The final objection to the idea I’ve been pushing for the last couple of weeks – namely, that higher education might be getting more affordable (which it is, to some extent, by most tuition-related measures of affordability) – is that tuition-related measures of affordability are in adequate and don’t cover and so do not do justice to the current “the cost of living crisis”.  Broadly, this is true.  But, I suggest, it’s not actually true for everyone, and even for those for whom it is true, it’s not clear how serious it is or what the policy response should be.

Before I begin, let’s be clear about one thing: in no way should this post be read as implying that many students have it easy.  Some do, of course; there’s somewhere around 5% – 10% who are on a truly generous free ride from the Bank of Mom and Dad and want for nothing very much.  But equally, there’s about 10% (or maybe a bit more) of the student population which lives in desperate straits, not able to eat three meals a day, having to make truly heart-rending choices between food, shelter and medicine just for the privilege being able to study.  The point of this blog is not to suggest that the experience of these students don’t exist, nor even that life can’t be miserable sometimes for the 80% that lie between the two extremes: it is, however, to ask the question: how much worse are things getting for students due to recent inflation?

Unfortunately, this exercise isn’t going to be a very quantifiable affair.  No one in Canada has conducted a decent student expenditure survey, along the lines of those conducted regularly by the Eurostudent project for over a decade so, our understanding of how students spend their money is pretty weak.  Statistics on rental costs are, by nature, incredibly difficult to figure out because the good/service being purchased is so heterogenous (“apartment rent” can vary enormously by size, quality, location, etc.); and while there are some new-ish tools to look at this phenomenon (e.g. the Rentals.ca monthly reports) they don’t go too far into the past, which makes long-term comparisons difficult.  In any case, the way inflation works for the budget-constrained at the lower end of the income scale (e.g. students) is less about raising overall expenditures but rather about forcing people into making different harder sets of choices spending which intrinsically are difficult to track/calculate.  Thus, expect this blog to be more discursive than data-driven.

Let’s start by defining “the cost of living” for students, and which bits of it are rising.  Food, certainly, is an element of the price index that affects everyone, albeit perhaps somewhat differently for those who live with family than those who live alone.  Only a minority of students own their own automobiles, and since those who take public transport have mostly been spared fare hikes in the last couple of years, increases in this part of the price index probably isn’t likely hurting many students.  Housing is the big one, but again, pretty close to half of the undergraduate student body lives with parents, family or relatives, so there’s a substantial chunk of students who are sheltered from all of this inflation.

In fact, at a broad level of generalization, you can pretty much say that the parts of the student demographic who are getting hit by inflation are the following six groups:

• Graduate students (few live at home, so nearly all exposed to worst of shelter cost inflation).
• Students with dependents (ditto).
• Students from rural areas who need to live away from home to attend post-secondary education.
• Undergraduates who could live with their parents (that is they live/study in the same city as their parents) but choose to live on their own.
• Undergraduates who choose to switch cities to study.
• International students.

(This is not an exclusive list, but it’s pretty close)

Now, these groups vary somewhat in terms of their “current alternatives to shelter” and their levels of class heterogeneity.   The first three groups, I think, are the ones worst affected and have the fewest alternatives open to them.  For them, higher shelter costs, at a minimum, means having to move to lower-quality housing or to a spot involving much longer commutes: at worst, it could mean homelessness.  As for the second trio…well, to some degree not living with parents is a matter of choice.  And what happens in some cases is simply that students decide to “opt-out of inflation” by moving back home (data from the Canadian Undergraduate Survey Consortium – which admittedly is not the greatest source data for cross-sectional data comparison given its shifting membership – suggests that the proportion of undergraduate students living with family is five-to-ten percentage points higher now than it was 20 years ago).  Is that a loss of utility for the student and the parents?  Probably.  But it saves a lot of money and it’s not obviously an outcome one would want to spend a lot of public money to avoid.

(Put it this way: I certainly wouldn’t spend it, but this Liberal government spends money on some damn foolish things in student aid, so who knows…)

So, to recap: we have somewhere around 40 percent of the student body, give or take, which is largely (though not completely) shielded from inflationary pressures by virtue of living with their parents.  The remainder, we can broadly separate into i) international students, ii) domestic students who for a variety of reasons – including in many cases substantial parental affluence – have lots of choices, and iii) domestic students with few options but to live independently.  All of the three groups are feeling similar pressures; the third has the least ability to cope with it in absolute terms. 

But in terms relative to the recent past?  Well, see, here’s the thing: that third group is basically exactly who benefitted the most from federal grant increases of $3,000 per student per year announced in the spring of 2020.  Are they worse off in 2022 than 2021?  Almost certainly given year-on-year inflation with no changes in student aid.  But compared to three years ago?  My guess is most of them are therefore still better off than they would have been under the 2019 aid regime, even if rises in the price of rent are to some extent offsetting lower net tuition.

I would argue that the group of students which has unequivocally been left significantly more exposed to inflation in the last couple of years is probably only about 25% of the student body.  And, further, at least part of this 25% are exposed precisely because they come from affluent families and have chosen to live away from home when cheaper options existed. 

The correct policy response here is left as an exercise for the reader.  Let me know what you come up with.