Seats vs. money

Earlier this year, the provincial government announced a major expansion of post-secondary education in BC—the creation of 25,000 new college and university seats between now and 2010. This is good news, something education advocates had been seeking. But before we hand out top marks to the government, we need to look at the whole story.

There are two main barriers to post-secondary education. First, unlike the public school system (K-12 education), there are a limited number of spaces available. In 2004, for example, this meant high school grades in the 80-85 per cent range to get into SFU. Premier Campbell even mused recently that in today’s competitive climate his high school marks might not have made the cut.

Second, and also unlike K-12, there is a financial cost to attend school, including tuition and other compulsory fees. Governments have to make a choice about how much post-secondary education will be financed publicly and how much will be paid for privately by students and their families.

The challenge for the provincial government is to adequately fund the 25,000 new seats—and the post-secondary system overall—so that BC’s colleges and universities can make ends meet without further tuition fee hikes. Put another way, the government needs to expand the number of students in the system and ensure that there is adequate funding for those students.

The province should bear in mind some lessons from the expansion of post-secondary education that began in the early 1990s, and saw some 42,700 new seats created between 1991/92 and 2003/04.

Expanding the post-secondary system is good policy. Historically, BC met its needs for skilled and professional labour through high levels of in-migration. We are now better able to meet our own labour market needs because of higher post-secondary participation rates.

Participation rates are also related to the cost of getting a post-secondary education. From 1996/97 until 2001/02, when tuition fees were increasing dramatically in the rest of Canada, they were frozen in BC in order to improve access.

The combination of new seats and frozen tuition would have been a “golden age” for BC’s post-secondary institutions, but for one thing. In the years prior to the tuition freeze, funding did not grow fast enough to accommodate both the expansion of seats and the cost pressures (for salaries, maintenance and so on) faced by institutions. After adjusting for inflation, per-student funding dropped significantly during this period—before the tuition freeze became government policy.

The funding crunch faced by universities and colleges in the late 1990s is often blamed on the tuition freeze. In fact, the crunch had more to do with insufficient operating funds provided by the province, which was undergoing a period of fiscal restraint, than the tuition freeze itself.

In 2002/03, the provincial government chose to relieve cost pressures by ending the freeze. For students, tuition fees have skyrocketed. For example, undergraduate arts tuition fees at universities have doubled in the past three years. Fees for professional programs have grown even more substantially.

For many students, especially those from low-income backgrounds, this means mortgage-sized debts upon graduation. Some students are choosing to take fewer courses and/or are forced to hold down a job while attending school. The elimination of provincial grants to low-income students is making this situation worse.

The Ministry of Finance estimates that total fees for students will be $808 million this year, an increase of $356 million above 2001/02 levels. This is a rough indicator of how much additional public funding would have been necessary to provide the same level of post-secondary services this year, had the tuition freeze stayed in place.

Those in favour of letting tuition fees rise argue that students are still “heavily subsidized” by the government. But this ignores the fact that graduates earn higher incomes and therefore pay higher taxes over a lifetime. When these extra taxes are considered, students more than pay back the government’s investment.

BC needs both more post-secondary seats and a new tuition freeze to ensure that a post-secondary education is affordable. If BC’s colleges and universities continue to raise tuition fees to pay for new seats, a good policy (adding 25,000 new seats) will have backfired.

--Marc Lee is an economist in the BC office of the Canadian Centre for Policy Alternatives, and is the co-author (with John Malcolmson) of a new report, Financing Higher Learning: Post-Secondary Education Funding in BC, available at www.policyalternatives.ca. Marc benefited from generous government grants and low tuition fees during his university career.