HESA

Higher Education Strategy Associates

Tag Archives: Alberta

October 21

A Prairie Round-up

If you’re a long-time reader of this blog, you’ll know that every spring I put together a little summary of provincial budgets and what they mean for higher education.  A few days ago I decided to put together a slide comparing the cumulative changes in provincial funding since 2011.  Here’s what it looks like, in inflation-adjusted dollars.

Figure 1: Change in real provincial government transfers to institutions, 2011-2 to 2016-17

ottsyd20161020-1

What should immediately jump out at you (apart from the raging dumpster fire that is Newfoundland’s public fisc these days) is that while public funding for universities is flat or declining in most of the country, in the three prairie provinces increases have been the order of the day.  So what’s going on out there?

The nature of the trend-bucking has differed across the three provinces.  In Saskatchewan and Alberta, high energy prices kept spending buoyant at least until a couple of years ago.  Since then, Alberta’s new NDP government has continued to spend, whereas Saskatchewan’s has started to retrench (but spending is still higher  than it was in 2011).  Manitoba’s never-too-hot, never-too-cold economy hasn’t see the big revenues fluctuations of its neighbours, but until earlier this year had a government that was prepared to engage in deficit spending in part so as to provide significant support to post-secondary education.

(You can get the gist of recent policy directions by looking at my recent provincial election analyses for Manitoba, Saskatchewan and Alberta).

So what’s in store for those three provinces now?  Well, for the moment they seem headed in quite different directions.  In Alberta, there were a lot of headlines about the NDP government extending its tuition freeze for a third year, but the interesting part of the announcement was that the Government simultaneously launched a review of the tuition policy with a view to a long-term funding solution.  Now, given that this is a government with a heck of a deficit that isn’t going to be solved through rising oil and gas prices any time soon, you’d have to think this “review” is in fact likely to end up twelve months from now with institutions being able to move somewhat on fees.  Because while the provincial government has been compensating institutions for the freeze, that still leaves income growth at around 2%. As we all know, Canadian universities start to seize up whenever the growth rate drops below 4% –  so there’s a gap there that has to be plugged somehow, and higher fees are almost certainly at least part of the solution.

In Saskatchewan, fees aren’t much on the agenda but the level of government support is.  Resource price falls mean that the government is running a $14 billion budget on $13 billion of revenue, so the province is talking very seriously about shrinking the size of government by 7% or so over the next two years. PSE will undoubtedly get its fair share of that cut; and that’s on top of a 7% cut over the last two years.  Yet so fast was expenditure growth in the first couple of years of this decade that even this massive cut will only bring the province back to the level of spending it was at in 2011.  The government speaks of looking for “transformational change” in PSE but the likelier result will be a lot of unpleasant but ultimately non-transformational corner-cutting and muddling through.

Manitoba feels like the place where fireworks are likeliest.  It has a new Conservative government with a mandate to pull back at least somewhat on public finances. Post-secondary education, one of the previous NDP government’s favourite files, seems likely to get hit the worst.  But the new government has some tools to mitigate these losses: tuition (currently 3rd lowest in the country) can rise, and a ghastly, wasteful post-graduation tax credit can be scrapped.  The former seems more likely than the latter, but both are possible.

Meanwhile, the University of Manitoba Faculty Association, the union which sicced CAUT on its own members when an Economics department dispute over curriculum didn’t go the way some people wanted, has decided that now is the PERFECT TIME to hold a strike to support a wage demand of – are you ready for this? – 6.9% over one year.

If UMFA’s serious about this demand, it could be a long strike.  And that’s not because the demand is unaffordable – in theory anything’s affordable if you cut back enough on library budgets or whatever.  It’s simply politics: the new government is not going to go easy on any para-public body which appears to be out of step with the new mood of thrift.  Just imagine the scene at the MB legislature if the institution were to cave on this:

U of M: “We would like some more money please.  We’re kind of strapped on account of having just given the faculty a 6.9% raise”

Conservative Govt: “HAHAHAHAHAHA Come back when you learn to manage your way out of a wet paper bag”

Agreeing to such a rise would be like signing a suicide note.  Unlikely to happen.

Have a good weekend.

December 10

Reports, Books, and CUDO

It’s getting close to that time of year when I need to sign off for the holidays (tomorrow will be the last blog until January 4th).  So before then, I thought it would be worth quickly catching up on a few things.

