HESA

Higher Education Strategy Associates

Category Archives: Tuition

March 09

Better Know a Higher Education System: Jordan

I’ve had occasion recently to take a deeper look at higher education in a couple of Arab states, and one system I’ve found to be especially fascinating is that of the Hashemite Kingdom of Jordan.

Jordan is a middle-income country (gdp/capita = $12,000 or so), but one with a lot of problems on its hands.  Not only is it dealing with a multi-million refugee flow from neighbouring Syria, it has also lost a huge amount of remittance income as low oil prices have hit the Gulf.  So there isn’t a lot of money for higher education: in fact, public expenditure on higher education is only about 0.3% of GDP, which makes it one of the lowest-spending governments in the world as far as higher education is concerned (the Gulf States are lower but they are spending off a much lower base and of course are only concerned with educating a small fraction of their population).

So you’d kind of expect higher education there to be a shambles.  Except it’s not.  It has participation rates that are right about average for a country at that level of development.  Compared to most OECD countries, it is heavy on science and technology programs – its distribution of students by field of study looks more like Korea or Germany than it does like Canada or France.  Among Arab countries it has a relatively high research profile and almost alone among countries with GDP/capita under $15,000, it places two universities in the Times Higher Education top 800 rankings.

How does it manage all this?  Simple: tuition fees.

All Jordanian student pay tuition.  Under the restrictive way students enter university, the students who do best on their high school exams get their pick of programs at the more prestigious public universities at below-cost rates (about US $1650).  Poorer performing students simply get assigned to wherever there is space.  If they don’t like it and want to study something else, they have to pay a higher price (often  around US $4000) at public universities, or they head to one of the private universities (between $4000 and $5000).  Add all this together and what you get is a country which devotes a little over 2% of GDP to higher education in the form of tuition fees.  That puts Jordan in some pretty rarified territory since only Chile and South Korea have ever hit this level (both are slightly lower than that today).  And in total it means that the tertiary ed sector in Jordan receives about as much in GDP terms as Canada’s does.

Total (Public & Private) Spending on Tertiary Institutions, as a Percentage of GDP, selected countries, 2011 or latest

JordanSpending

Now, what’s a little odd about the Jordanian system is that it has achieved this while keeping the higher education system mostly in the hands of public universities.  There are private universities but they only educate about a quarter of all students – in both Chile and South Korea, private institutions educate about 80% of tertiary students.  So Jordan is somewhat sui generis as a developing country where public universities are essentially privately funded.

It’s also sui generis in that it has no functioning system of student aid beyond a few scattered scholarships.  All these costs are being borne directly by families, without the help of any student loan program or system of fee waivers for poorer Jordanians.  Although there are no studies on how this situation is affecting access to Jordanian universities, it’s reasonable to assume that the barrier is a pretty severe one and that the system as a whole would be much better off with a decent system of loans and grants.

But of course that would mean making new government investments in an area which allows the cost burden to be shifted but doesn’t directly help universities.  And universities keep clamouring for more money (as they usually do).  That may seem a bit ungrateful in a country which is among the world leaders in university income, but of course since they operate in an international environment, they are paying world prices for scientific equipment and libraries, and above-the-odds in local term for academics as well.  Simply put, 2.4% of GDP doesn’t go as far in Jordan as it does here.  And so they clamor for more.

Jordan’s going through a rough period right now and the likelihood of a lot more public money showing up anytime soon is pretty remote.  So development, if it occurs, is going to have to happen through judicious management of what effectively is a system entirely dependent on fee-paying students, just like South Africa and Chile did. 

It’s an experiment that bears watching.  And it’s another reminder that in some contexts at least, tuition fees are what create educational opportunities, not deter them.

March 08

The Coming Cost Debate in Ontario

Today I want to think about how the new Ontario system of student assistance is going to play out.  I think there is the potential here for quite an interesting and useful debate; but the timetable is somewhat tricky.

As you will recall, the Government of Ontario is rolling out a plan to provide enough grants to fully offset tuition in most university and college programs for students from families with incomes of less than $50,000.  That’s going to happen by 2017-2018.  But the really interesting thing they want to is what they call “net billing”.  It’s going to roll out sometime in early 2018 for students starting in the 2018-19 year.

