Higher Education Strategy Associates

Tag Archives: Affordability

September 07

Tuition Fees in Canada, 2017-18

So, yesterday was the annual tuition fee data dump from Statscan.  Probably worth it to go over the data just a bit to see what the story is.

The data everyone likes to focus on is the “average undergraduate tuition fee by province”.  This year, it looks like this (note that “fees” here do not include ancillary fees, only tuition proper):

Figure 1: Average Domestic Undergraduate Tuition Fees by Province, 2017-18

The other number that people always look out for is the one that shows increases over time.  For reasons that defy easy comprehension, Statscan always publishes these in nominal rather than real dollars which always leads to inflated estimates of tuition increases.  So I’ve put all the figures in 2017 real dollars in Figure 2:

Figure 2: Average Domestic Undergraduate Tuition Fees, Canada, 2006-07 to 2017-18


So, accounting for inflation, the increase in tuition fees is 25% over 11 years, or an average of 1.8% per annum.

Now keep in mind that what is being averaged here is tuition fees across all domestic undergraduate students, not fees across all undergraduate programs.  So where a program has one set of fees for in-province students and another for out-of-province students (e.g. Quebec, Nova Scotia) the two get averaged.  Also, even if there is no change in posted tuition, if more students enrol in more expensive programs (e.g. engineering) and fewer in cheaper ones (e.g. Arts) then that will still mean an increase in average tuition.

And tuition does vary a heck of a lot by field of study even at the undergraduate level.  This is actually a nuance of Canadian tuition fee data which is not well understood outside the country, where variable tuition by field tends to be quite rare. Here’s the national average by field:

Figure 3: Undergraduate Average Tuition by Selected Field of Study, 2017-18

Note here that the presence of a few very expensive professional disciplines drags up the average substantially.  In humanities and social sciences, average tuition fees are 12-15% lower than the national average, and in education it is 29% lower.  This is one of those cases where the average price is somewhat higher than the median price – something to keep in mind when thinking about affordability.

There was some other interesting data in yesterday’s release with respect to domestic graduate student fees (up 1.8% in nominal terms, vs. 3.1% for undergraduate fees) and for international students fees (surprise surprise – up 6.1% in nominal dollars), but the above covers the main points of interest.  Nothing terribly exciting, but worth re-capping and putting into context nonetheless. 

June 14

Affordability of Higher Education in Canada and the United States

About a decade ago, my colleague Kim Steele and I did a comparison of the affordability of public higher education in all ten Canadian provinces and fifty US states. In general, Canadian provinces did not do well; yes, Canada has lower costs for students, but its student aid system is less generous and – this is worth remembering – Americans are wealthier than we are. And so, once you adjust costs and net costs for family purchasing power, it turned out there was a substantial affordability gap in Americans’ favour.However, things have changed a lot in the intervening decade. Tuition has increased at a faster pace in the US than in Canada, and while both countries have made improvements in student aid, the gap in median household incomes has narrowed substantially due to the severity of the recession in the US. And so my colleague Jacqueline Lambert and I thought it would be fun to re-run some of those comparisons. We’ll be publishing our full 60-jurisdiction report in the fall but it seemed like it would be fun to give you some top-level comparisons right now.

First, a brief methodological note on this comparison. We take six different measures of cost (see table below) and divide each of them by each nation’s median household income. We do this because affordability by definition is a function of a household’s ability to pay – simply comparing costs, which on their own are meaningless.


Most of this data is easily available from various official sources (email me if you’re curious).  The exception is living costs because while Canada occasionally produces student income/expenditure surveys (we at HESA have done a few of these), Americans simply don’t.  Not on a national basis, anyways.  When you hear American student aid analysts talk about “cost of attendance”, what they’re referring to are institutional estimates of costs to live on- or off-campus which form the basis of student aid need assessment.  Sometimes these estimates make sense, sometimes they are batshit crazy (do read the New America Foundation’s recent series on this issue, available here. Regardless, they’re the only data we have.

