HESA

Higher Education Strategy Associates

Tag Archives: international tuition

February 06

“Xenophobia”

Here’s a new one: the Canadian Federation of Students has decided, apparently, that charging international students higher tuition fees is “xenophobic”.  No, really, they have.  This is possibly the dumbest idea in Canadian higher education since the one about OSAP “profiting” from students.   But as we’ve seen all too often in the past year or two, stupidity is no barrier to popularity where political ideas are concerned.  So: let’s get down to debunking this.

The point that CFS – and maybe others, you never know who’s prepared to follow them down these policy ratholes – is presumably trying to highlight is that Canadian universities charge differential fees – one set for domestic students and another, higher, one for students from abroad.  Their argument is that this differential is unfair to international students and that fees should be lowered so as to equal those of domestic students.

It’s not indefensible to suggest that domestic and international tuition fees should be identical.  Lots of countries do it:  Norway, Germany and Portugal to name but three and if I’m not mistaken, both Newfoundland and Manitoba have had such policies within living memory as well.  But the idea that citizens and non-citizens pay different amounts for a publicly-funded service is not a radical, let alone a racist, one.  A non-citizen of Toronto wishing to borrow from the Toronto Libraries is required to pay a fee for a library card, while a citizen does not.  This is not xenophobic: it is a way of ensuring that services go in priority to people who pay taxes in that jurisdiction.  If an American comes to Canada and gets sick, they are expected to pay for their treatment if they visit a doctor or admitted to hospital.  This is not xenophobic either: the price is the same to all, it’s just that we have all pre-paid into a domestic health insurance fund but foreigners have not.

It’s the same in higher education.  American public universities all charge one rate to students from in-state and another to those out-of-state.  Not xenophobic: just prioritizing local taxpayers.  In Ontario, universities are not allowed to use their tuition set-aside dollars – collected from all domestic tuition fees – to provide funding to out-of-province students.  Irritating?  Yes.  Xenophobic?  No.

International students are in the same position.  Their parents have not paid into the system.  Only a minority of them will stay here in Canada to pay into it themselves.  So why on earth should they pay a similar amount to domestic students?  And it’s not as if there’s massive profiteering going on: as I showed back here, in most of the country international fees are set below the average cost of attendance.  So international students are in fact being subsidized; just not very much.

In any event, even if we were charging international students over the going rate, that wouldn’t be evidence of xenophobia.  Perhaps it has escaped CFS’ notice, but there is not a single university in the country which is turning away undergraduate students.  According to every dictionary I’ve been able to lay my hands on, xenophobia means irrational fear and hatred of foreigners; yet now CFS has discovered some odd variant in which the xenophobes are falling over each other to attract as many foreigners as possible.

My guess is that most people at CFS can distinguish between “xenophobia” and “differential fees”.  What’s happened, though, is that part of the brain trust at head office simply decided to use an emotive word to try to stigmatize a policy with which their organization disagrees.  That kind of approach sometimes works in politics: just think of the success Sarah Palin had when she invented the term “death panels” to describe end-of-life counselling under American federal health care legislation.

But effectiveness is not the be-all and end-all of politics.  Sarah Palin is a cancerous wart on democracy.  You’d kind of hope our own student groups would try to avoid imitating her.

December 14

More on International Fees in Canadian Universities

Due to a few unexpected issues yesterday, we had to postpone the One Thought. With no further ado, here it is:

The day before yesterday we looked at what universities in different parts of the country are charging in terms of international tuition fees.  Here’s a quick graph to refresh your memory:

Figure 1: International Undergraduate Tuition Fees, by Province, Canada, 2016-17

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Figure 2 shows the same data but with a different Y axis.  Instead of showing the figure in dollars, let’s show the figure as a percentage of national average total institutional expenditures per FTE students (minus sponsored research), which in 2014-15 was $24,732.

Figure 2: Provincial Average Tuition as a percentage of National Average Institutional Expenditures per FTE student

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What figure 2 shows is that on average international students are covering more or less (95%) covering the cost of their education through tuition, but that is mostly because of policies in Ontario, where the figure is 120% of cost.  In the other three “big provinces” the fees are about 85% of cost, whereas elsewhere the figure is lower; as low as 38% in Newfoundland’s case.