Some reports you may have missed.  A number of reports have come out recently that I have been meaning to review.  Two, I think, are of passing note:

i) The Alberta Auditor-general devoted part of his annual report (see pages 21-28) to the subject of risk-management of cost-recovery and for-profit enterprises in the province’s post-secondary institutions, and concluded that the government really has no idea how much risk the provinces’ universities and colleges have taken on in the form of investments, partnerships, joint ventures, etc.  And that’s partly because the institutions themselves frequently don’t do a great job of quantifying this risk.  This issue’s a sleeper – my guess is it will increase in importance as time goes on.

ii) The Ontario auditor general reviewed the issue of University Intellectual Property (unaccountably, this story was overlooked by the media in favour of reporting on the trifling fact that Ontarians have overpaid for energy by $37 billion over the last – wait, what?  How much?).  It was fairly scathing about the province’s current activities in terms of ensuring the public gets value for money for its investments. A lot of the recommendations to universities consisted of fairly nitpicky stuff about documentation of commercialization, but there were solid recommendations on the need to track the impact of technology transfer, and in particular the socio-economic impact.  Again, I suspect similar issues will crop up with increasing frequency for both governments and institutions across the country.

Higher Ed Books of the Year.  For best book, I’m going to go with Lauren Rivera’s Pedigree: How Elite Students Get Elite Jobs, which I reviewed back here.   I’ll give a runner-up to Kevin Carey’s The End of College, about which I wrote a three-part review in March (here, here, and here).  I think the thesis is wrong, and as others have pointed out there are some perspectives missing here, but it put a lot of valuable issues about the future of higher education on the table in a clear and accessible way.

Worst book?  I’m reluctantly having to nominate Mark Ferrara’s Palace of Ashes: China and the Decline of American Higher Education.  I say reluctantly because the two chapters on the development of Chinese higher education is pretty good.  But the thesis as a whole is an utter train wreck.  Basically it amounts to: China is amazing because it is spending more money on higher education, and the US is terrible because it is spending less money on higher education (though he never bothers to actually check how much each is spending, say, as a proportion of GDP, which is a shame, as he would quickly see that US expenditure remains way above China’s even after adjusting for the difference in GDP).  The most hilarious bits are the ones where he talks about the erosion of academic freedom due to budget cuts, whereas in China… (you see the problem?  The author unfortunately doesn’t).  Dreck.

CUDO: You may recall I had some harsh things to say about the stuff that Common University Dataset Ontario was releasing on class sizes.  I offered a right of reply, and COU has kindly provided one, which I reproduce below, unedited:

We have looked into the anomalies that you reported in your blog concerning data in CUDO on class size.  Almost all data elements in CUDO derive from third party sources (for example, audited enrolment data reported to MTCU, NSSE survey responses) or from well-established processes that include data verification (for example, faculty data from the National Faculty Data Pool), and provide accurate and comparable data across universities. The class size data element in CUDO is an exception, however, where data is reported by universities and not validated across universities. We have determined that, over time, COU members have developed inconsistent approaches to reporting of the class size data in CUDO.

 COU will be working with universities towards more consistent reporting of class size for the next release of CUDO.

With respect to data concerning faculty workload:  COU published results of a study of faculty work in August 2014,  based on data collected concerning work performed by full-time tenured faculty, using data from 2010 to 2012. We recognize the need for further data concerning teaching done by contract teaching staff. As promised in the 2014 report, COU is in the process of updating the analysis based on 2014-15 data, and is expanding the data collection to include all teaching done in universities by both full-time tenured/tenure track faculty and contract teaching staff. We expect to release results of this study in 2016.

Buonissimo.  ‘Til tomorrow.

November 18

The Radical Implications of David Turpin’s Installation Speech

David Turpin was installed as President at the University of Alberta earlier this week.  His inaugural speech was good.  Very good.  Read a shortened version of it here.

(Full disclosure: I spoke at a leadership function at the University of Alberta in August, for which I received a fee.  The University has also recently purchased two of our syndicated research products.  Make of that what you wish.)

