have base tuition of $500 per class. You could raise the fee to $600 for each class in which teacher evaluations have consistently been above-average, adjusted for the professors’ grading policies (no grubbing for marks by handing out easy A’s), and $750 for a class with above-average ratings that is also taught by a professor with a superior research record.

If you’re squeamish about differential prices, you could as a second-best solution still achieve something similar by keeping tuition equal but distributing funds internally to departments according to such a scheme.

Generally speaking, universities and colleges are about building bridges to the future. But sometimes there’s value in building them to the past, too. Tuition policy might just be such an area.

February 06

Fibs, Nose-stretchers and Trolls

Can someone please make the Glen Murray v. CFS bunfight stop? It’s making me want to poke my eyes out with knitting needles.

To recap, the Ontario Liberals made a stupid election promise about tuition rebates which they first communicated badly and then partially reneged on while pretending they hadn’t. Still, they did something for students, and would like some credit for it.

But they are being rebuffed by the Canadian Federation of Students. The Federation is incandescent that the Liberals avoided making an even stupider promise about tuition reduction, and for reasons which anyone with experience in government relations would describe as “baffling” or “criminally insane,” it has decided to treat the Liberals’ “something” as worse than “nothing.”

The CFS’s main talking point these days is that, far from helping “five out of six students” as they say the Liberals promised, the new rebates will only help “one in three” students. How did they arrive at this figure? Well, remember, CFS wants to make the Liberals’ promise look like as much of a “lie” as possible, so their job is basically to throw in as many extra students into the denominator as they can. They therefore include:

– 37,000 International students, who never receive aid anyway
– 50,000 graduate and professional students, who were quite clearly excluded from the promise in the manifesto
– 45,000 part-time university students, who were not excluded in the manifesto, but who, it was verbally clarified on the day of the manifesto announcement, were not included
– 312,000 part-time college students, a) who were subject to the same clarification, b) who on average take less than one course per year and c) 60% of whom are doing contract training which is fully-funded by their employer (and hence, presumably, are in absolutely no need of tuition reduction).

Clearly, not all those students were meant to benefit from this program, and in the case of student-in-contract training, its completely unclear why anyone would think they are deserving of assistance at all. Journalists who fall for this stuff need a stern talking-to.

I can see how having this kind of bratty trolling technique must irritate Liberals in the extreme. And I understand how the temptation to lash out at this kind of obnoxious behavior must be pretty strong. But, seriously, what possesses the Minister to get into a slanging match with CFS on Twitter? Go ahead and check out Glenn Murray’s twitter account for 2 and 3 February.

Wow, huh? Not only is it not becoming of a minister (the accusation of homophobia is particularly over the top), it’s spectacularly counterproductive.

Trolls live for that kind of reaction. Politicians should know enough to ignore them.

January 31

U.K. Tuition Fees: Early Results Are In

Unless you’ve been in a cave for the last 18 months, you’ve probably heard that the U.K. government is overhauling policies on student fees and government support in England and Wales (Scotland has its own arrangements). Public support for arts and social science students was eliminated, institutional grants were cut by 41% and, most strikingly, the limit on tuition fees was raised from £3,350/year to £9,000/year.

Since announcing the broad outlines of the policy fifteen months ago, the Cameron government has gone through some fairly bizarre twists and turns on certain details of the funding and tuition policies. At the end of the day, though, the final average tuition for the coming year came to £8,354, or about a 150% increase from last year.

For those of us who watch tuition fees for a living, this was a big experiment. Data from the competitive environment of the United States tends to show that even small changes in tuition fees can have significant effects on institutional enrolment, though usually through shifts from one institution to another rather than on aggregate enrolment. Large across-the-board tuition increases which affect the minimum price for all forms of higher education, on the other hand, presumably have more severe effects. But these are rarer and harder to observe, so this one-time “big-bang” in the UK seems like an ideal opportunity to examine the pure effects of a tuition hike.

Well, final application data was released yesterday.  Among 18 year-olds, this £5,000 (roughly $8,000) tuition increase has lowered applicant levels by just 3.6%, or about 8,000 students. Among older students – who tend to have less time to earn back their investments in higher education – the effect was significantly larger (on the order of 11%). Now, even a single student turned away for financial reasons is too many. But if an $8,000 net tuition increase only generates a net impact of less than 3% on traditional-aged students, and only 7% overall, that strongly suggests that tuition fees are not, on their own, a major deterrent to study.

So the next time someone suggest that the $250 tuition fee increase your institution is planning might have major effects on enrolment, there’s a simple reply. Such an increase would be 1/32nd of what was introduced in England and Wales. Assuming linear effects, a $250 increase might therefore be expected to reduce overall enrolments by between 0.2% and 0.25%. On an incoming class of, say, 3,000 undergraduates, that’s between six and eight students. We’d guess it’s not beyond anyone’s wit to design some student aid to offset that kind of effect.

