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OTTAWA— Public investment in postsecondary education is paid back to governments in full and helps to reduce the financial risks taken on by students, says a new study released today by the Canadian Centre for Policy Alternatives (CCPA).
The study, by economist and CCPA Research Associate Hugh Mackenzie, finds public funding for postsecondary education is repaid many times over by graduates in the form of higher personal income taxes paid on the income they earn. According to the 2006 Census, 25-34 year-olds with a BA/BSC working full-time made $50,857 compared to $37,475 for high school grads.
“The length of time it takes governments to recoup their investment in postsecondary education in the form of income taxes ranges from a low of 10.3 years in Ontario to 17.5 years in Saskatchewan,” says Mackenzie. “While completely eliminating tuition would increase the payback period, those increases are minimal—ranging from 0.6 years in Quebec to 2.6 years in PEI and BC.”
In addition, the study demonstrates the claim that subsidized tuition amounts to an unfair, regressive income transfer from lower-income families to middle- and upper-income families is simply not true.
When the source of revenue required to fund postsecondary education is taken into account, subsidies for postsecondary education redistribute resources away from higher-income households and towards lower-income households, not the other way around.
“Subsidies for public education serve to level the playing field when it comes to access to higher education. Constraints on those subsidies contribute significantly to the affordability squeeze experienced by many middle-income families,” Mackenzie says. “Postsecondary education is indeed a good investment for individual students, on average. It is also a very good investment for society as a whole.”
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Learning and Earning: The Impact of Taxation in the Higher Education Debates is available on the CCPA website at http://policyalternatives.ca
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