The speech starts out with what I would call some standard defences of the university, which any president would give: we seek truth and knowledge, we innovate, and we create jobs, yadda yadda.  Where it gets interesting is where he starts his appeal to the provincial government.  Let me quote what I think are the key bits:

“Our task continues to be to ask unexpected questions, seek truth and knowledge, and help society define, understand and frame its challenges. Our goal for the future is to find new and innovative ways to mobilize our excellence in research and teaching to help municipal, provincial, national and international communities address these challenges.”

Note: the truth/knowledge tasks “continue”, but now we’re adding a “goal” of mobilizing the university’s talents to address “challenges”.  And these are not just abstract challenges.  Turpin gets very, very specific here:

To our municipal partners: We will work with you to address your major goals on poverty reduction, homelessness, downtown revitalization, infrastructure renewal and transportation.

To our provincial partners: We will work with you to strengthen a post-secondary education system that serves the needs of all Alberta’s learners. We will provide our students the educational experience they need to seed, fuel and drive social, cultural and economic diversification. We will advance social justice, leading reconciliation with our First Nations and protection for minorities. We will conduct research to sustainably develop Alberta’s wealth of natural resources and improve Albertans’ health and wellness.

These are really specific promises.  If I’m a municipal or provincial official, what I hear from this is “Cool! U of A is going to be my think tank!  It’s going to put expertise at my disposal in areas like poverty reduction and economic diversification”.  That may or may not be Turpin’s intent, but it’s what they will hear.  And that’s well beyond the traditional role of a university in Canada, and in some ways beyond even some of the “state service” commitments that exist in US Land Grant institutions.  Sure, ever since von Humboldt, universities have been there to serve and strengthen the state, but I think the way Turpin is articulating this is genuinely new.

Now, no doubt the University has enormous resources to help achieve all of these things.  But those resources are mostly faculty members and grad students.  And while the university can ask them nicely to help folks at city hall/the legislature when they come calling, the question is: what’s in it for the profs and grad students to drop what they’re doing and go help the city/province (especially if they feel they have better things to do)?  Is the expectation that staff will do this out of a collective desire to contribute to their communities, or will incentives be put in place?

This goes deep to the heart of a university’s research mission.  At research universities like U of A, tenure and promotion is based mostly on publication records, and time is supposed to be spent 40-40-20 on teaching, research, and service.  But if your provost walks down the hall and says “hey, I just met with a couple of MLAs, and they’re hoping they can borrow your expertise for a couple of weeks”, do those expectations now change?  Will tenure/promotion committees actually take into account work done for government as equivalent to work done for an academic publication?

(For those of you not native to academe, it may seem amazing that research done for public policy, something that changes the way government makes decisions in a certain area, is not rated as highly for tenure/promotion as publishing things in journals that on average are read by a handful of people.  It is amazing, yes.  But true more often than not.)

If the answer to those questions is no, then I don’t think this initiative will go far.  But if the answer is yes, then Turpin is literally talking about a new kind of university, one that is prepared to sacrifice at least some of the prestige associated with being a “world-class university” with a laser-like focus on publication outputs, in order to contribute to its community in very concrete ways.  It’s not a reduction in research intensity, but it is a different type of research intensity.

The risk, of course, is that this new type of intensity won’t come with as many dollars attached.  I hope that’s not the case.  But in any event, this could be quite an exciting experiment.  One definitely worth keeping an eye on.

April 30

An Alberta Election PSE Primer

As long-time readers know, when there are important elections looming, I like to do analyses of party platforms.  There is such an election in Alberta next Monday.  It has never before occurred to me to write about Alberta election platforms because never before has it seemed like the Alberta PCs, who have been in power since Nixon’s first term, ever seemed likely to lose their majority (for the record, I never bought the polls in 2012).  And yet here we are, just a few days out, with the Conservatives in third, and the NDP running first in rural Alberta in some polls.

These are strange times.  Like, Book of Revelations strange times.  (“And when he opened the seventh seal, there was a silence about the space of half an hour, until the first polls began to trickle in” – Rev 8:1.)

