Higher Education Strategy Associates

Tag Archives: International Students

May 31

The Financial Landscape of Canadian Universities

I was updating some old charts on sources of university income for a presentation last week and they are kind of interesting so I thought y’all might want to have a look.

The first is the total income of Canadian universities over the past 35 years, in constant dollars.  What it shows is that total income has increased in a relatively steady fashion ever since the late 1990s (the slight spikiness of the last decade has more to do with uneven endowment income than anything else).  Total income for 2014-15 was around $35 billion, or more than double the figure of twenty years earlier, even after accounting for inflation.

Figure 1: Total Income of Canadian Universities, 1979-80 to 2014-15, in $2013

May 31 Fig 1 Total Income of Cdn Unis

But of course, student numbers have increased substantially over the past two decades.  In the late 1990s, we had about 650,000 university FTEs; in 2014-15 those numbers had increased to nearly 1.1 million.  So if we calculate income on a per-student basis the gains are less impressive.

Figure 2: Per-student income of Canadian Universities, 1979-80 to 2014-15, in $2013

May 31 Fig 2 Per student income

Income per student stayed roughly stable through the 80s and 90 at around $23,000 per student per year in constant dollars.  Income then began to rise sharply.  For most of the last decade the figure has hovered around $31,000, or about one-third higher than it was in the 1990s.

Now, this flies in the face of conventional wisdom.  Cutbacks are everywhere, right?  So how can there be so much money in the system?  Well, a few reasons.  The main one is that there actually hasn’t been much an increase in dollars available for operating funding.  On a per-student basis, government funds are now lower than they have been at any point this century, and if research funds are removed from the equation, then they are more or less lower than they have been at any point since these records began.  What has offset this is a rise in income generated from tuition (more on that in a second) and income from other sources (which is not the same as net income, so not all of this is available to the academic enterprise).

Now, a quick peek back at figure 1 shows that the big trend of the last few years has been a decrease in government funding (the blue area) being offset by an increase in student contributions (the green area).  That’s a real trend: after a decade of student contributions sitting at around the 20% mark, they have increased in the last few years to 25%.

Figure 3: Tuition Fees as a Percentage of Total Income, Canadian Universities, 1979-80 to 2014-15

May 31 Fig 3 Tuition Fees as Percentage

But before anyone goes around yelling about the evils of tuition fees, it’s worth remembering that tuition fee increases for domestic students over the past few years have been roughly inflation plus one percent.  The increases in tuition income per student, however, have been rising at about inflation plus three per cent.  How is this possible?  Simple.  International students and – to a lesser extent – increased enrolment in higher tuition programs.

This is the very simple lesson of the past half-decade.  Governments can allow public funding to erode quietly, keep domestic tuition relatively stable and institutions can make up for it all by enrolling more and more international students.  So far, it’s worked as a strategy, even if no one owns up to it actually being a conscious strategy.  But there are limits to this policy and eventually, something has to give.

It would be helpful if we started having out-loud grown-up discussions about what those limits are, and what we do when we hit them, rather than playing it all out in silence with nods and winks.  But that implies maturity among our politicians.  Based on their recent performances, I have my doubts.

May 30

The Resignation of Theresa May

London, May 4th, 2020

British Prime Minister Theresa May resigned her office today after a series of revelations that she had been in the pay of a foreign power since 2009.  Though both parties continue to deny the specifics of the story, a series of leaks from Universities Canada in the Canadian capital of Ottawa made it clear that the British politician had been receiving payments from this country’s universities for over a decade.

One Canadian higher education expert said he was not surprised by the revelations.  Said Toronto-based consultant Alex Usher, “It’s been evident for years that Theresa May was acting contrary to UK national interests, devising and implementing catastrophic immigration policies which resulted in tens of thousands of international students choosing Canadian schools instead of British ones.  It’s worth billions to Canadian universities.  Now we know why.”

Former Universities Canada staff, speaking under condition of anonymity, pinpointed the start of the operation in late 2009.  Shortly after the financial crisis of late 2008, Canadian universities became alarmed at the pressure the economic slump was likely to put on provincial education budgets.  Rather than try to put a lid on their own spending, most preferred to find new sources of revenue in order to keep spending high.  That new source was international students.