Now, let’s think about these figures in terms of how Canada positions itself as an education market.  Are we a bargain player, or a luxury player?  This isn’t quite a straightforward question to answer because not everyone reports data in the same way.  But, basically, here’s the basic story: in the US according to the College Board’s Trends in College Prices 2016, 4-year private non-profits charge US$33,480 (for both national and international students); out-of-state charges at public 4-year universities are US$24,930.  In the UK, international fees vary substantially based on whether the course is a lecture course, a laboratory course or a clinical course; the Times Higher 2016 survey of fees, the average for these three types of courses are, respectively, £13,442, £15,638 and £20,956.  In New Zealand, the most recent data available comes from the Education Counts website; according to this, in 2015, the average tuition at universities was NZ$24,150.  So far as I can tell there is no “official” average for fees in Australia (not even for domestic students), but this 2014 survey shows that the average in “indicative fee” for international students is A$23,521.  Given that a couple of years have passed and fees certainly aren’t going down, we can probably round that up to an even $25,000.

Now, let’s translate all those figures into a common currency.  And let’s do it the way an international student likely would; namely, in $USD, using current exchange rates.  Normally, I do these kinds of comparisons in $PPP but since international students have to convert money to buy in each currency, exchange rates make more sense.  So, at current rates of exchange, here is what the competitive picture in each jurisdiction looks like:

Figure 3: Average International Student Tuition Fees, Selected Jurisdictions, in $USD

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In brief, prices for international students in the US are substantially higher than they are elsewhere in the Anglophone world: US privates are charging 85% more than Canadian universities, and the publics are charging about 35% more.   National averages for Canada, Australia, New Zealand and UK (lecture courses) are all very tightly bunched together at between $17-18,000 US.  Only Ontario seems to be trying to play around the same price point as US publics.

One question that arises from this chart is: why exactly aren’t universities in the rest of Canada charging more?  What do Manitoba and Nova Scotia, let alone Newfoundland, gain by having such low fees?  Well, part of the story has to do with the way provincial subsidies work in these provinces.  In both Manitoba and Newfoundland, institutions get block grants and so all money from international students is “additional” to institutional budgets (I have a feeling this is true in Nova Scotia as well but wasn’t able to confirm before publication).  They can set them low because they simply do not need to get income equivalent to cost of education, the way Ontario universities do.  But while that might make sense from an institutional point of view, it’s not as clear why that makes sense from a provincial one: what’s in it for provincial governments to provide this level of subsidy for international students?

One possible argument is that these provinces need to price low in order to attract students (Winnipeg winters are perhaps a tough sell in South East Asia); and since education is a funnel for immigration, maybe the way to think about this money is as a “loss leader” for future population growth.  But then again, we already know that Atlantic Canada has a harder time hanging on to students after graduation than the rest of the country , so maybe this isn’t such a winning idea after all.n

I’d argue in fact that low-pricing is self-defeating in international higher education.  A degree from a (reasonably) prestigious institution is in fact a Veblen good: higher prices drive greater demand because they give an aura of exclusivity.  It’s the one type of good where demand curves don’t slope downwards and institutions would be kind of crazy not to take advantage of that.  There’s a good case to be made that institutions in the Atlantic and prairie provinces could increase international student tuition.

 

December 12

How International Tuition Fees Keep Canadian Universities Afloat

Everyone knows that international student numbers have been going up over the past decade or so. What you might not know is what kind of effect that’s having on university budgets. So, today, a few brief tables and charts.

First, tuition fees for international undergraduate students. Nationally, these have been growing at a rate of inflation +4% over the past decade, which is substantially faster than the rise in domestic tuition (roughly, inflation +1.5%). Nationally, the average international tuition is $23,589, but both this figure and the recent run-up in tuition is due almost entirely to what is going on in Ontario. Ten years ago, international student tuition in Ontario was barely different from the national average; now, after a decade of annual increases of inflation +6%, it lies a full $6,000 above it.

Figure 1: International Undergraduate Student Tuition, Canada and Selected Provinces, 2006-07 to 2016-17, in constant $2016

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Now of course, if you have increasing numbers of international students paying increased fees, it stands to reason that their financial contribution is also increasing. Now, no institution actually publishes data on the amount of money they receive from international students, so no one has ever looked at the extent to which Canadian universities are dependent on that type of revenue with any degree of specificity. But if one simply multiplies out student numbers (using data from Statscan’s Post-secondary Student Information System) by average fees (from Statscan’s Tuition and Living Accommodation Costs Survey), one can get a rough sense of the magnitude of their contribution (some quirks in the way Statscan deals with business students means we can’t quite capture data on MBA students accurately, so we are probably undercounting a bit). What we find when we do this (see Figure 2) is that nationally, roughly 23% of all fees paid come from international students.