Until now, student aid in Canada has worked on the fairly bonkers premise that you don’t need to know anything about your student aid package until after you’ve applied to and been accepted by an institution.  Mostly, that has to do with Canadians governments’ instinct to make things easier for themselves more than for clients.  You see students apply for college/university right around the time that governments make budgets (i.e. January-March).  Governments like to have the flexibility to change programs entirely at the last minute, and so prefer to make students wait until after budget season to apply for the next year’s aid.  What Ontario has done is say “that’s stupid”, and will now accept applications a few months earlier so that students’ aid request can be processed at the same time as their applications.  In effect the province has guaranteed that henceforth changes to aid are going to have to be announced a full application cycle before they take effect.  Result: henceforth, students will see on their acceptance letter what tuition is, what grants they will receive, and what “net tuition” is.

Now in the short term, this will work extremely well for the governing Liberals because by a COMPLETE COINCIDENCE (no, really), the next provincial election is scheduled for Spring 2018.  So tens of thousands of students and parents will be receiving these letters announcing clear, accurate (and low) net prices right before voting.  Amazing how that happens.

But in the slightly longer term – say the first twelve months of a new government, when some serious decisions are going to have to be made about paying off the province’s world-beating debt – there’s going to be another debate.  Because the data that feeds into those admissions letters will be in universities’ hands.  And they are going to show in excruciating detail how much public subsidy is going to people who don’t really need it.

Think about the histograms the Council of Ontario Universities will be able to produce.  They’ll be able to show, by income level and field of study, how little families are actually paying.  And they’ll be able to do it not just in reports for wonks like me, but also to parents in the actual acceptance letters.  “After grants, you pay: $1,000.  Actual cost of child’s education: $18,000.  Degree of subsidy: 94.5%”

For families under 50K, the average payment will be zero (which is about where it should be), and the figure will show 100%.  But families around $100K, whose net tuition payment might end up being $2000 or $2500, might be surprised to learn that they are being subsidized to the tune of 88-90%.  And families at $175,000, subsidized at perhaps 65%?  Hmmmm.

I don’t think many people – other than say, the Canadian Federation of Students and their wilder-eyed allies – genuinely believe that tuition for children of wealthier families should be free.  Most people agree that there should be some sort of net price slope, running from zero for students from poorer families and upwards as family income increases.  There’s no consensus about where the threshold for going above zero is, and no consensus about what the grade of the slop should be.  That’s mostly because we’ve never had data to look at the question properly before. 

But soon we will.  And that is going to kick start a discussion about who might be able to pay more, especially in times where governments are apparently no longer prepared to hand new money to universities and colleges.  Only this time, no one is going to be able to make misleading arguments about tuition and how it affects the poor, yadda yadda because  a) everyone will finally understand how little low-income students pay and b) because proposals to raise fees will explicitly be made in terms of net fees, and can be targeted specifically to on those families who can pay.  In fact, to start with they won’t be phrased as tuition increases at all, they’ll be phrased in terms of diverting some subsidies from (better-off) individuals to institutions.

And that’s all good.  We will -finally- have informed debate.  Expect the summer of 2018 to be particularly interesting, policy-wise.

March 01

When is Free Tuition Free?

You would be forgiven, over the past 24 months or so, for growing ever more confused about when tuition is “free” and when it is not.  The reason, in part, is that “free” tuition is in the eye of the beholder.

You’d think it would be as easy as saying “no fees”, but it’s actually not that simple.  What if, instead of a fee, there is a variable “contribution” or a gradate tax?  What if fees are charged to a minority of students based on their high school marks (as in most of the former socialist countries in Europe, and parts of Africa)?  What if fees are charged to richer students but not poorer ones?  Or, what if fees are waived for a limited number of years and then kick in?

And that’s just the issue of fee setting.  What if tuition fees exist, but grants or other aid are distributed to help some students cover the costs?  Or, how about if fees exist, and are refunded after graduation in return for some service? And, finally, how do we deal with objections – such as those from American academic, Sara Goldrick-Rab – that free tuition isn’t actually free unless you also cover living expenses?

(This is about where some will say: “education is never free; it always has to be paid for by someone”.  Which is true, but beside the point that I’m making here, which has more to do with retail price.)

And so, forthwith, a quick cheat sheet to all the varieties of “free tuition” available around the world:

Manitoba and Saskatchewan don’t claim to have free tuition, but they actually do have it, subject to certain conditions: essentially, anyone who finishes on-time and stays within the province for a few years to collect their tuition tax rebates will actually receive more money in grants and tax rebates than they spend in tuition.