U.K. tuition policy isn’t something we’d endorse, but clearly it’s not as harmful as some would lead us to believe, either. Real life’s just not that simple.

January 09

You Couldn’t Make It Up

This email is G-rated, so I can’t use the full range of sexual/scatological imagery needed to describe my true feelings about the Ontario government’s Tuition Rebate announcement last week. I’ll keep it to: I told you so.

To recap, the Ontario Liberals made a not-particularly sensible election promise to give a 30% rebate tuition to full-time dependent students. But at least it involved giving some new money to low-income students, even if it came at the cost of providing a lot of money to families who clearly didn’t need it. And at least their proposal wasn’t as dumb as the CFS critique of it, which demanded (with the usual self-righteousness) that the government give less money to low-income students so that students from families making over $160,000/year not be excluded.

(Seriously: CFS’s definition of “progressive” policies includes ones with redistributive outcomes like the Bush tax cuts. Obviously, student views need to be heard, but let’s not pretend the CFS’s possess intellectual coherence).

Anyways, the Liberals got post-election religion on the deficit and someone, somewhere – the Premier’s office, maybe? – subsequently decided that the new grant had to be revenue-neutral. That meant the rebate went from being a good-news new money story to a money-shuffling what-the-hell? story.

The source of the $400 million needed to fund the rebates is still unclear. We know that some will come from the elimination of the Textbook Grant – hilarity alert: this was the Liberals’ signature PSE promise in the 2007 election – the Queen Elizabeth II Scholarship and the Ontario Student Trust Fund. We also know that some will come from displacement; students with relatively high need who get the new grant up front will get less OSOG at the end of the day (something the Liberals who spun this three months ago swore blind was never going to happen).

Now, those two sources don’t add up to nearly $400 million, so there’s some more cuts coming that we don’t know about. But based on what we do know:

– Students from high-income families who get this grant will be $800-$1,600 richer. Students from low-income families who are needy enough to receive OSOG will be no better off because of displacement.
– The Textbook Grant and the QEII were more narrowly targeted on income than the rebate – killing one to fund the other means, on aggregate, shifting money from poorer families to better-off ones.

Bottom line: cannibalizing existing programs to fund the Tuition Rebate means more money for upper-income families and less money for low-income ones. Oddly, the CFS is still unhappy, despite this being exactly what they asked for. Not just bad policy, then: bad policy presented so poorly your main critics don’t realize they got their wish.

Honestly, you couldn’t make it up.

December 02

College Tuition: More than you Think

It is a truth universally acknowledged, that a single student in possession of a modest fortune pursues studies at college, not university. If it is so, it is because of another truth universally acknowledged: that college is cheaper than university.

Or is it?

While Statistics Canada does a bang-up job collecting university tuition and fee data, weighting them carefully by enrolment patterns and reporting averages by province, level and discipline, no such mechanism exists for college studies.

In fairness, the B.C. government has gathered data on “base” tuition levels by province for years. Like university tuition, college tuition varies considerably from province to province. Moreover, there is considerably variation in college tuition across programs within provinces – arguably much more so than in university. The “base” costs covered by the B.C. survey are increasingly irrelevant as colleges find ways to offer niche programming and charge accordingly. We recently embarked on a project to create a college tuition fee index that would mirror Statistics Canada’s tuition survey by combining data on program costs and enrolments to create a weighted average tuition fee for colleges. As Figure 1 demonstrates, the weighted tuition is considerably higher than the base tuition. The differences are over and above the effect of including ancillary fees.

Figure 1: Base Weighted Average College Tuition by Province, 2010-11

Note: Weighted tuition numbers include ancillary fees.
Source: Government of British Columbia (base tuition); Higher Education Strategy Associates, various provincial and institutional sources (weighted tuition).

So how does the weighted cost of college compare to the weighted cost of university? As Figure 2 demonstrates, the gap is smaller than expected. In Saskatchewan, the weighted college tuition is almost as high as the university equivalent; it’s more than 85% of the university total in P.E.I. and B.C., and it’s more than 75% of the amount of undergraduate tuition and fees in Manitoba and Newfoundland (provinces that have, it should be noted, relatively low university tuition).

Figure 2: College and University Tuition and Fees, by Province, 2010-11

Source: Higher Education Strategy Associates, various provincial and institutional sources; Statistics Canada’s Tuition and Living Accommodation Costs Survey.

On the whole, college is cheaper than university, if only because college programs tend to be significantly shorter than those at university. On the flipside, college graduate earnings are substantially lower than those of university grads. Is Canadian college still a bargain? Sometimes, but not always.

