Worthy Investments: The Economics of a Tuition Freeze

When students make the life-altering decision to attend university, they are making an investment. That investment is not only in themselves, but also in the university they attend. Whether they choose university X, Y, or Z, they generally select that school because they see it as the best investment for their future. And sooner or later, students expect to see a return on that investment.

Consider that the more you invest into something—say a stock or a bond—the more you expect to receive in return. So when a student invests in a university education with tuition costs that consist of increasingly higher student contributions, they should naturally expect to see a greater return.

Unfortunately, their return on investment has stalled, and in some cases, regressed. Students are investing more into their education and arguably receiving less, particularly as university budgets are stretched thin and post-graduation job opportunities become more sparse.

No, universities are not job-making factories, nor are they solely responsible for ensuring students are employed after graduation. It is also true that there are more reasons to attend university than the pursuit of a career, such as obtaining critical thinking skills, the fulfilment of attaining a formal education, and personal and professional growth. But it is naïve to think that the vast majority of students do not attend university in order to find a job—in fact, studies have shown that most grade ten and eleven students plan on attending university for that exact reason.

That’s why OUSA is asking for a fully funded tuition freeze. Students recognize that they have to pay into the system—they are a part of it, after all—but at current, unsustainable levels, they are undoubtedly paying far more than their fair share.

In 1980, student contributions to university operating budgets in Ontario, which include tuition and fees, were only 18 per cent. In 2014, accounting for inflation, that number reached 51 per cent. I’m no financial planner, but I do believe that if I invest 33 per cent more into something—I should probably receive a comparable amount in return, or at the very least, expect to.

So let me ask: are there more jobs available for university graduates? More co-op and paid internship opportunities? Are students being taught to articulate their soft skills to employers? Has the ratio of students to faculty in the classroom improved? Most importantly, are university degrees more valuable now than they were in 1980? If the answer to these questions, particularly the last one, is no, then why are students paying more than ever for a university education?

It is often considered distasteful in academia to frame the issue of education in dollars and cents, and we understand there is more at play here than "market feasibility". However, the same consideration and flexibility afforded private institutions in order for them to succeed could reasonably be applied to the success of our young people. When governments attempt to attract large, multinational corporations to their region, they usually employ the following techniques: up-front subsidies, a low overall tax burden, tax credits, and low operating fees. They do not saddle these corporations with high taxes and high fees that make running their business in that region unaffordable. Students should be treated with the same intent. It’s not as if their collective economic impact on the province is so much less than that of any corporation, and down the road, those same students could become the executives of the very companies governments covet most—if given the opportunity for an affordable, quality education.

This is a competitive world. If Ontario wants to attract, educate, and retain the best and brightest, it should create an environment that is affordable and one that provides students with a reasonable return on their sizeable investment. Freezing tuition is a good first step in that direction.

Justin Bedi
OUSA Research Analyst