Ontario has had “net free” tuition for poorer undergraduates for most of the last ten years.  Now, however, they’re actually calling it “free tuition” for dependent students under $50,000 (although there are a couple of caveats). This doesn’t change much in terms of dollars and cents, but the framing seems to matter.  At the same time, a substantial number of college students across Canada have this kind of “net zero” tuition due to a combination of low tuition and large tax credits.  As, indeed, do many students in cheaper 2- and 4-year colleges in the United States.  For instance, a number of US states, including Tennessee and Oregon, now have schemes to ensure that all students – in community colleges, anyway – who have financial need get grants that are at least equal to the amount of their tuition.

Chile goes a bit further than this.  Its new system of “gratuidad” actually waives tuition fees for university students (but not yet colleges or polytechnics) from families below the national median income, which accounts for about 25-30% of the student body.  Similarly, tuition fees in England between 1998 and 2005 were variable according to family income, and those with family incomes below £20,000 paid no tuition.

In most former socialist countries and parts of Africa, there are what are called “dual track” tuition systems.  Students who do well on matriculation or university entrance examinations are allowed to attend for free, while everyone else is charged a fee.

In France, there is an entirely public system of higher education, in which most institutions charge nothing; however, the “grandes ecoles” charge fees of €10,000 or more.  Ireland has “free tuition”, but still charges a whack of other fees, amounting to thousands of euros, which might as well be tuition.

In a whole bunch of countries too disparate to mention, there are public institutions that charge nothing, but also have significant numbers of private institutions that do charge tuition (Germany falls into this category, though the fee-charging institutions only educate about 5% of all students).  And sometimes, as in Romania, this overlaps with the “dual track” tuition system.

Australia does not charge fees, per se, but rather demands a “contribution” from graduates.  The amount of the contribution sure looks like a fee (it is a set amount of money per year of study, based on one’s chosen field of study), but if your post-graduate income never rises above a certain level (currently about $50,000/year), you never pay a cent.  (In a more roundabout way, this is also true in England, even though formally there are fees.)

Greece charges nothing at entrance, but provides essentially no assistance whatsoever with living costs.

Finally, Scandinavian countries charge nothing, and provide more or less all students with grants of varying degrees of generosity to cover living expenses (and loans to cover the remainder).

So there you have it.  Next time someone talks about free tuition, be sure to ask what they mean by “free”.

February 19

The Dollar Quandary

If you haven’t been hiding under a rock these last few months, you may have noticed that the US dollar is on a roll.  And it’s not just on a roll in Canada, where the price of oil has reduced the value of our own currency; since mid-2014, the US dollar is up over 20% against a trade-weighted basket of currencies. This creates some interesting conundrums and strategy options for pricing international education.

The change in the dollar’s status means that everyone’s price has been reduced vis-à-vis those at American universities. If you’re a university in, say, Sweden, it doesn’t matter much because practically all of your competitors are European. Basically: if your price isn’t changing relative to that of your main competitors, then the fall of the dollar is fairly meaningless.

However, if the fall in the value of your currency is greater than that of your competitors, then this does actually create some room to maneuver. I was in Russia last week, where the fall in the value of the rouble (76:1 USD, down from 37:1 USD at the end of 2014) means that their product is now much cheaper, relatively speaking, than that of their competitors, and that makes them a more attractive destination.  As a result, the Russians are now marketing themselves as a “bargain” product because, let’s face it, Russian universities have a brand image problem after the disasters of the 1990s. Their strategy is to go low price, high volume, and admit as many Asian and Latin American students as possible.

That’s one strategy. But there are others. If you are an Australian or a British university with a reasonable reputation, you might ask why you should keep your prices constant in local currency. If you think your main competitors for international students are American schools, you might also think it makes sense to take advantage of your lower currency, and increase prices a bit. It won’t necessarily hurt you with recruitment, and you can make a little bit of extra money in local currency terms. Basically, in these situations, universities have a choice between marketing themselves as a “bargain” institution (take advantage of low price to increase volume) or as a luxury institution (risk volume to increase price).

Now in Canada we have a somewhat different set of issues at play, for two reasons. First, we actually have a lot of American students, institutional pricing strategies need to take account of that market. Second of all, unlike European universities, Canadian schools can be very sure that US institutions are a major source of competition, and hence we have more scope to re-price based on currency changes. So here’s the question: should institutions take the “bargain” route and keep prices steady in local terms, or a “luxury” strategy that sees us raise prices, or perhaps even start charging in US dollars?

