Higher Education Strategy Associates

When Should McGill Go Private? (Part 3)

Over the last couple of days, we’ve seen how McGill could at least theoretically survive leaving the public higher education system and cope with a loss of its $272 million teaching grant. About 85% of the resulting funding gap could be closed on the revenue side; the rest would need to come from internal re-allocations (basically, shifting away from graduate studies and losing a faculty or two).

Probably the biggest implication of abandoning public funding is that the numbers don’t work unless McGill focuses more on undergraduates and less on graduate students, at least in the medium term. That’s a potential turn-off to a lot of the faculty members upon whose shoulders McGill’s reputation rests, and could tilt the balance in any discussion about the merits of going private.

The short-term equilibrium needed to make the plan work involved setting tuition at Ontario levels plus about $3000 and increasing enrolment slightly. But that’s a very short-term solution: McGill’s reputation for quality can withstand higher prices and larger classrooms for awhile, but over time that won’t be sustainable. Quite apart from the need for eventual capital improvements, the school will eventually have to develop a value proposition different from that of public institutions, and that almost certainly means smaller class sizes. The ineluctable logic over time is a significantly smaller school charging prices that are at least in the $20,000 – $30,000 range. But that’s really uncharted territory as far as student price-response goes. That people would pay a premium to go to McGill is almost unarguable. But what kind of premium? Fifty percent more than (say) Queen’s? Probably. One hundred percent? Now the issue of the value proposition becomes pretty acute.

With more money coming through students and their parents, student aid would also start to become a major issue. The province of Quebec wouldn’t be able to cut McGill off, but it would almost certainly find a way to limit the amount of tuition that would be counted as “need” (much as Ontario has done for the past decade). This may not matter much – one implication of this plan is almost certainly a shift in the student body to accommodate more out-of-province students. Most likely, McGill would need to start pumping increasing proportions of new tuition income into its own student aid programs, in exactly the same way U.S. private schools do. But head down that route and every extra dollar returns ever less net revenue; pretty soon you’re chasing your own tail.

Going private would involve some very serious trade-offs for McGill; it’s by no means a panacea. But at least McGill has the luxury of such a debate. For other Quebec institutions, the remainder of the decade looks bleak indeed.

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One Response to When Should McGill Go Private? (Part 3)

  1. Anonymous says:

    Truthfully, I am completely shocked that someone in Canada could even think of meaningful universities going private (outside some small ones in places like BC and ON).

    To actually work out the numbers and come up with the ideas shows how far behind Canada is developmentally from the rest of the advanced world where education is free for all and largely equal (England’s aristocratic and France’s revolutionary systems aside). The fact that students were in the streets of Quebec just months before protesting for capping and abolishing tuition fees and for consultants to come up with new ways to charge them is quite interesting indeed.

    Nonetheless, quite a thorough analysis of what can be done to turn McGill into the Harvard of Canada. Should be noted though that once upon a time York was to become the Yale of Canada, but that did not work out as planned either.

    One should also remember that what can be given can be taken. If the government really wanted they could legislate McGill to do whatever they wanted given that it was itself created by government legislation (see http://www.mcgill.ca/secretariat/charter-statutes/quebec). That a university could first break the law (increasing tuition) and then decide to go private without the control of the government shows the real problems in the system:

    The universities serve themselves not the public, a problem Quebec (but not the rest of Canada) seems to have understood.

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