“It was kind of a no-brainer” said one source familiar with Universities Canada’s operations, on condition of anonymity.  “University Presidents could go head to head with Deans who wanted new facilities and faculty unions who wanted new hires and job security, or they could go enrol another couple of hundred students from India or the Middle East.  Which would you do?”

The problem, according to recently-obtained documents from Universities Canada, was competition.  Canadian institutions were nowhere near as accomplished at international recruitment as UK universities, and in the summer of 2009 the Canadian government had blindsided the sector by de-funding the Canadian Education Centre Network.  The question was how to overcome the competition.

Normally, Canadian attention would have focussed on Australia, traditionally the most aggressive international student recruiter.  But earlier that year news broke in Australia about racist attacks on Indian students in Melbourne.  That was potentially a boost for Canada as a destination, but there were fears that UK institutions might scoop up all these students instead.  That’s when a plan was hatched to undermine the UK as an international student demonstration.

“The pieces all just fell into place,” said the source.  “Universities Canada had a new President (Paul Davidson) who wanted to try new approaches to public policy.  And you had the Brown government in London that was self-destructing, likely to be replaced by a ridiculously inexperienced government led by David Cameron.  Subversion seemed like the obvious way to go.”

Universities’ Canada initial scouting on the Tories led them to believe that May was the likeliest choice for Home Office minister under a new Conservative government.  “Immigration and security were clearly going to be important files for the Conservatives to shore up their right flank and they needed a steady hand at the tiller.  Osborne was clearly going to be Chancellor, Hague was a shoo-in for Foreign Secretary, whilst Gove and Duncan-Smith had pet interests in other areas.  Basically, that left May.”

Though details on the meetings remain vague, at some point Universities Canada approached May and offered a deal: substantial sums of cash in return for adopting policies guaranteed to undermine the UK as an international student destination.

“We didn’t need to encourage her to take anti-migration positions,” said the anonymous source “because that was already baked into the Tory manifesto.  All we asked her to do was implement it in the stupidest way possible, by including students in the net migration targets.  We thought it might be an outlandish ask; turned out she loved the idea and implemented it beyond our wildest dreams.”

Canada saw results quickly.  After the Tories took power in the UK 2010, Canada saw its international student numbers rise quickly.  And, as predicted, the money from these students allowed Canadian institutions to keep spending even as provincial governments limited domestic tuition increases and allowed core funding to erode.

Not all of the success was planned, though.

“We didn’t see Brexit coming” said the Universities Canada source.  “And nor, obviously, did we suspect that the subsequent Conservative leadership race would end up being the comedy festival that it was, or that May would stay in power so long.  But what was really gratifying was that May continued her pro-Canada policies even after becoming Prime Minister, thus providing Canadian universities with billions in extra cash and obviating the need for any restructuring at all.

“Agent May was the most brilliant investment Canadian universities ever made,” said Usher.  “Without her the last decade would have been a lot more painful.  Now that she’s gone and her policies discredited, things are going to get much tougher for us”.

November 24

Who’s More International?

We sometimes think about international higher education as being “a market”. This is not quite true: it’s actually several markets.

Back in the day, international education was mostly about graduate students; specifically, at the doctoral level. Students did their “basic” education at home and then went abroad to get research experience or simply emigrate and become part of the host country’s scientific structure. Nobody sought these students for their money; to the contrary these students were usually getting paid in some way by their host institution. They were not cash cows they did (and still do) contribute significantly to their institutions in other ways, primarily as laboratory workhorses.

In this market, the United States was long the champion since its institutions were the world’s best and could attract top students from all over the world. In absolute terms, it is still the largest importer of doctoral students. But in percentage terms, many other countries have surpassed it. Most of them, like Switzerland, are pretty small and small absolute numbers of international students nevertheless make up a huge proportion of the student body (in this case, 55%). The UK and France, however, are both relatively large markets, and despite their size they now lead the US in terms of percentage of doctoral students who are international (42 and 40% vs 35%). Canada, at 27%, is at right about the OECD average.