And so, without further ado, here’s what the parties have to say:

The “Prentice Plan” (apparently the words Progressive Conservative don’t focus test well, despite the Party having been in power since Prohibition) promises a “world-class education system”.  Most of it is about K-12, but PSE does receive three vague-to-the-point-of-meaninglessness bullet-points.  These are: i) enhance financial aid and student awards; ii) develop a plan to ensure stable funding for institutions; and, iii) ensure apprenticeship training is more inline with labour-market demands.  For anyone who’s been awake for the last four years, this is baffling: the Tories slashed grants in 2010, and have yo-yoed institutional funding since 2008 (it’s 5% up!  It’s 7% down! Whee!).  Given the collapse in oil sands production, the most obvious way to “align apprenticeships with workforce needs” is probably to simply stop doing them for a year or two (see here for more on the link between commodity prices and apprenticeships).  So their platform seems to be mostly about running against their own recent record, with a little fantasy thrown in. Oh, and no commitment to more money for institutions, so far as I can tell.

The Wildrose Alliance Party, of course, does not have a record on which to run.  No one does, because the Tories have been in power since the late 17th century.  And that lack of familiarity with power shows in the party’s PSE platform, which is called – wait for it – “World-Class Post-Secondary, Trades & Skills Training” (imaginative, huh?).  They have an affordability and accessibility portfolio, which is pure Glen Murray (better transfer credit, more online delivery), a research policy that is nothing of the sort (more collaboration with industry, more tax credits for undergraduate students – yes really), and a trades/skills policy that is a mix of the good (more dual credit programs in trades in secondary schools), the banal (better information in high schools), the already-being-done (collaborate with other provinces to make trades certifications more portable), and the slightly weird (allow trades completers to choose between an oral and a written exam).  Note, however: no new public money for institutions.

The New Democrats, or rather, “Alberta’s New Democrats”, presumably to distinguish them from the ravening socialists who periodically run their neighbouring provinces, make only three PSE-related commitments in their platform.  One is with respect to re-installing the Summer Temporary Employment Program for youth ($10 million).  The second is “stable funding for universities and colleges” – in practice, a set of guaranteed annual increases of about 5% per year, which is quite substantial.  The third is to impose a total freeze on tuition, which undoes about 50% of the good of promise number two.

So if you’re in Alberta and you’re voting education in this election, the NDP would seem to be the obvious choice. That said: even if they are elected, and even if they are competent enough in government to deliver on their promises (a challenge for any non-incumbent party in a province where the government has been in power since the latter part of the Tang Dynasty), the net increase in money for institutions will still be below the rate of increase in universities’ underlying costs.  Cutbacks will still happen.  Sorry.

October 15

The Problem with Cutback Narratives

Let’s discuss how we talk about cutbacks.  And let’s talk about the University of Alberta.

U of A has been rather radically affected by the recent cutbacks imposed by the Alberta government.  But here’s the weird thing: apparently it’s not enough to say “we’ve had cuts of 7%”in one year”.  Instead, people feel the need to enhance that figure in many ways.  It’s not just a 7% cut, they say – “we were told by government to budget based on 2% growth, so it’s actually 9%”.  Or, “11% over two years”, etc.

If that’s not enough to invoke sympathy, people turn to statements like: “well we have to absorb a 7% cut, but that’s on top of the 18% we’ve already taken in the last four years.”  This, apparently, is a quote from the Dean of Science.  I have to hope it’s a misquote, because it’s not even vaguely true.

First, although the government grant fell 7%, that doesn’t mean revenue will fall 7%, because the University can always get new revenue – even with a ridiculous and unconscionable tuition fee freeze – by changing their enrolment mix to favour more expensive programs (professional master’s degree) and students (i.e. foreign ones).  In fact, according to a planning document which came out last month, the 2013-14 operating budget for faculties is actually 0.2% higher than it was last year (Science did take a 2% hit, but hey, someone’s got to pay for that 6% bump that Medicine received).

Second, it’s preposterous to say that cuts have been sustained over a four-year period.  Here’s the actual budget of the faculty of Science over the past four years:

University of Alberta Science Budget, 2009-10 to 2013-14, in Millions

 

 

 

 

 

 

 

 

 

 

 

 

… and for faculty operating budgets in general…

University of Alberta Faculties’ Budget, 2009-10 to 2013-14, in Millions

 

 

 

 

 

 

 

 

 

 

 

 

… and total operating budgets…

University of Alberta Operating Budget, 2009-10 to 2013-14, in Millions

 

 

 

 

 

 

 

 

 

 

 

 

The problem, as you can see, isn’t primarily about income.  The problem is that when your business is 60% labour costs, and you can’t fire people, and you hardwire-in annual 4% rises in labour costs, there isn’t a lot of flexibility in the system.  When revenue growth slows below 4%, cuts – sometimes quite painful ones – do occur… in non-salary areas.  Indeed, between 09-10 and 12-13, the Faculty of Science did cut the materials budget by 25%, from 2 million to 1.5 million… but the salary & benefits budget went from 69.2 million to 76 million over that same period.  Hmm.