Essentially, this is the choice every institution needs to make over the next couple of months. I think there’s a pretty clear case for Toronto, UBC, and McGill to move to USD pricing, and keep last year’s fees constant in USD terms (that is, raise them by about 20% in $CDN terms). Will they lose some applicants? Probably. But they have the brand power to deal with that, and the students for which they are really competing are going to be paying more anyways to go to an American university. And the prize is a big whack of extra cash.

For everybody else, it’s a trickier proposition. Some institutions – particularly if they are experiencing recruitment shortfalls (say Trent, or any one of a dozen Atlantic universities) – will probably see more benefit in going the “bargain” route, and aggressively going after students looking for a “cheap” North American experience. Others – Windsor, perhaps – might decide to take that pitch directly to American students. The institutions with the trickiest task are the other U-15 universities. They might be tempted by the USD route, but may be unsure if they had the brand power to make it work. Expect a period of experimentation, not all of it successful.

In any case, for those interested in looking at price elasticity as a function of institutional prestige, the next couple of years promise to be quite interesting.

February 16

Two Simple Reasons Tuition Rises Have Little Effect on Access

It’s that time again, when boards of governors are thinking about tuition for the upcoming year; and as a result, people will be rehearsing their arguments for and against tuition increases.  The basic argument against is the rather simplistic, “higher fees means lower participation”.  And it’s wrong.  Here’s why:

The argument essentially relies on that thing everyone remembers from first-year Econ, where you draw your first supply/demand curves.  When price falls, demand rises; conversely, when price rises, demand falls.  Therefore, a rise in the price of tuition must cause a drop in demand, right?

Well, no.  For this to happen, the starting price must be a market-clearing price – that is, the price that the market will bear.  But in Canada, there are very few universities where this is the case.  In most instances, tuition is already so subsidized that the price is well-below market-clearing levels.  So it’s possible to raise the price without actually affecting aggregate demand.

Think about it: even while we worry about the effects of a price change of a few hundred dollars, we also talk about how great higher education is, and how it makes a difference of tens or hundreds of thousands of dollars in lifetime income (depending on who’s doing the counting, and how).  Well, students aren’t stupid: if there’s an investment that’s going to bring them tens or hundreds of thousands of dollars, a matter of a few hundred dollars isn’t likely to deter them.  Want a prime example?  The massive tuition hikes in the UK in 2012 – which amounted to about $10,000 per year – made almost no dent in access rates (and to the extent they did, the effects were greater among the wealthy and white than the poor and non-white).  Want more data on this?  See here, herehere, and here.

(It’s a different matter when students don’t perceive the benefits that way, which is possible; however, the correct answer in that case is to get the informational issues sorted out.)

Ah, you say.  But what if it’s not a price/value issue?  What if it’s a liquidity issue?  Sure, students understand the value of the degree, but the issue is that they can’t put the money together in the short-term.  And tuition fees make it harder to make ends meet.

Well, that’s a fair point.  Students are cash constrained.  But remember that in Canada, we hand out north of $10 billion in loans, grants, tax credits, and scholarships to students every year.  And half of our students work – maybe not the most ideal source of money for school, but it’s still a mainstay for many learners, and a source of extra income if necessary.  Most students can cover extra costs if need be, which explains why, in point of fact, enrolment over the past three decades has tripled even as tuition has risen by roughly the same.

This is not to say that tuition can be raised with impunity.  Our student aid system is generous, but also it is complicated and opaque, and in need of reform. Some students already receive maximum aid: these students may have significant difficulties in meeting tuition rises, and offsetting measures need to be taken to protect them.  And just because tuition rises in general tend not to have much effect, this doesn’t mean that all fee increases work for all institutions: depending on what local competitors are doing, tuition hikes can sometimes be counterproductive.

In other words, there are good reasons to proceed with caution on tuition fees, to set aside extra funds for vulnerable students, and urge faster reform of student aid.  But they aren’t good reasons to forego a tuition rise altogether.

February 04

Lessons from Scandinavia on the Value of Tuition Fees

Whenever you hear somebody complaining about higher education funding in Canada, it’s usually only a matter of time before someone says “why can’t we be more like Scandinavia?”  You know, higher levels of government funding, no tuition, etc., etc.  But today let me tell you a couple of stories that may make you rethink some of your philo-Nordicism.