Figure 1: International Students at Doctoral Level as Percentage of Total

Let’s turn now to Master’s students, who most definitely *are* cash-cows. Master’s programs are short degrees, mainly acquired for professional purposes and thus people are prepared to pay a premium for good ones. The biggest market here are for fields like business, engineering and some social sciences. Education could be a very big market for international Master’s but tends not to be  because few countries (or institutions, for that matter) seem to have worked out the secret for international programs in what is, after all a highly regulated profession. In any case, this market segment is where Australia and the UK absolutely dominate, with 40 and 37% of their students being international. Again, Canada is a little bit better than the OECD average (14% vs. 12%).

Figure 2: International Students at Master’s Level as Percentage of Total

Figure 3 turns to the market which is largest in absolute terms: undergraduate students. Percentages here tend to be smaller because domestic undergraduate numbers are so large, but we’re still talking about international student numbers in the millions here. The leader here is – no, that’s not a misprint – Austria at 19% (roughly half of them come from Germany – for a brief explainer see here). Other countries at the top will look familiar (Great Britain, New Zealand, Australia) and Canada doesn’t look to bad, at 8% (which strikes me as a little low) compared to an OECD average of 5%. What’s most interesting to me is the US number: just 3%. That’s a country which – in better days anyway – has an enormous amount of room to grow its international enrollment and if it hadn’t just committed an act of immense self-harm would have be a formidable competitor for Canada for years to come.

Figure 3: International Students at Bachelor’s Level as Percentage of Total


Finally, let’s look at sub-baccalaureate credentials, or as OECD calls them, “short-cycle” programs. These are always a little bit complicated to compare because countries’ non-university higher education institutions and credentials are so different. Many countries (e.g. Germany) do not even have short-cycle higher education (they have non-university institutions, but they still give out Bachelor’s degrees). In Canada, obviously, the term refers to diplomas and certificates given out by community colleges. And Canada does reasonably well here: 9% of students are international, compared to 5% across OECD as a whole. But look at New Zealand: 24% of their college-equivalent enrollments are made up of international. Some of those will be going to their Institutes of Technology (which in general are really quite excellent), but some of this will also be students from various Polynesian nations coming to attend one of the Maori Wānanga.
Figure 4: International Students in Short-Cycle Programs as Percentage of Total


Now if you look across all these categories, two countries stand out as doing really well without being either of the “usual suspects” like Australia or the UK. One is Switzerland, which is quite understandable. It’s a small nation with a few really highly-ranked universities (especially ETH Zurich), is bordered by three of the biggest countries in the EU (Germany, France, Italy), and it provides higher education in each of their national languages. The more surprising one is New Zealand, which is small, has good higher education but no world-leading institutions, and is located in the middle of nowhere (or, at least, 5000 miles from the nearest country which is a net exporter of students). Yet they seem to be able to attract very significant (for them, anyway) numbers of international students in all the main higher education niches. That’s impressive. Canadians have traditionally focused on what countries like Australia and the UK are doing in international higher education because of their past track record. But on present evidence, it’s the Kiwis we should all be watching, and in particular their very savvy export promotion agency Education New Zealand.

Wellington, anyone?

July 14


Morning, all.

Everyone’s writing a Brexit thinkpiece these days.  Literally, everyone.  I’m feeling left out.  So here’s mine.

1) Brexit isn’t a foregone conclusion.  Yes, Leave won 52% of a non-binding referendum based on a pack of lies about the results of future negotiations that would make the PQ blush.  But the UK government has yet to invoke Article 50, the clause in the EU constitution that signals a 2-year countdown to departure, and will certainly not do so until a new PM is chosen.They may not do so until after the French and German elections next year, and as the realities of negotiating a divorce sink in they may never do so (and – irony of ironies, there are not enough trade lawyers in the UK to negotiate such deals, so they are having to import them ) .  Even if they do start negotiations, the final settlement may be so far from the Leave fairytale that there would almost certainly be a huge demand for a second referendum before ratification.  So all this handwringing may be for naught.