Universities didn’t have to build brittle systems that would shatter if revenue growth fell below 4%.  The academic community, through a thousand little decisions, made this bed for itself and now has to lie in it.  Yet the dominant narrative is one of universities being passive victims of outsiders’ (i.e. government) actions.  A more thoughtful response – one befitting an institution devoted to dispassionate analysis – might be a bit more of an introspective one.

August 19

Cuts at the University of Alberta

If anybody wants to know what Ontario universities are going to look like over the next couple of years, they could do worse than check out what’s going on in Edmonton.

To recap: In its spring budget, the Government of Alberta cut 7% from university operating grants.  Since then, Alberta universities have been working out how to deal with this cut.  At Athabasca, it’s meant significant layoffs.  At Mount Royal it’s meant program closures.  At the University of Alberta, so far, there’s been more sound and noise about the size of the cutbacks ($60 million over two years) than details.  

The university initially tried to persuade the faculty union to give back some or all of the raises it won for 2013 and 2014 in the last round of collective bargaining.  Predictably, this went nowhere, although the faculty union’s rationale (“it doesn’t matter if we refuse because saying yes wouldn’t come close to delivering a comprehensive solution”) had the merit of being amusingly reminiscent of those used by the anti-Kyoto crowd (“it doesn’t matter if we don’t meet Kyoto commitments, because China”).  This seemed to take the administration by surprise and out came a buy-out plan which – it is feared – could see many productive mid-career faculty leave (though I’m skeptical – where would they go?  Not many universities with salaries comparable to Alberta’s are hiring these days)

Note, though, that the 7% cut in operating grants does NOT mean a 7% cut in the budget.  That’s because the University of Alberta only gets 65% of its money from government.  When you add in all the new money it is getting from students – mostly international ones – income for 2013-14 is likely going to be almost close to what it was in 2011-12 budget.  Yet this is enough to force the university into salary buy-outs, position terminations, the elimination of travel and hosting budgets, etc.  And if you think it’s bad being a prof, try being a grad student: in the Arts faculty, 20 percent of TA positions are being cut. 

How is it that all these positions and activities could be funded three years ago but can’t be in 2013-14 on exactly the same budget?  The answer, unfortunately, is simple: tenure, low productivity and the prioritization of research all cause serious cost inflation such that even the tiniest reduction in university budgets causes absolute chaos.

Here’s the thing: no sane President can go to the public and argue that their institutions are doomed without perpetual budget increases of 3-4%.  The ONLY alternative is to make university cost structures less rigid.  Any university not focusing on that problem is in deep trouble.

July 23

Go West

The key to understanding what post-secondary education is going to look like a few years down the road – say, 2017 – is to look at what is likely to happen to government funding.   We can’t know exactly what governments will spend on PSE, but we can know  how much money they are going to have available to spend simply by working out how much money each will likely have once health expenditures (which make up just 40% of the budget in most provinces) are accounted for.  Today, I’ll be doing this for the country’s 4 largest provinces, which make up 88% of the country’s population

With the exception of Ontario, most provinces’ governments move more or less in step with GDP growth.  Quebec and British Columbia keep their expenditures steady at around 20% and 15 of the economy, respectively.  Alberta’s fluctuate somewhat, usually in line with changes in hydrocarbon prices.  Since the Liberals took office in 2003, Ontario has been increasing the size of its government quite steadily from 13 to 18% of GDP.

 Figure 1 – Provincial Budgets as a Percentage of GDP, 2000-2013

 

Given this, it seems unrealistic to expect any of these governments to increase overall expenditures much faster than GDP growth.  Alberta and BC could conceivably inch up a bit after 2014 since their spending is currently slightly below the long term average.  For simplicity’s sake, though, let’s assume that growth in those two provinces will be restricted to growth in nominal GDP, which in both provinces is expected to average 4.5-5% for the foreseeable future.

Quebec and Ontario, meanwhile, can’t grow expenditures anywhere near that much because of their abysmal finances.  Quebec’s budget currently projects spending growth to be around GDP growth minus 1% out to 2017; in Ontario, program spending is frozen in nominal dollars through to 2017.

