On Monday, Alexi and I attended the Higher Education Quality Council of Ontario’s (HEQCO) event with former BMO chief economist Tim O’Neill. He recently authored a review of Nova Scotia’s university system that has created considerable debate in the province. The report is wide-ranging and touches on institutional restructuring, research, funding, and accountability, but amongst the most controversial suggestions is the deregulation of university tuition fees, accompanied by improvements to the student financial assistance program. HEQCO invited him here to share his findings with stakeholders in the Ontario post-secondary education sector.
Before I share my comments on the event, I want you to imagine the following scenario:
A provincial government in Canada is facing significant budget deficits with no easy way out. It looks to its largest expenditure – health care – and tasks a well-respected economist to review its health care system and propose recommendations for improvement. The economist undertakes the review and hears from hospital CEOs across the province that hospitals are underfunded and need more revenue to meet demand and offer quality care. The economist also notes that healthy residents in the province are significantly subsidizing the care for unhealthy people. Additionally, the economist suggests that those who use the health care system receive significant personal and economic gain from it.
The economist therefore concludes that to meet the revenue demands of the hospitals that a user fee should be implemented. It is noted that there is a social good to having a healthy populace, so that public funding should not be entirely eliminated. However, the cost that should be borne by the public for that good is unknown, so the user fee should simply be deregulated to let the hospitals and market demands determine the cost. The report also importantly notes that many low-income people will not be able to pay the user fees, and so suggests that the government provide loans for health care costs and cap the amount of debt that can be incurred.
Residents respond that these fees would compromise accessibility and equity of health care in the province. The economist responds that low-income people already have poorer health outcomes than high-income people, and that the economist hasn’t found any evidence from other jurisdictions that increases in user fees, coupled with the availability of government loans, would make this unequal situation any worse.
Other residents suggest that making this change disproportionally hurts those that are unhealthy. The economist responds that just because healthy people have subsidized unhealthy people in the past doesn’t mean it should continue. Further, it is fairer to directly charge those that use the service than to use the income tax system which draws more from all higher-income earners, regardless of how much they use the health care system.
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I am obviously being sensational in my analogy to the O’Neill report. Higher education is not health care. The difference between someone who attended post-secondary education and someone who did not is not the same than someone who is dead or alive. There are also several pathways of higher education with different average economic outcomes. But as I was sitting in the Tim O’Neill event, I couldn’t help but think of the public reaction that would ensue if his proposal to deregulate user fees for university was adopted for health care.
I have many thoughts on the different recommendations contained in O’Neill report, but I will try to limit myself to a few salient points. It is widely recognized, as Tim O’Neill noted on Monday, that there is a public benefit to higher education. Success in the new economy is increasingly dictated by the knowledge and innovation of our citizens. Raising the educational attainment of the population drives growth in the economy, increases the tax base, lowers crime, improves health, and reduces poverty. So if one recognizes that there is a public benefit and agrees that public dollars should be invested in its pursuit, the public investment must be protected.
Granted, significant private benefits exist as well. One could argue that if these benefits really do accrue, then the student will contribute significantly more to the tax base – and thus to the post-secondary education system – through the progressive income tax system later in life. Indeed, the Canada Millennium Scholarship Foundation has found that the 22% of Canadians with a university degree contribute over 41% of taxes. Others would argue that a cost sharing between government and students recognizes that not all of the benefit accrues to the public and it also likely incents timely completion. This is why the Ontario Undergraduate Student Alliance has long advocated for a return to a 2 to 1 cost sharing model, in which two dollars of government funding are provided for every dollar of student tuition. As the government here in Ontario develops its new five-year funding plan for post-secondary education, we urge the province to keep this balance in mind, given student contributions are now surpassing government funding at many institutions.
An additional point of concern for Nova Scotia is the proposed model of higher tuition and greater student assistance. While it does not directly state it this way, the report could be construed by some to be advocating that this model will improve accessibility. The suggestion from many is that higher tuition, with a portion of tuition increases being directed to aid for low-income students, is the solution to access concerns. This is essentially the model we utilize here in Ontario with OSAP and the tuition set-aside. Unfortunately, here in Ontario, the participation gap between high-income and low-income students increased every year from 2003 to 2007, which is the most recently available data from HEQCO.
To say that these participation gaps are due solely to increasing tuition would be unfounded. Research has shown that financial factors, such as debt aversion, sticker shock and a lack of understanding on the rate of return of higher education are significant barriers to access. But, it almost goes without saying that research has also shown that parental attitudes, academic abilities, motivation, geographic distance, lack of information, and cultural barriers are equally, if not, more important considerations in decisions to pursue higher education. Obviously, solving accessibility concerns is going to require more dedication and leadership from institutions and government than the simplistic answer of improving financial aid programs while tuition rises. Further, the elimination of tuition would not eliminate financial barriers or the need for financial aid, considering tuition makes up only one-third of the cost of attending university away from home.
Beyond accessibility, government must also monitor the affordability of higher education. As tuition has now risen beyond the sum that a student can realistically save over the summer, those students that do not receive assistance from their parents or through OSAP are increasingly having to turn to private loans to finance their education. We also need to develop better solutions on how to accommodate those students who are adverse to loans and debt, and are therefore self-selecting out of post-secondary education.
One further point is the claim was also made at the event that all international jurisdictions have accessibility concerns, regardless of tuition fees. People also tend to point to Newfoundland or Quebec where tuition reductions or freezes have not shifted participation rates considerably as reasoning for why tuition increases are acceptable. While it is true that there has been no strong demonstrated relationship internationally between overall participation and tuition fees, there are several European countries that have more equitable participation than Canada. For example, Finland which charges no tuition has much more equal post-secondary participation rates based on socio-economic status and parental education than here in Canada. But to use isolated examples and assume tuition fees are the sole contributing factor is not fair nor how one should create public policy. A more fulsome international analysis of the relationship between costs and access from OUSA can be found HERE.
Finally, I am now more eager for January when we will release our strategy for the Ontario government to improve accessibility of post-secondary education with our sector stakeholders. The strategy takes into account the available research, results from our focus groups with underrepresented students, and our consultations with stakeholders and community organizations. It touches on all of the barriers to accessing higher education, including that of tuition fees and strengthening financial assistance.
Ontario continues to lead Canada and most of the world in attainment for post-secondary education. Maintaining this competitive advantage and creating a more equitable society will require drawing more underrepresented students to our institutions. The future of our province depends on it.
-Sam Andrey