Let’s start with Denmark.  The government there is trying to rein public spending back in from a walloping 56% of GDP, and bring it back down to an only slightly less-imposing 50% by 2020.  And it’s doing this while the economy is still weak, and while oil prices are falling (Denmark has some North Sea oil so, like Canada, it tends to see low oil prices as a negative).  So cuts are on the way across many services, and higher education is no exception: universities there will see cuts of 2% in their budgets for each of the next four years.  Over to Finland, where it’s the same story in spades.  Nokia as a technological saviour/massive boost to government coffers is long gone, and economic contraction in Russia is hitting Finnish exports hard.  With the economy declining and the government trying to stay out of debt, the government there also laid out cuts to many services, including higher education: there the hit is a cut of roughly 13% out to 2020.

Now, in North America, when you hear about cuts like this you tend to think “oh, well, at least the government will let institutions make some of it back through tuition, either by increasing enrolment, or raising fees, or both”.  And in general, this attenuates the impact of funding cuts (unless of course you’re at Memorial in which case you are plain out of luck).  But remember, these are free-tuition countries.  By definition, there is nothing that can attenuate the cuts.  And so that 2% per year cut for the next four years in Denmark?  The University of Copenhagen has since announced a first round of cuts equaling 300M DKK ($62 million Canadian), equal to about 5.5% of the university’s operating budget, and that will involve cutting 500 staff positions.   Those cuts in Finland?  The University of Helsinki has decided to cut almost 15% of its staff positions.

Total reliance on government looks good on the way up; much less so on the way down.  That’s why tuition fees are good.  You know students will pay tuition fees every year, which makes them more dependable than government revenue.  Fees balance the ups and downs of the funding cycle.

Another thing tuition fees do is to provide an incentive for institutions to accept more students; if institutions can’t charge tuition and aren’t funded according to student numbers, their inclination will be to accept fewer students, thus undermining the “access” rationale for free tuition.  And this seems to be the case in allegedly-access-friendly Sweden, where enrolment in first and second degree programs has actually been in decline over the past few years.

Total Bachelor’s/Master’s Enrollment at Swedish Universities, 2007-2014

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I know what you’re wondering: is it a demographic thing?  No.  The 2015 version of the annual report, Higher Education in Sweden (which is a great report by the way… one of those documents you wish every country could publish), makes it clear that the ratio of applications-to-acceptances for students with no previous post-secondary education (i.e. 18-19 year olds) has actually been rising for the last few years (from 2:1 to 2.5:1).  And it’s not a financial thing either: between fall 2010 and fall 2014, real expenditures at Swedish universities increased by 12%, or so.

So what’s going on?  Well, a few things, but mainly it seems to be that universities prefer to get more dollars per student than actually increasing access.  And I mean, who can blame them?  We’d all like to get paid more.  But I genuinely cannot imagine any jurisdiction in North America – you know, big, bad North America, with its awful access-crushing neo-liberal tuition regimes – where reducing spaces while government expenditures were increasing wouldn’t be considered an absolute scandal.  Yet this is what is happening in Sweden, and apparently everyone’s OK with it.

Total reliance on government funding can make universities complacent about access.  Fees can incentivize institutions to actually admit more students.  Fees have a role to play in access policy.  The data from Scandinavia says so.

January 20

The Inter-Generational Equity Thing

I see that one of my favourite student groups, the Ontario Undergraduate Student Association (OUSA), has come out in favour of a tuition freeze.  Fair enough; not many students endorse fee increases, after all.  But the stated rationale for wanting one is a bit disappointing – mixing, as it does, poor historical analysis with poor generational politics.

Here’s their thinking:

In 1980, student contributions to university operating budgets in Ontario, which include tuition and fees, were only 18 per cent. In 2014, accounting for inflation, that number reached 51 per cent. I’m no financial planner, but I do believe that if I invest 33 per cent more into something—I should probably receive a comparable amount in return, or at the very least, expect to.

So let me ask: are there more jobs available for university graduates? More co-op and paid internship opportunities? Are students being taught to articulate their soft skills to employers? Has the ratio of students to faculty in the classroom improved? Most importantly, are university degrees more valuable now than they were in 1980? If the answer to these questions, particularly the last one, is no, then why are students paying more than ever for a university education?