Now, the amount of money available for PSE (and other types of government spending) is limited by what happens to the health budget.  With the overall size of government more or less steady as a percentage of the economy, every time the health budget increases more quickly than GDP, the pool of money available for every other piece of spending – including PSE – must decline. In Quebec and British Columbia, the health budget has been growing at 5-6% annually for the past decade.  In Ontario, the figure is 7% and in Alberta it is a (frankly) ludicrous 9%. 

So, let’s assume that everyone can keep health care increases to just fractionally above expected GDP growth levels (say, 5% per year). Here’s what will happen to the pool of non-health dollars available in each province: 

 Figure 2 – Nominal Non-Health Dollars Available by Province, indexed to 2013.

 

Your eyes do not deceive you: that is indeed a 41% funding gap opening up between Alberta and Ontario over the next four years.  Given the assumptions above, non-health spending in Alberta can grow by 20% by 2017 and BC looks set for an increase as well.  Quebec should hold just about steady; Ontario, thanks to its need to get rid of its deficit without raising revenues, is going to see a fall of a little over 15%.

To be clear: I am not saying that PSE budgets will increase or decrease by these amounts.  What I am saying is that this is a good approximation of how the amount of funds available to PSE will evolve in each province over the next four years and that if historical funding patterns hold up, these kinds of changes in nominal funding are about what we can expect.  But politics still matter, and universities and colleges could still see increases to their budgets relative to the amount of available funding if they are smart in their lobbying (or cuts if they are not).  

A couple of years ago I said that differential patterns of higher education investment meant that the country’s intellectual centre of gravity was moving west rather quickly.  Notwithstanding recent cuts in Alberta and British Columbia, it seems to me that this trend can only pick up steam in the next few years.  

May 07

Some Perspective on those Alberta PSE Cuts

So, everyone seems to be getting very upset about the Government of Alberta having cut budgets by 7%.  Of course, cuts are always very painful, but I think it’s worth stopping to consider the government’s perspective on this issue, which I think boils down to this specific graph:

Figure 1: Provincial Government Expenditures per FTE Student, Selected Provinces

 

 

 

 

 

 

 

 

 

 

 

 

(Since I know some of you will ask: Data is StatsCan, drawn from the 2012-13 CAUT Almanac: Provincial expenditures are from 2008-09, Table 1.3; Student numbers are from 2009-10, Table 3.2.  Yes, the numbers are a bit old – we can only do so much with StatsCan in its given state – and slightly more up-to-date numbers would change specific figures in each province. But they wouldn’t change the basic picture, which is that government $/student in Alberta is about 40% higher than in Quebec, 50% higher than in BC, and close to double what it is in Ontario).

So, if I’m the Government of Alberta, and looking at the fact that the Americans have worked out this shale gas thing, and the main prop of the provincial budget has gone all pear-shaped, and I’m contemplating the question, “where can I save some money”, you’d have to conclude that, in fact, universities – indeed, PSE generally – are one heck of a tempting target, no?

I mean, what’s Alberta buying for that extra money, exactly?  Slightly better-paid profs, which allow them to recruit better staff.  Somewhat lower teacher-student ratios, which is also good.  Lower tuition fees, for sure.  But they could probably do all that almost as well with $1300 or $1400 less, per student – especially true since per student funding would have to drop by about 35% before Alberta would find itself anywhere near the national average.

So are Albertans just whiners?  Well, no. See, the thing about university finances is that they’re supremely inflexible.  Salaries and benefits make-up about 50% of all spending, and dumping salary quickly is damn near impossible; it’s even harder if you’ve just negotiated a contract with staff, guaranteeing raises of 2-3% over the next four years.  If you can’t touch that, then a 7% cut quickly becomes a 14% cut in non-salary areas.  That’s pretty brutal, even if you are starting from a very high base.  And in Ontario, at least institutions can partly offset cuts through tuition – something Alberta institutions were forbidden to do.

There’s no question the Alberta universities are undergoing a wrenching change – the biggest, in fact, since the Bouchard government dropped the boom on Quebec universities in 1997.  But at the same time, let’s keep in mind how lucky Alberta universities are to begin with.  There isn’t a single Ontario university that wouldn’t beg to switch places with them.