2) Even if Brexit doesn’t happen, this episode can cause a lot of damage.  The UK hasn’t been booted out of the Erasmus student mobility program yet, but with racist incidents up 500% since the vote, you can bet there will fewer European students thinking London is a place they’ll feel secure.  The UK hasn’t been booted out of the Horizon 2020 European research scheme yet, but multi-national scientific teams have been pulling UK researchers’ names from their proposals in anticipation of Brexit.  And the idea that the UK will make up for the drop in funding?  Good luck with that.  Paradoxically, the longer the uncertainty about Brexit, the less likely the UK will actually pull the trigger; but conversely, the longer they wait, the greater the damage will be.

3) What will happen to International student flows?  Now this is where it gets tricky.  A lot of the focus right now is on EU students, and the fear that they won’t come to the UK because they will have to pay international student fees instead of domestic ones.  But domestic fees are already pretty high (and in humanities and social sciences are set well above the cost of delivery). If universities want to keep those students they could always grant concessionary fees to EU students and keep them paying exactly what they’re paying right now.  No, I think the real issue with EU students has to do with whether students still think the UK is a place they want to spend a part of their lives.  Lots of them now go assuming they can stay and work there: no more.  But it’s not clear that countries like Canada or Australia would be able to pick up on this loss.  If the point of going to London was because it was a “destination” rather than simply a chance to learn English, it’s not obvious that Melbourne or Toronto would be a satisfactory second choice.

It’s the same with non-EU students: you might think that there would be a lot of non-EU students who might be dissuaded from going either because of increasing incidence of racism or because London was no longer a way into the EU.  Since the Tories took power it’s been increasingly difficult for graduating students to immigrate anyway, so it’s unlikely to be the latter: Teresa May’s immigration saw that lot off years ago.  But the racism/intolerance thing?  That’s a vulnerability.

4) Can Canadian universities and colleges cash in on this?  Yes. Advertise a lot in Asian markets where UK currently does well.  Emphasize security and multiculturalism.  Talk about possibilities for immigration.  And do it fast, because odds are the Aussies are already there doing it.

Hope you’re all having a good summer.

September 15

Visible Minority Numbers Rise Sharply

I was poking around some data from the Canadian Undergraduate Survey Consortium the other day and I found some utterly mind-blowing data.  Take a look at these statistics on the percentage of first-year students self-identifying as a “visible minority” on the Consortium’s triennial Survey of First Year Students:

Figure 1: Self-Identified Visible Minority Students as a Percentage of Entering Class, 2001-2013














Crazy, right?  Must be all those international students flooding in.

Er, no.  Well, there are more students with permanent residences outside Canada, but they aren’t necessarily affecting these numbers, because they represent only about 7% of survey respondents.  If we assume that 80% of these students are themselves visible minorities, and we pull them out of the data, the visible minority numbers look like this:

Figure 2: Visible Minority Students, International* vs. Domestic, 2001-2013














*assumes 80% of students with permanent residences outside Canada are “visible minorities”

That’s still a heck of a jump.  Maybe it has something to do with the changing demographics of Canadian youth?

Well, we can sort of track this by looking at census data on visible minorities, aged 15-24, from 2001 and 2006, and (yes, yes, I know) the 2011 National Household Survey, and then marry these up with the 2001, 2007, and 2013 CUSC data.  Not perfect, but it gives you a sense of contrasting trends.  Here’s what we find.

Figure 3: Domestic Visible Minority Students as a Percentage of Total vs. Visible Minorities as a Percentage of all 15-24 Year-Olds, 2001, 2007, 2013














So, yes, a greater proportion of domestic youth self-identify as visible minorities, but that doesn’t come close to explaining what seems to be going on here.

What about changes in the survey population?  Well, it’s true that the consortium metric isn’t stable, and that there is some movement in institutions over time.  If we just look at 2007 and 2014 – a period during which the number of visible minority students almost doubled – we can see how a change in participating schools might have shifted things.