In our 2006 paper, we used US figures for on-campus housing and in Canada we used results from an Ekos survey for living expenses.  Here’s how affordability stacked up then:

Figure 1: Canada vs. US Cost Comparisons, 2002-03 

American tuition and living costs were both 15-20% higher than Canadian ones, but once adjusted for household income they were roughly the same – education costs in both countries came out to 11% of median household income and total costs were 23-24%. Where the Americans had a real advantage was in loans: the ubiquity of loans meant that Americans were much less credit-constrained than Canadians and had to dig into their pockets much less in the short term. Result: on the most inclusive measures of affordability, Americans looked better than we did in 2002-03.

Now on to a more recent comparison, after a recession and many policy changes on both sides of the border. We’ve refined the US living cost data by using a weighted average of on-campus and off-campus housing costs, and to make the Canadian data more comparable we’ve chosen to use CSLP living cost estimates for Canada rather than actual survey data (nationally, the two are within 5% of one another, so it’s not a big change in practice). Here’s how the data looks for 2013-14:

Figure 2: Canada vs. US Cost Comparisons, 2013-14


What happened? How does Canada now look so much more affordable? Well, not much on the income side; in fact US median household income grew slightly faster on the American side. But tuition grew a lot faster in the US than it did in Canada. So, interestingly, did American students’ living costs; in 2003 they were 18% higher than in Canada; now they are 86% higher. To some extent, the increase in US living costs is due to our methodological change of including off-campus housing costs. That said, US cost of attendance is truly rising quickly for reasons which are not entirely clear.

Some policy measures have kicked in to offset these rises. Grant dollars per student in the US have risen by over 170% in the past decade, and loans per student have risen 64%. Both these figures far outstrip the equivalent figures in Canada. But it’s not enough to close the widening cost gap. On the most inclusive measure of affordability – out-of-pocket costs after tax expenditures – Canadian families must spend 11.9% of median household income (compared to 13.1% a decade ago) while Americans must spend 20.8%, up from just 9.7% a decade ago.

Plenty of food for thought – on both sides of the border.

March 18

The Cultural Aspect of “Affordability”

In tuition policy circles, there are a lot of “grass is greener” perspectives: that is, people arguing about affordability based on foreign examples of either high or low tuition.  But one of the problems with looking at “affordability” of higher education in cross-national contexts is that affordability is a matter of perspective.  What’s affordable in one country often isn’t in another.  I don’t mean this simply in the trivial sense that some countries are richer than others.  Obviously a $3,000 tuition fee is more affordable in Canada than it is in Zimbabwe.  Rather, I mean it in the sense that students and families in different countries with similar standards of living have different views about what kinds of sacrifices they are prepared to make in order to send their kids to school.

So here’s one example: East Africa.  There, you have four countries with fairly similar higher education systems.  Each has one obvious “flagship” institution, and a mix of private and public institutions.  The private sector teaches about a third of all students in Tanzania, and about half in Uganda and Rwanda; in Kenya, the figure is between 10 and 15%.  I can’t show you average fees in each country because they don’t exist, but here’s a selection of fees at each country’s flagship institution, in USD, at current exchange rates, which gives you a rough idea of the relative fee levels across the region.

Table 1: Tuition Fees at East African Flagship Universities, 2015-16, in USD






Now, let’s express those fees in terms of GDP/capita to get a sense of how “affordable” these fees are.  For comparison, tuition + compulsory fees in Canada are about 13% of GDP/capita.

Table 2: Tuition Fees at East African Flagship Universities, 2015-16, in USD (*Source: World Bank 2013)







Finally, let’s talk about availability of student assistance.  All four countries have student loan programs.  Uganda’s is very small – only a couple of thousand loans per year, starting in 2015 – while Tanzania’s is the largest, serving somewhere between a quarter and a third of all students.  The other two countries are in between, though Kenya’s system more resembles Tanzania’s, and Rwanda’s is closer to Uganda.