April 02

Understanding Credit Transfer (Part 1)

Every once in awhile, the issue of credit transfer pops up.  Usually, it’s in the context of “learning efficiency” – some politician or deputy minister starts off with, “why can’t my son/daughter/constituent get full credit for previous learning”, and follows that with some diatribe about how universities and colleges “just don’t get it”, etc, etc.

Right now, this script is playing out in Alberta, where the Advanced Education Minister is asking institutions to create ten per cent more “seamless learner pathways”, whatever that means.

Now, it’s quite true that universities have incentives not to accept transfer credit, the reasons are both financial (receiving universities can make more money if they accept fewer credits), and reputational (high-status receiving universities will seem more exclusive if they accept fewer credits).  And there is certainly a public interest in reducing barriers of this kind.

The problem, though, is that there are some perfectly good reasons not to accept transfer credit.  Credits are not a universal currency; they need to be taken in particular sequences and combinations if they are to result in a degree.  One can’t take 120 History credits and expect to get a B.Eng.

Basically, a school accepting a transfer student needs to ask two questions: are this student’s credits of the right “level”?  And, are the credits relevant to the new program the student will be attending?  If the answer to either of those questions is no, then they are perfectly justified in rejecting the credit.

Most people focus on the issue of determining the “level” of credits – should it be done by bulky credit-transfer systems, like those in Alberta and BC? Or, should it be done through standards-based systems, like the European Credit Transfer System?  Those are important questions: the efficacy of the former seems to fall as the number of participating institutions rises, but nobody in Canada seems inclined to try the latter, because it’s too much work.

But, in fact, the bigger challenge is determining the relevance of old credits to new programs.  The whole point of specialized degree programs is that they offer something specific that others don’t; the more unique programs are, the harder it should be to transfer in credits.  This is why it’s completely baffling when politicians insist that institutions should simultaneously reduce program duplication and allow more transfer credit.  They’re two directives operating at cross-purposes.

And to make matters worse, the one thing usually ignored in this debate is actual data.  While n=1 might work for a features story, that doesn’t prove there’s a generalized problem.

But never fear, we at HESA actually have some real data on this subject, both from colleges and universities.  More tomorrow.

December 11

Manageable Debt, Part 2

Yesterday, we looked at the principles underlying the discussion on manageable student debt; today we examine how Canadian governments try to help students manage debt, and whether or not their efforts are as efficient as they could be.

Manageable debt loads are a function of three things: total debt, interest rates, and student income.  The last of these three is only vaguely susceptible to government control, but governments can control program interest rates and total debt loads through direct subsidies.  What remains odd about Canadian student aid is that our governments use these tools in such an ineffective manner.

Let’s start with interest rates.  Unlike the Netherlands, where, throughout the loan’s life, student loans have one low interest rate (equal to the government rate of borrowing), our system has negative real interest rates while students are in school, and then strongly positive rates (prime plus 2.5%) during repayment.  Adopting a more Dutch-like system would raise debt-at-graduation slightly, because interest would be charged while students are in school — for the average student, the increase would be about $2000.  However, monthly repayments would actually be lowered by about 8% thanks to lower interest rates after graduation.  Since the Dutch approach is essentially cost-free, it’s a bit of a mystery why we haven’t adopted it, given its obvious positive affects on debt-management.

Or take remission.  What matters in terms of debt manageability is debt at the time a student finishes; yet, nearly all provinces base their debt-management programs on annual debt levels.  Thus, in Ontario, someone who borrows $6,900/year for four years graduates with $27,600 in debt and never sees a penny of remission, while students who borrow $10,000 for a single year (a pretty typical situation, given the rules we have about students becoming independent in their fifth year of studies) get a $3,000 debt write-down from the province.

Why do we do this when it makes so little sense from a debt management perspective?  The answer, mostly, is History.  Remission programs were introduced in the early 1990s to replace grant programs that had become unaffordable.  Since those old programs delivered money on an annual basis, it made political sense for these new ones to do so as well.

But maybe it’s time to take another look at this.  Alberta has long had a policy of capping total debt per degree; and, moreover, it varies the size of this cap by program – doctors, sensibly, are allowed to take on a lot more debt than humanities students.  Properly targeted, this approach could be substantially more efficient at ensuring manageable debt than what most provinces are currently doing.  An Alberta Advantage, indeed.

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