(You can read the complete document here.)

There are a number of errors here.  Are there more jobs for graduates?  Yes, of course there are.  Maybe not relative to the number of graduates, but even so, graduate unemployment rates are a lot lower than they were in the early 80s and early 90s (though of course that has more to do with the state of the economy than anything else).  More co-ops and paid internships?  Incomparably more.  In 1980, Waterloo was still about the only place doing co-op; today, the practice is widely spread (and at Waterloo itself, the number of co-op students per year is at least three times what it was back then). The only piece that’s unambiguously true here is the bit about student-teacher ratios.

If we really want to understand why students are paying more for their education we need look no further than the facts that: a) enrolments tripled, and b) the cost per-student for education got more expensive (not always for good reasons, but true nonetheless).  Governments paid for part of this – admittedly less so in Ontario than elsewhere in the country – and students paid for the rest.

And this is why we have to be careful when making comparisons over time.  Of course, we could bring student contributions back down to 18% of total costs: but remember, part of what that increased contribution bought was vastly increased access.  Anyone want to make that trade and return to a time of cheaper education for a luckier few?  No, thought not.

So that’s the analytical error.  The political error – and it’s a seductive one, I’ll admit – is to claim that every time a new generation doesn’t get something that the old generation got, it’s “unfair” and a basis to lay a claim on state resources.  But this way madness lies.  Where PSE is concerned, it’s tantamount to saying “our parents were oversubsidized and we demand the same treatment”.  Or maybe, “we’re getting a pretty good deal on PSE, but we demand that our deals be ludicrously good like they were in the 70s”.

For a whole bunch of very long-term demographic and economic reasons, today’s students are going to find it harder than the boomers, and even the Gen Xers did (also harder than the generation that passed through university between 2000 and 2005, who did pretty well).  There’s not a whole lot anyone can do about that: some cohorts just have it easier than others, and progress isn’t always linear.  Policy shouldn’t be totally insensitive to these shifts, but neither should our goal be to preserve certain benefits in amber just because “that’s what our parents got”.

None of this is to say there aren’t decent arguments in favour of tuition freezes, or even that the “universities need to show value for money” argument is wrong.  (If it were me arguing the case, I’d push for limiting increases in student fees to whatever the increase in public funding is.)  But arguing on the basis of changes that have occurred over 35 years is a mistake; too much of the money spent over that period did too much good to be criticized.  Inter-generational arguments are trickier than they look, both analytically and politically.

January 18

Would Lower Tuition or Lower Student Debt Improve the Economy?

Short answer: not really, no.  But judging by this Chronicle Herald article last week entitled “Eliminating Tuition Fees would Buoy Bluenose Economy“, bad ideas die hard.  So let’s think this one through.

As I wrote back here, there are basically four ways to lower tuition or reduce student debt.  Government can raise taxes to pay for it, borrow to pay for it, re-allocate spending to pay for it, or reduce the cost of educational provision (i.e., cut spending on equipment and salaries).  If you choose the taxing, re-allocating, or cost-reduction methods, the net effect on the economy as a whole is zero.  Yes, students gain, but others lose, so it more or less nets out (exception: taking money from profs with a high propensity to save and giving it to students with a high propensity to spend actually probably would make a bit of a difference in the short-term, but since no one’s actually proposing that we’ll leave it aside).  Only by borrowing to reduce tuition/debt could government actually achieve the goal of a short-term boost; but then again, deficit spending on anything gives the economy a short-term boost.  What’s the case for spending it on students?

(A colleague has since pointed out to me that in theory there is a fifth option: the government could expand the money supply by printing money and using it to buy down student debt.  But that’s: a) not an option open to a provincial government; and, b) really unlikely to be used by a federal government, so I think we can confidently give this one a miss.)

There is certainly a case in Nova Scotia at least for spending some money on controlling student debt.  This is not a province that spends a whole lot on student aid – as we at HESA noted in our work on net prices, entitled The Many Prices of Knowledge.  Nova Scotia is for most students, by most measures, one of the most expensive places to study, so there’s not much doubt that some targeted assistance is in order. But free university tuition for everyone is obviously regressive, so making a case for that option is much harder.