December 01

A Prayer for Noah Morris

Noah Morris runs the Ontario Student Assistance Program (OSAP). He is the unfortunate soul who has the unenviable task of implementing Dalton McGuinty’s promise to give students 30% tuition rebates if they came from families with less than $160,000 in family income. It may have been popular electorally, but in policy terms it’s got “ugly” written all over it.

The government could have implemented this through the OSAP system by just cutting cheques to student aid recipients. But no: somebody in the Premier’s office had half-read some research about low-income students not always applying for student aid, and so decided they should avoid OSAP and make it universal. So who should cut the cheques in this brilliant scheme? The universities and colleges, of course! When students hand over their tuition money, institutions will hand back a rebate cheque. What could be simpler? Or more visible?

Great idea – until you realize institutions have absolutely zero idea about students’ incomes unless they apply for student aid. So we’re back to square one, except that now the government has shifted the administrative burden to institutions. Under the circumstances, COU’s “we’re sure keen to work with you” throne speech response was a model of turning the other cheek.

Did I mention the nightmarish interaction effects with federal programs? If the award is treated as a tuition waiver, two things happen. The first is that students’ recorded costs will fall, which means the students’ eligibility for student aid is reduced. The province can tweak OSAP rules to ignore the grant in the resource calculation, but it can’t force the federal program to do the same; since provincial remission programs are based on joint borrowing, the waiver may in fact be offset by a reduction in students’ eligibility for the province’s OSOG grants.

A fee-waiver approach also means that students will receive fewer tax credits. Assuming the program costs roughly $400 million, Ottawa will save $60 million a year in its tax credit programs at students’ expense.

Treating the awards as grants would eliminate the tax credit problem, but would require changing a lot of OSAP rules in order to avoid a situation where the new grant isn’t pushing out other aid dollar-for-dollar. It’s do-able – but again, there’s no reason to think Ontario will be able to shield students from clawbacks from the federal program.

So – an administrative nightmare plus nasty program interactions; just your run-of-the-mill trainwreck that results from designing public policy on the back of a cocktail napkin. And it’s OSAP’s Noah Morris that has to make it all work.

He deserves everyone’s sympathy.

November 03

The Robin des Bois of Canadian Higher Education

In its budget this past spring, Jean Charest’s government announced its plans to increase tuition in Quebec by $325 per year for five years, beginning next fall. By 2016-17, the basic undergraduate tuition in Quebec will reach $3,792 for a typical, 30-credit year. While the tuition increase will keep Quebec students’ fees well below the average elsewhere in Canada, the increases still clock in at 75% over five years. Clearly there is potential for a significant impact on enrolment.

So it was with great pleasure that I read the recent report of the province’s committee on access (en français), the Comité sur l’accessibilité financière aux études.  The report describes the government’s plans to expand the already robust student aid system to ensure the most vulnerable students remain immune from a price shock.

Here’s the bluffer’s guide to Quebec’s tuition increase:

1. Tuition will increase by 75% by 2016-17…

2. Except for low-income students who receive financial aid, since the province will cover the entirety of their expanded tuition bill in the form of non-repayable bursaries; some lower-middle-income students will also benefit from expanded access to the bursary program…

3. Additionally, the province is planning to expand access to its loans and bursaries program by reducing the amount of income it expects a parent or spouse to contribute to a student’s education.

4. All told, the province is ramping up student aid funding by $118.4 million, an amount equivalent to 35% of the new tuition revenue

The province’s student groups are bellyaching about the tuition increase and the fact that, from a certain perspective, the province is robbing Peter to pay Paul. There is some merit to this view – after all, the expansion of student aid is only necessary because tuition is going up and is going to be funded from new tuition revenue. Except that Peter will still be getting a relative deal on higher education, Paul needs the additional support and Mary (the gouvernement) is out of cash. The analogy that fits best is that of an institutionalized Robin Hood: wealthy families will contribute more to a system in dire needs of funds, and low-income families won’t find themselves overstretched.

A tip of the cap to the Comité: through research and thoughtful reflection, it has shown exactly how a tuition hike can be made progressive.  Félicitations!

September 22

By Their Actions Shall Ye Know Them

There are two ways of thinking about student unions. You can think of them as being (a) populated by idealists, who only want education for all, or you can think of them as (b) actual unions, prioritizing wins (financial and otherwise) for their members – who, let’s recall, tend to come from wealthier backgrounds than society as a whole – ahead of any other cause.

With that in mind, let’s look at the some recent public statements from the Canadian Federation of Students’ Ontario chapter.