Table 1: Schools Participating in CUSC First-Year Survey, 2007 and 2013




















Here’s what stands out to me on that list.  York and Waterloo are in the 2013 survey, but were not there in 2007, which you’d think would skew the 2013 data a bit higher on visible minorities (although not that much – together, these two schools were only 7% of total sample).  On the other hand, UBC Vancouver was there in the 2007 survey, but not 2013, which you’d think would skew things the other way.  On the basis of this, I’d say a school participation probably contributed somewhat to the change, but was not decisive.

I could end this post with a call for better data (always a good thing).  But if a trend is big enough, even bad data can pick it up.  I think that might be what we’re seeing here with the increase in visible minority students.  It’s a big, intriguing story.

June 10

Crazy Managerial Imperatives Around International Students

One of the weirdest – and I mean totally bat-guano-crazy – things in Canadian higher education is the way recruitment of international students is managed.  Although the image of international student recruitment is often seen simply as a money-spinner for institutions, the fact of the matter is that most institutions aren’t coming close to maximizing revenue from this source.  And that’s not because of any high-minded motives of institutions turning away students they don’t think are suitable for their university experience, either.  It’s simply because of the way institutions’ internal budget controls work.

In a regular business, sales forces get the budget they need to hit revenue targets.  But if sales are going well, and management thinks they can get more money by investing money in sales, then the sales force will get more money.  Simple as that.

Compare this to what is happening at many institutions in Canada around international recruitment budgets, where the discussion is more along these lines:

Senior Admin (to international office):  Can you get us more international students?  We could really use the cash.  Budget cuts, you know.

International Office: Um, sure.  But can I have some extra money for that?  Recruitment actually costs money.  Not to mention support once we get them here.

Senior Admin: What?  More money?  Didn’t I just tell you we don’t have any money?

International Office: But… we’ll get our money back and more (NB. There are circumstances where this isn’t true, as described back here, but for the moment let’s assume it is).  You need to spend money to make money.

Senior Admin: Look, there’s a budget freeze on.  If I give non-academic units more money, there’ll be hell to pay.  You know how envious everyone already is that you guys get to fly all over the place?

International Office: (Desperately suppressing the urge to start listing decanal and vice-presidential visits abroad) But you’re not “giving us money”. We generate revenue!

Senior Admin: Yes, but there’s nothing in our budget process that allows us to reflect that.

International Office: (repeatedly bangs head against wall.)

Seriously, this happens.  The idea of investing money to make money later on isn’t entirely foreign (sorry) to universities – but doing so via the international office often isn’t possible.  To a large extent that’s because of their historical roots.  Most of them weren’t set up as revenue-generating units – until a decade ago they were mostly busy doing things like checking student’s health insurance, and helping profs on sabbatical deal with accommodation and paperwork.  As a result, they tend to get tied up with other administrative units like Student Services or Human Resources (which tend to take a hit when times are bad), rather than with revenue units like Advancement (which usually doesn’t).

(As an aside, I’m pretty sure this is one of the reasons international offices turn to agents, rather than building up their own networks abroad; the latter requires upfront investment, while the former just requires paying for students once they arrive – which, as you can imagine, is a lot easier to sell within the bureaucracy.)

If institutions are serious about playing the international game, they need to get serious about how they fund and manage it.  Too many haven’t bothered to do that.

July 15

More Money Than You Think

If there’s one thing everyone knows, it’s that Canadian universities have had a hard time of it during the recession during the last few years, yes?  Absolutely starved for income because of government cutbacks, etc etc.

Not so fast.  Check out this data on university operating budgets from the CAUBO/StatsCan financial survey:

Figure 1: Indexed growth in University Operating Budgets 2007-08 to 2011-12

That’s right – across the country, university budgets went up by 28% between 2007-08 and 2011-12.  That’s more than twice the rate of inflation.  (Note: if you’re wondering why Alberta skews high, its because MacEwan and MRU were re-classified as universities in 2009 – take them out and Alberta basically looks like BC).