The article doesn’t address the issue of regressivity but it does make quite a different case, which is that a province in as bad a demographic and economic situation as Nova Scotia needs to toss a bone to its youth.  And for what it’s worth, that’s true: the situation for youth in Nova Scotia is pretty dire, and out-migration is a serious issue.  But if that’s the problem you’re trying to combat, why give the biggest subsidies to that section of youth who: a) mostly come from better-off families; and, b) are likeliest to be making high salaries in the future?  Why direct money to them and not youth who haven’t accessed PSE?

If Nova Scotia really wants to do something big and bold, something that will attract or retain youth, and isn’t quite as brutally regressive, it should think about creating a type of tax rebate for all youth – say a 50% reduction on provincial taxes for anyone born within the last thirty years.  That’s a heck of a message to send to young workers – and one that might resonate outside the province as well.  And yes, okay, it’s still regressive, but likely less so than free tuition because at least it includes some benefits to those who don’t attend PSE.

Worth a thought, anyway.

November 12

Explaining the #FeesMustFall Movement

One of the more interesting policy debacles in higher education this year has been the fracas over tuition fees in South Africa, which has led to what some are calling the biggest set of anti-government protests since the end of apartheid.  Here’s what you need to know:

The protests began when universities announced fee hikes for the coming year.  On average, the fee hikes were in the 6% range, which was relatively modest given a persistent inflation rate of just under 5%, and additional cost pressures due to a falling rand (the rand is 14 = 1 USD at the moment, up from 8 = 1 USD three years ago).   This kind of increase is not unusual in South Africa, but for a variety of reasons, this year the increases brought students out into the streets in very large numbers.

There were, near as I can tell, three factors at work.  The first is generalized discontent with the ANC government (animosity that is by no means restricted to students).  Though the party can still win over 50% of the vote in elections, a lot of that support is residual loyalty for its fight against apartheid rather than approval of current policies; and since today’s students were mostly born after Mandela was released from prison, they feel less loyalty to the party than do older South Africans.  Economic growth is fading (partly due to falling commodity prices, partly due to government incompetence, particularly on energy and power generation), which means no progress on persistently high unemployment among blacks.  And if there is one file where the government has underperformed the most over the past twenty years, it’s education.  The problem is worse in K-12 than  in universities (though colleges are a right mess), but the repeated failure to sufficiently increase expenditure in higher education is a persistent failure.

The second issue is with respect to student aid.  Though the government has massively increased outlays, it has also massively increased loan losses.  Up until about seven years ago, the National Student Financial Aid System (NSFAS) had the continent’s best record of loan repayment (about 60%).  Then, the government decided – on what many regard as quite spurious grounds – to make it harder for NSFAS to collect the loans, and repayment plummeted to about 20%.  This was good news for graduates of course: more money for them; but it effectively raised the price of increasing access.  One of the casualties of that was an inability to expand  middle-class families’ access to loans, a group who subsequently feel very squeezed.

The third factor was an uptick in student militancy this past March with the #RhodesMustFall campaign.  This started at the University of Cape Town where students wanted to remove a statue of the arch-colonialist Cecil Rhodes (they succeeded).  This morphed into a wider set of protests about the progress universities have made in transforming themselves since 1994, in particular with respect to the progress of black academics.

So with all this kindling, the relatively small sparks of what vice-chancellors thought was a run-of-the-mill tuition increase turned into a major conflagration, which went under the heading #FeesMustFall (a play on the earlier Rhodes campaign).  At first the government tried to straight-arm the students, with the Higher Education minster (and Communist party chief) Blade Nzimandize claiming maladroitly that he would start his own #StudentsMustFall campaign.  When that didn’t work, the ANC began trying to co-opt the protest, claiming students’ views as their own.  Eventually the protests grew so large that President Zuma eventually froze all fees for a year, and compensated institutions to the tune of 80% of the cost of the freeze.  But the ANC has also taken steps to give itself unprecedented authority to massively intrude on universities’ autonomy, so that it can more directly control costs and remove inconvenient administrators.

The fee freeze took some of the sting out of the protests, but it also emboldened some protestors who want to see South Africa move to a free fee system.  Given that participation rates for whites are between three and four times higher for blacks, this is a curiously regressive idea (and may explain why whites were seemingly so much more prominent in the #feesmustfall protests than in those for #rhodesmustfall).  The head of South Africa’s Centre for Higher Education Trust, Nico Cloete, skewered the idea in a University World News column this weekend (read it here; it’s long but very good), saying rightly that in a society as unequal as South Africa, “affordable higher education for all” is a necessary goal, but “free higher education for all” is morally wrong.