Now, based on all that, what do you think access rates look like?  Most people would probably put Tanzania (cheapest, best student aid) at the top, and Uganda (expensive, least available student aid) at the bottom.  But here’s what enrolment rates actually look like:

Figure 1: University Students per 100,000 of Population, East Africa, 2015 or Latest














A couple of caveats about the data.   Tanzania’s numbers are different from the others because nearly a quarter of its student body is enrolled at the country’s Open University, many of them in education programs.  Uganda’s numbers are somewhat lower because compared to the other countries, it has more tertiary students in non-university institutions.  But that aside, the real story is that Tanzania (richer, cheap tuition, better loan availability) is a lot closer to Uganda (poorer, more expensive, almost no loans) than it is to Kenya in terms of access rates.  And if you spend any time in the area, you’ll quickly learn something else: universities in Tanzania are far more likely than those elsewhere in the region to say they can’t expand without loans; the claim is that students simply won’t come if fees rise or loans aren’t expanded because “students can’t afford it”.  But on the face of it, that’s nonsense, as the costs for students elsewhere in the region are manifestly higher, and they are not thought to pose quite so severe a barrier.

The difference is entirely cultural, and has to do with collective saving mechanisms.  In Uganda, it is normal for a family to hit up their neighbours and co-workers for a few dollars each semester to help their kid get through school, which everyone does because they know that when it’s their turn to put a kid through school, the donation will be reciprocated.  In Tanzania, people will do the same to cover the cost of weddings or sometimes hospital fees, but not for tertiary education.  Locally, most people attribute this difference to the after-effects of the long period of socialism under President Julius Nyerere.  This view says that Tanzanians simply got used to government paying for everything, and citizens haven’t entirely adapted their thinking to the post-1990s reality.

I have no idea whether or not this is true, but it does beg some interesting policy questions: What’s the right policy to follow if a population has sub-optimal savings and investment habits?  Is there any practical  way to nudge a country from a Tanzania-ish state to a Ugandan one?  If not, are you stuck with permanently high tertiary education subsidies because households can’t be depended upon to contribute?

These are some serious questions, which have real implications here in Canada, too.  After all, wouldn’t Quebec universities be better off if Quebecers were a little more Ugandan and a little less Tanzanian?

Something to ponder, anyway.

September 05


At some point in the next week or so, Statistics Canada will be releasing its annual statistics on tuition fees.  Hopefully it will be less of a fiasco than last year, when they released data a few days after the Quebec election, but didn’t bother to note that the planned tuition fee hike was being reversed.

What I want to do today is to put the inevitable “rising fees” stories that always accompany the Statscan release into some sort of context.  Students pay two types of fees – tuition and “ancillary fees”.  Statscan data on the latter is only marginally better than hopeless, so these fluctuating annual figures need to be treated with extreme caution; but they’re a non-negligible part of total tuition (15% or so), and so I include both in the graph below showing the evolution of total fees.

Figure 1 – Average Tuition, Canada, Nominal Dollars













Figure 1 is the graph that the zero-tuition crowd love to show: steady 5.1% annual tuition increases from 1995 to the present.  That’s actually a trick of scale – in fact, during the era of maximum government skintness (the 90s) tuition was going up about 9% per year to make up for cuts in government grants.  After 1999, the economy improved, public finances improved, and the rate of fee increase fell to just about 4%.

There is, however, a little thing called inflation.  It’s kind of important if you want to understand real prices over time.  Here’s what the tuition graph looks like if you take inflation into account.

Figure 2 – Average Nominal and Real ($2103) Tuition, Canada













This changes things a bit.  Those annual increases since 1999-2000?  Just two percent, after inflation.

But, as apparently nobody in the press or politics seems to understand, those increases in fees have been accompanied by increases in subsidies, too.  The most important of these are the increases of various forms of tax credits.  Say what you want about them – they reduce the actual cost of education by about a third.  Their value is eroding slightly at the moment due to inflation, but they are still worth $2,220 to the average Canadian student.

Figure 3 – Average Nominal and Real ($2013) Tuition plus Net Real Tuition Canada













Finally, if we’re looking at affordability, we also need to take into consideration a measure of ability-to-pay, because cost on its own is meaningless.  Televisions cost more than they did, say, 40 years ago, but no one thinks they’re “less affordable”, because incomes have risen even more quickly.  So to compare affordability across time, what we need to do is look at cost over time with respect to a measure of purchasing power, such as average family after-tax income.  Which I do, below.

