Ontario’s universities and colleges are in a state of financial crisis. Across the province, post-secondary institutions, citing a lack of revenue needed to fund operations, are making devastating cuts to programs and issuing mass layoffs. This crisis was not only easily foreseeable, but completely avoidable.
It isn’t hard to understand why Ontario’s universities and colleges are struggling—they have long been starved of vital public funding and forced to make up the difference with tuition fees. When the provincial government froze tuition for domestic students, international students’ fees predictably became the main source of revenue growth for universities and colleges.
What the Ontario Government did not predict was that, in an effort to find scapegoats for the cost of living crisis,the federal government would restrict the flow of international students—and therefore tuition revenue. The risk of such a disruption was too obvious to ignore.
Ontario’s higher education system is shockingly underfunded
Ontario has long had the lowest post-secondary funding level in Canada, but the situation has worsened considerably since 2018.
Provincial governments outside of Ontario provided, on average, half of university and over 60 per cent of college operating revenues during the 2022-23 school year. Ontario, by contrast, covers less than a third for universities (29 per cent) and under a quarter for colleges (23 per cent).
Since 2018, provincial operating grants and contracts have stagnated. Due to high inflation, this translated into massive real revenue losses. By the 2023-24 school year, inflation-adjusted operating revenues (in 2024 dollars) provided by the province had dropped by $670 million for universities and $358 million for colleges.
Ontario has fallen far behind the rest of Canada in terms of per-student provincial funding. Compared to the average in the rest of the country, universities in Ontario received $6,900 less in provincial operating funds per full-time student, while colleges got $13,300 less.
Ontario’s manufactured higher education funding crisis
Government support should be the solid foundation of a well-funded higher education system. Successive governments in Ontario had gradually whittled away at this would-be foundation, leaving universities and colleges no choice but to rely increasingly on tuition fees from students to fund their operations.
In the 2018-19 academic year, Ontario imposed a 10 per cent tuition fee reduction and freeze for domestic students. At the same time, the province announced sweeping cuts to the Ontario Student Assistance Program (OSAP) that dramatically reduced the level of loans and grants available to students, while eliminating a recently established targeted free tuition program for low income students.
The drop in tuition was not enough to make up for falling student aid, leaving nearly all students who relied on OSAP worse off, but especially those from low income families.
While it failed to make the system more affordable, the tuition freeze has effectively closed off domestic student fees as a source of revenue growth. Since the tuition reduction was made without increasing public funding to replace lost revenue, it was a major blow to university and college finances.
Inflation-adjusted university revenues from domestic student fees fell by more than $883 million. On top of reduced provincial funding, annual revenue losses reached nearly $1.5 billion by 2023-24. Accounting for a growing student population, losses from these two sources added up to over $4,700 per full-time student over the last seven years.
While data is not as readily available for colleges, they also experienced substantial losses due to the tuition freeze. According to data published by the Auditor General of Ontario, inflation adjusted college revenues from domestic students fell by $178 million in the two years following the tuition freeze. Combined with the loss of provincial funding, this amounts to over a half-billion dollars of lost yearly revenue.
International students now pay over half of all tuition fees
Not that long ago, international student fees were only a minor part of university and college finances in Ontario. Over 90 per cent of post-secondary operating revenues come from just three sources: provincial funds, domestic tuition, and international tuition.
As the government whittled away at two out of three funding sources, university and college administrators reached for the only source of revenue growth remaining—international students. While they may not have had much choice in the matter, they enthusiastically pursued this agenda.
Over the last seven years, Ontario’s post-secondary system has grown utterly dependent on international student fees as a source of revenue. As of the 2023-24 school year, international students represented just under 20 per cent of the full-time student population, but they were paying more than half of all university tuition fees in the province. The college system was even more reliant, with international students accounting for 68 per cent of total tuition revenue.
Ontario must reinvest in post-secondary education
The current post-secondary financial crisis has an obvious cause—withdrawal of public funds, while freezing other revenue sources. Therefore, it has an obvious solution, restoring government funding to adequate levels. With Ontario in a provincial election, where do the parties stand on the issue?
The incumbent Progressive Conservative (PC) party does not mention post-secondary education at all in its campaign document. The Liberal platform issues only a vague promise to “fund universities and colleges fairly” so that they are not dependent on international students without actually stating what that means.
Both the New Democratic Party (NDP) and Green Party platforms call for a specific increase of 20 per cent in per-student funding, pegged to inflation, for universities and colleges. If such an increase happened in 2023-24, it would have added about $780 million in university operating revenues—a welcome boost after years of cuts, but an amount that still falls far short of what is needed.
Higher education affordability has received scant attention in this election. None of the party platforms address the domestic tuition freeze, a key factor driving the revenue crisis. To stabilize the system, provincial funding must replace the lost revenue from domestic tuition. Only the Greens touch on affordability in the promise to convert OSAP loans to grants for low and middle income students.
What would it take for Ontario’s higher education system to thrive again? In the 2022-23 school year, provincial funding would have to have been boosted by $3.4 billion for universities and $3.7 billion for colleges—a total increase of $7.2 billion— just to reach the average level of per-student funding in the rest of Canada. Unfortunately, none of the published party platforms call for anything even close.