How is this possible, you ask?  Haven’t governments been cutting back?  Well, the last two years haven’t been very good, but let’s not project that too far backwards.  In fact, during the heart of the recession years, the worst any major province fared (Ontario – big surprise) was to keep pace with inflation.  Across the four big provinces which make up 90% of our national system, spending was actually up nearly 20%.

Figure 2: Indexed Growth in Government Contributions to Operating Grants, 2007-08 to 2011-12

Those of you with heads for numbers may now be scratching your heads.  Government grants are a little over half of all institutional income.  So if overall income is up 28%, and this half of it is only up 20%, that means the other half – the student half  must be up by…

 Figure 3: Indexed Growth in Tuition Income, 2007-08 to 2011-12

Yeah, that’s right: tuition income is up 40%.  Four.  Zero.  How is this possible when Statscan says tuition fee increases are only about a third of that?  Because this is aggregate tuition and Statscan looks at average tuition.  One is larger than the other partly because of increases in domestic enrolments, but more importantly because of spectacularly increased international enrolments, which also carry much higher tuition fees.

Obviously, with extra students come extra costs, which is why it doesn’t necessarily feel like there’s 28% more money floating around these days.  Between enrolment increases and cost increases (mostly labour costs, including rise through the ranks (Link to: http://higheredstrategy.com/rise-through-the-ranks-rtr/)), Ontario is still slightly down on the deal in per-student terms, while other provinces are up, but only slightly. 

“Cutbacks” aside, governments are still spending far more than they were on PSE six years ago (even in Alberta) and institutions have been absolutely raking in cash from tuition.  We don’t have the 2012-13 numbers yet, but they’ll likely be in the 8-9% range everywhere except Quebec.  That means operating budgets overall likely expanded by about 3-4% last year, even as governments reduced funding.

Two final thoughts: One, if institutions still feel squeezed when income is rising twice as fast as inflation, it means there are some serious issues to work out on the cost side.  And two, God help us if those international students stop coming.



January 29

This Should Be Interesting

So, I see that the Government of Canada is going to have-a-go at designating Canadian institutions for their suitability to accept foreign students, and deny entry visas to students who wish to study at non-designated institutions.  Having watched this process unfold in the student loans arena for the past twenty years, or so, I can only say, “good luck with that”.

Designation isn’t a new thing in Ottawa.  The HRDC spent the better part of a decade trying to get a designation framework together with the provinces regarding student loans.  This was a tedious process, which took a lot longer than it should have.  The delay was partly because the feds had some goofy ideas about how to go about solving the problem, and partly because a couple of provinces were seriously obstructionist (some, out of a sense of lingering irritation over the CHST cuts; others, because their politicians were reluctant to irritate private career college owners, who inevitably would be upset by such regulations).  There was never any doubt that some regulation was needed; everybody at the time could see that certain career colleges – especially in Ontario, Newfoundland, and Nova Scotia – were blowing a hole in government expenditure plans.  But the mere fact that the federal government was trying to insert itself into the issue of deciding which schools should, and which should not, be eligible for government programs sent everyone into a tizzy.

Here’s the thing: immigration is a federal responsibility, but education is a provincial one.  So who gets to make the rules?  It seems as though, this time out, the feds have had the good sense to leave designation to the provinces, but it’s not clear how well that will go.  From the sounds of things, it seems unlikely that many public institutions will be excluded – which means that what’s about to occur is ten separate provincial reviews of the career college industry.

But this could get awkward.  On what grounds, exactly, would a province deny private colleges a shot at international students?  It couldn’t possibly have to do with quality concerns; if it did, there’d have to be questions asked as to why, on the one hand, provincial governments won’t let foreigners pay their money to attend these schools, but, on the other hand, have no qualms whatsoever about allowing domestic students to take public student loans to go there.  And in any case, the lobbying around this issue promises to be intense; career colleges are already out lobbying intensively on this.

It’s far from certain, therefore, that the ten provinces will arrive at anything like a common approach on this issue.  And this will leave the feds in an interesting position: should they accept a patchwork of rules from the provinces, or start trying to regulate themselves?  There will no doubt be some temptation to do the latter, but it would set off an almighty fed-prov bun fight.

As I say, this should be interesting.