March 2011 – The Canadian Federation of Students says it is “disappointed” that the Ontario budget included measures to improve access by increasing spaces rather than reduce tuition fees for students who are already in post-secondary.

September 2011 – The Ontario Liberal party announces it will reduce tuition fees by thirty percent for every student from a family earning less than $160,000 per year. The Canadian Federation of Students-Ontario says it would prefer a solution that spent more money to include families earning over $160,000 as well (who, last we checked, weren’t having problems accessing PSE).

Both incidents seem to lend themselves to the interpretation that the CFS cares only about money for all of its members. This is, of course, an entirely fair and reasonable position for a union to take.

But then, a new piece of evidence arrives that really makes you wonder:

September 2011 – CFS-O issues its party platform report card for the Ontario election. The NDP platform, which freezes tuition fees and eliminates interest on student loans, gets a B+ for affordability. The Liberal platform, which provides tuition rebates of 30% for 85% all of students, but allows base tuition to continue to creep upwards, gets a B. The report card helpfully points out that the Liberal tuition promise would cost $430 million annually, while the NDP interest elimination and tuition freeze would cost $110 million.

Even from the crude analytical perspective of “how much students get,” this makes zero sense. The only students who would be better off under the NDP proposals would be those from households with over $160,000. And while the NDP proposal does contain the holy grail of “freezing tuition,” the Liberal proposal hands students almost a billion more dollars over four years than the NDP one does.

That’s an awful lot of money to punt for the right to say that tuition is frozen, and isn’t consistent with our earlier theory about being their being solely concerned with financial wins. Rather, it suggests deep confusion about the difference between means and ends.

September 16

What the U.K. Tuition Fight Tells Us About Universities

The U.K. is a great country when it comes to higher education innovation – good or bad, they’re not afraid to take new policy ideas to their logical conclusion. Their most recent move – allowing tuition fees to rise up to £9000 – is a case in point, and it is already providing some valuable lessons with respect to the essential dilemmas of higher education policy.

The government clearly thought that this kind of “big bang” deregulation of tuition would create real price competition – some institutions would go the high-fees/high quality route, while others would try take a more value-oriented tack. But they fundamentally misunderstood two things about universities.

The first is that universities don’t care about market share. Unlike most industries, no player in this industry aspires to teach more than a tiny fraction of students. As a result, there’s no one in a position to play the “low-cost, high-volume” role that, say, Wal-Mart does in retailing. They’re all niche players.

The second is that though universities aren’t competing for market share, they are competing for something else – prestige. And prestige, unfortunately, tends to be correlated with expenditures, which in turn are correlated with revenue.

So, when someone asks universities to compete, what they’re essentially doing is setting off an arms race for revenue. And if you do that at the same time as you liberalize fees, what inevitably happens is that there will be a race to the top of the tuition scale, with no one able or willing to play the role of low-cost, high-volume provider that plays such an important role for market discipline in other industries. You can offset the effects somewhat through student aid, but as long as prestige is the metric by which institutions measure their success, nothing – nothing – can be done to alter the basic dynamic.

September 12

The Newfoundland Strategy

There was an interesting study out last month from a group of scholars at Memorial University of Newfoundland (MUN), led by Education Professor and Canadian Higher Education über-blogger Dale Kirby, called Matriculating Eastward . With MUN’s out-of-province student numbers skyrocketing in recent years (intake from the other Atlantic provinces has risen fivefold since 2002), the report used both quantitative and qualitative methods to examine the reasons that out-of-province students chose Memorial as their place of study.

Not surprisingly, cost emerges as the number one factor – with fees having dropped over 35% in real terms over the last decade, MUN has become the region’s low-cost education destination. But number two on the list was interesting – availability of program of choice. It’s a hint at least that cost on its own might not be enough to make a school a “destination” – it still needs a degree of comprehensiveness and reputation for quality capacity in order for people to want to go there in the first place.

The study unsurprisingly concludes that keeping MUN a low-cost environment is key to its remaining competitive for out-of-province students. But that’s not something the university can decide on its own – MUN’s tuition is a function of provincial government largesse. And the province’s return on investment for massively subsidizing out-of-province students depends to a large degree on whether or not they choose to stay in the province after graduation. Here, the study’s results are less encouraging – migrant students’ willingness to consider staying in the province after graduation is not much better than “neutral” (3.3 on a scale of 1 to 5, where 5 is “strongly agree”).

It’s an argument at least in favour of a two-tier tuition scheme, with one rate for home students and another for immigrants who are (arguably) just subsidy-shopping. As long as oil revenues stay healthy, it’s hard to see Newfoundland changing course. But if budget cuts ever loom, there’s every chance for Newfoundland could imitate Quebec and make visiting students pay in order to maintain locals’ privileges.

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