Figure 4 – Real Net Tuition as a Percentage of Average After-Tax Family Income













So, is tuition less affordable than it was?  Well, a bit, yes.  Fifteen years ago, it took up 4.8% of average, after-tax income; now, it takes up 5.2%.  But calling it a crisis, the way the usual suspects routinely do, is a bit of a stretch.

And we haven’t even taken into account need-based student aid yet.  We’ll do that tomorrow.

August 30

So, This Obama Plan, Then (Part 2)

To recap yesterday’s blog: President Obama has a plan to make colleges reduce their costs, and deliver better value for money.  It involves having the government rate institutions on Accessibility, Affordability, and Outcomes; those which rate poorly risk losing eligibility for various forms of federal student aid (which, in total, is up around $150 billion/year these days).

While there’s no question that college costs do need to be reined in, this particular solution strikes me as odd.  Here’s what you have to believe in order to think that the President’s plan will work:

1)      That there exists a set of metrics, applicable to all institutions, which can measure Accessibility, Affordability, and Outcomes.  Forget data availability, institutions juking the stats, and whether one should judge institutions based on graduate salaries – can this stuff actually be measured in an equitable manner?  Will universities be judged on affordability without reference to the amount of state aid they receive?  Will those in rich states be penalized for the number of Pell-eligible students they enrol because there are fewer of them around than in, say, Alabama?  For employment rates or salaries, do tribal colleges or HCBUs get measured on the same scale as Princeton?  And if you’re looking at university-wide comparisons, rather than program-level ones, won’t mid-tier liberal arts colleges get completely blown out of the water?  There are probably work-arounds on most of these, but they aren’t simple.  Which leads to the next issue:

2)      Assuming the answer to 1) is yes, that the government is actually capable of finding and choosing the right measures.  I’m skeptical, let’s put it that way.

3)      That the Government, at the end of the day, is prepared to take students hostage to make this work.  Does anyone really believe that the government is going to reach the point where it says to a group of students: “we’re with you, your school isn’t delivering good value.  To show you our support, we’re going to cut off your student aid”?  The words “communications nightmare” don’t even begin to cover it.

This last one really speaks to a large problem with the Obama program.  The US federal government actually doesn’t have the tools to affect affordability because it doesn’t control the appropriations process.  At the end of the day, it’s a state issue, as it would be here in Canada.

So is this just an elaborate set-up to allow Obama to use the bully pulpit to jawbone institutions into line?  Or does the White House (and it is the White House – DOE appears to have had little to do with this) actually believe that there is a workable technocratic solution here? I’d like to think the former; I’m afraid it’s the latter.

April 16

A Closer Look at Student Debt (Part 2)

On Friday, we looked at the evolution of average monthly student loan payments since the 1980s. Though debt has increased considerably during the past thirty years, it’s been pretty stable over the last decade.  Meanwhile, a major decline in interest rates has caused student loan payments to drop from a peak of $323 per month in 2000 to $268 in 2011 at the Bachelor’s degree level (in inflation-adjusted dollars).

If student debt is up but the monthly payment burden is down, are students better off? The picture to date is incomplete. What’s needed is an appreciation for graduates’ ability to pay. Chiefly, we’d ideally examine how the proportion of a graduate’s income required to service student debt has evolved over time.

Fortunately, Statistics Canada has been surveying graduates for decades. Every five years, the National Graduates Survey looks at a class of graduate students two years after graduation, offering a portrait of graduate outcomes, including labour market transition, debt management and income.

First off, it’s worth noting that university graduates have relative success finding work. The unemployment rate for Bachelor’s degree holders aged 25 to 34 has stayed between 4% and 8% since 1980; while the rate has been slightly higher for college graduates, it has remained below 10% since the early 1990s.

As demonstrated in Figure 1, after dipping between 1992 and 1997, graduates’ salaries peaked in 2007. Unfortunately, there is no reliable, accessible data on earnings by education level and age group since 2007.