Figure 2: International Students’ Fees Paid as a Percentage of all Fees Paid, Canada and Selected Provinces, 2008-09 to 2013-14

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Now a careful examination of Figure 2 reveals some interesting facts. The proportion of fees coming from international students is highest in Quebec (44%) not just because fees are high, but because tuition for domestic students is so low. Conversely, the proportion in Ontario is relatively low even though international tuition is high because domestic fees are also high.

We can move on from this to show what percentage of all operating revenues are accounted for from international fees, which I show below in figure 3.

Figure 3: International Tuition Fees as a Percentage of Operating Income, Canada and Selected Provinces, 2008-09 to 2013-14

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Nationally, income from international students at Canadian universities was equal to a little over 7% of operating income in 2013-14 (also true in Ontario, which you probably can’t see on the chart because the lines are almost entirely parallel); however, the averages by province vary enormously, from 12% in British Columbia to 4% in Alberta to even lower in Prince Edward Island and Saskatchewan.

(In the preceding graphs I stuck to only showing the largest four provinces, because including all ten makes for a gory visual mess; but for all the other provinces, information for 2013-14 is shown below in table 1. And for those who might be kvetching because I am not presenting college data – we asked colleges for data to do precisely this kind of analysis, and by and large they refused.)

Table 1: Data on International Fees, Canada and Provinces, 2013-14

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A final point here: at most Canadian universities, total operating income plus capital expenditure per student is in the range of $25,000 a head. What that suggests is that in most provinces, international students, despite paying what is allegedly “market” tuition, are in fact still not paying the full cost of their education and are in fact being subsidized. Only in Ontario is this clearly not the case; elsewhere, it would appear that foreign students – far from being “cash cows” – are in fact being subsidized by Canadian taxpayers.

More thoughts on this tomorrow.

November 28

Canadian Enrollment Data, 2014-15

Statistics Canada published the 2014-15 enrollment data last week and I thought I would give you a bit of an overview.  The data is based on snapshots of enrollment taken in the fall, so we’re talking a 24-month lag here (most other OECD countries can do this in 12-18 months), but this is Statscan so just be glad you’re getting any data at all.

The headline news is that enrollment in 2014-15 was up – barely – from 2.048 million to 2.055 million students (i.e. by 7,000 students), which puts enrollment at an all-time high. As a percentage of the Canadian population, students are thus now 5.8% of the Canadian population.  Just to put that into perspective: that’s roughly the population of Saskatchewan and Nova Scotia combined.  if students were a province, they would be the country’s fifth-largest.  Students make up roughly the same proportion of the population that works in education, law, social services and government services occupations combined, or roughly 5.5 times the number of individuals employed in natural resource occupations.

Figure 1: Enrollment by Level and Intensity, 1994-95 and 2004-05

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But while enrollment increased at both universities and colleges, there are some interesting dynamics if you poke around a bit under the hood.  The main one is that part-time enrollment fell substantially for the second year in a row at universities and third at colleges.  Full-time and part-time enrollments are going in completely different directions at the moment.

Figure 2: Changes in Full- and Part-time student enrollments, 2010-11 to 2014-15 (2010-11 = 100)

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The other really interesting trend in enrollments has to do with international students.  Over the past five years, total full-time enrollment at colleges and universities has increased by 126,000.  48% of that increase is accounted for by international enrollments.  Or, to put that another way: domestic student enrollment has increased by about 5%, but international student enrollment has increased by 56%.  These figures are shown below in figure 3.  Apologies for lines not being distinct, but that’s a factor of the trends being almost identical in both the college and university sectors.

Figure 3: Changes in Domestic and International Full- time enrollments, 2010-11 to 2014-15 (2010-11 = 100)

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That last graph is especially important when you think about institutional finances.  Assuming (at a high level of generality) that tuition income from international students is about three times what it is for domestic students, that implies that over 75% of the increase in tuition revenue over the period 2010-11 to 2014-15 comes from international students.   I’ll try to get into more detail on this at some point before Christmas, but by my back-of-the-envelope reckoning that makes international student fees responsible for almost exactly 50% of total increase in operating funds over those five years.

Let that sink in for a bit.  Fifty percent.

There are a lot of implications to that number.