Which is dead on, frankly.  Fix student aid so the poor get more grant aid and the middle-class get more loan aid, sure.  More money for universities to maintain quality?  Sure (South Africa has an amazing set of universities for a middle-income country, but that’s at risk over the long-term).  But spending more money to make it free for the already highly privileged?  South Africa can and should do better than that.

October 02

Better Know a Higher Ed System: Brazil

Brazil is the smallest and probably the least-known of the BRICs.  It doesn’t have a big economy or a big diaspora like China or India, and it isn’t a former superpower like Russia.  But it is still the second-largest country in the Americas, and with more Brazilian students heading abroad, it’s a country well-worth knowing more about.  So here goes:

First, it’s a pretty young system.  The first functioning university – Universidade de Sao Paolo (USP) – was founded in 1934 (prior to that, individual faculties of law and medicine existed, but did not comprise a full university).  That’s maybe not a huge surprise given that former colonial master Portugal only got it’s second university (Coimbra) in 1911.  And until 1968, there really wasn’t much by the way of a full-time teaching corps: most profs had jobs elsewhere, and taught part-time for the prestige.

Second, it’s an odd two-tier public university system.  There is a system of federal universities, which are quite prestigious (locally at least); but each state has its own system.  Most of the latter aren’t considered to be all that good, except in Sao Paolo where the state pours in a ton of money – USP is generally considered the country’s best.  And then there are the federal and state government-run systems of “non-university higher education institutions”, which are usually stand-alone faculties rather than a separate level of education, like community colleges or fachhochschule.  As in most of Latin America, the teaching mission tends to be given greater priority than it is in North America, with research restricted to a fairly small number of faculty.  Also, as in most of the rest of the continent, public higher education is free.

But of course, one of the reasons Brazilian public higher education can be free is that only a little over 20% of Brazilian students are fortunate enough (read: sufficiently academically gifted) to attend.  The other 80% of students go to private institutions.  Some of these are old, prestigious, mainly Catholic institutions; but since the late 1990s, most of the enrolment growth has been in for-profit institutions.  Quite simply, as Brazil massified its higher education system (it currently enrols close to 7 million students), the decision was taken to outsource that task to the private sector, much as was done in Chile and South Korea.  On the face of it, this was in keeping with other neo-liberal reforms of the 1990s, but it was a policy that the left adopted for itself once Lula da Silva became President in 2003.

In this situation, equity is always a question: isn’t it the case that the poor are paying for higher education while the rich get to go for free.  Well, it is certainly inequitable.  But the fact is that the student population in both sectors looks pretty similar: in fact, the very poorest seem slightly more likely to attend public than private higher education (though the numbers are still fairly small).  And in the private sector, the arrival of private providers seem to be driving costs down: average tuition in the private sector fell substantially over the last decade, as these institutions searched for new students in less wealthy parts of the country – for the most part, this was the result of the Lula-era policy of offering substantial tax benefits to private higher education providers who hit certain participation targets for disadvantaged students.

One Brazilian higher ed innovation that deserves wider attention is something called the Provão (literally, “Big Test”). In the mid 1990s, when university quality was an issue, the national ministry introduced a test in certain fields of study (3 at first, growing  later to 26) to measure students’ competency at graduation.  In design, it was much like the Collegiate Learning Assessment in that captured “value-added” by simultaneously testing first and final-year students.  Unlike CLA exams, though, results of these tests were released, which allowed comparisons to be drawn between the quality of graduates from each institution; these also played a role in accreditation and re-accreditation decisions.  You can imagine how much universities loved this.

Interestingly, it was the replacement of the Provão, rather than support for private institutions, which became the election issue of 2002.  By 2005, Lula had replaced the Provão with something called ENADE.  In conception, this  was somewhat similar to Provao, but with some key differences – early musings about ditching the test entirely were not greeted favourably by the public.  It is now a lower-stakes test (samples of students are tested, rather than all students), it focusses more on value-added (it now has a first-year and fourth-year structure similar to the American Collegiate Learning Assessment), and it is less obviously a regulatory control mechanism.  It also now contains a general learning component, instead of being exclusively about domain-level learning.  In other words, it’s awfully close to what AHELO was trying to achieve.

Funny how it can be done there, but not here, isn’t it?

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