Figure 1 – Median Gross Annual Earnings of Graduates Working Full-Time Two Years after Graduation by Year of Graduation and Level of Study, 1988-2007 (in 2007 Real Dollars)

Source: Statistics Canada’s 1986, 1990, 1995, 2000 and 2005 National Graduates Surveys

As Figure 2 demonstrates, the percentage of income spent on loan repayments increased steadily until the start of the 2000s. The class that graduated in 2000 devoted less of their monthly income to debt repayment. Unfortunately, the absence of data on graduates post-2005 means we cannot fully understand the impact of the significant reduction in interest rates since then (from 9.77% in 2000 to 5.5% in 2011).

Figure 2 – Percentage of Monthly Gross Earnings of Graduates Devoted to Student Loan Payments by Year of Graduation and Level of Study, 1988-2007 (in 2007 Real Dollars)

Source: Statistics Canada’s 1986, 1990, 1995, 2000 and 2005 National Graduates Surveys

Assuming income levels for graduates have stayed constant since 2007, the proportion of income going to debt repayment would have dropped by one percentage point between 2007 and 2009 and by another half-percentage point by 2011.

So, to conclude, student debt is unquestionably up. But low interest rates and steady graduate earnings have meant that the student debt burden hasn’t changed much in since the 1990s, and is trending downward. The Class of 2005 graduated with same debt load as the class of 2000, but spent less money out of pocket on repayment.

On the whole, the situation appears reassuring. Tomorrow, we’ll conclude by examining ways in which debt obligations might become too burdensome, and explore what policymakers are doing to prevent that from occurring.

December 15

Affordable Enough?

“Everybody knows” that student debt loads are spiralling out of control, that the incidence of debt is growing at an alarming rate and that debt loads are unsustainable. Student debt forgiveness has played a major role in the Occupy movement in the United States, where student debt doubled in the last decade and now exceeds credit card debt. If reports are to be believed, we are in the midst of a student loan crisis.

Scratch the surface a little and you’ll see that the situation in Canada is hardly like that in the U.S. According to the most recent data on student debt, which unfortunately dates from the Canadian University Survey Consortium’s 2009 Graduating Student Survey, debt increased at a relatively small pace between 2000 and 2009, from just under $25,000 in 2000 to just under $27,000 in 2009 – 9% after inflation. No small amount to be sure, but keep in mind that tuition grew at a faster pace, by 14%, according to Statistics Canada during the same time period. Moreover, the proportion of undergraduates reporting debt increased by a mere two percentage points, from 56% to 58%.

While, in fact, student grant and loan remission programs are holding the line on debt, there remain concerns about the long-term manageability of debt loads; we’ve never really had a strong measure of the impact of student debt on a graduate’s financial decisions.

How much debt can students reasonably afford to take on in pursuit of post-secondary education? In a neat little paper for the College Board, Carleton’s Saul Schwartz and Skidmore College’s Sandy Baum, who combined have studied the issue of student debt from every conceivable angle, attempt to define benchmarks for student debt affordability (the pair worked on a Canadian version reaching similar conclusions). They conclude that what really matters isn’t the debt load, per se, but the proportion of income a graduate must devote to student loan repayment. They argue for a sliding scale of repayment, ranging from no payments for those earning $10,000 or less to a maximum of 18% of discretionary income (i.e., that which exceeds 150% of the poverty line) for those earning $150,000. Sound familiar? That’s because it served as the rationale for the parameters of the Repayment Assistance Plan administered by the Canada Student Loans Program and its provincial counterparts, which caps maximum payments at 20% of income and allows students to discharge outstanding debt after 15 years of repayment.

Coming off of a decade where student aid programs kept debt increases below the rise in tuition, Canadian students who do struggle after graduation have access to comprehensive repayment assistance. And yet, access to higher education remains titled in favour of those from wealthy, highly educated backgrounds. Tweaking student aid or adjusting the net cost of higher education is unlikely to produce huge gains in access; it will take serious efforts to address the academic, informational, cultural, motivational and aspirational barriers to higher education. Unfortunately, that’s a lot to fit on a placard.

A longer version of this article is included in the recent edition of Educated Solutions, put out by the Ontario Undergraduate Student Alliance.