Our Schools/Our Selves Summer 2003

Private dollars in Canada’s “public” colleges and universities: Who really pays?
July 1, 2003

This spring the Canadian Centre for Policy Alternatives released its annual guide to Canadian post-secondary education—a study comparing the provinces’ commitment to higher education and ranking them accordingly. This is the fourth year of Missing Pieces: An alternative guide to Canadian post-secondary education, and we, the authors, have noted the ways in which this exercise has allowed us to refocus our analysis of higher education and ask a number of questions about the nature of our public system and the degree to which it serves and is accountable to the public.

While ranking the provincial governments according to their level of commitment to maintaining high quality, equitable, accessible and publicly accountable education in each province, it became clear that post-secondary education in Canada is becoming less and less public—with grave repercussions. So we used the opportunity of this fourth edition of Missing Pieces to ask the following questions: what would a fully public system of higher education look like; to what extent do we not have one; and how might we move towards the realization of that goal.

In each year of this project we have examined post-secondary education based on four principles: quality, equity, accessibility and public accountability. Each of these principles is closely linked to the others; for example, what good is an affordable and accessible education if it’s of low quality? And similarly, what’s the use of an excellent education if only the wealthiest or most privileged can afford it, and if it’s only accountable to a handful of private individuals or corporations rather than the entire public it’s supposed to serve?

Public education?

It’s important to look at how higher education is being increasingly privatized with the increase in tuition and other fees because it’s here that we really see the disconnect between accessibility as a concept and as a practice.

To what extent is higher education publicly funded, and to what extent is it privately funded? According to the most recent data from Statistics Canada, government grants range from 66%--two thirds—of the post-secondary education (PSE) budget in Quebec to about 43% in Nova Scotia and 48% in Ontario.

There’s a perception that tuition fees are somehow not “private funding” of higher education. In fact they’re increasingly socially-accepted user fees. And the degree to which PSE budgets are funded by tuition fees is directly proportionate to the level of provincial government commitment to maintaining a public system of higher education. So, while students fee represent 11.4% of PSE budgets in Quebec, they represent almost 27% in Nova Scotia and over 25% in Ontario.

Private sources account for a certain percentage of PSE budgets as well, and range from just over 4% in PEI to almost three times that in Ontario—over 12%. Quebec sits at about 10% and Alberta at about 9%. Note the disparity between provinces—the fact that some are better positioned than others to attract private revenue sources, reinforcing revenue differences between provinces. This extends to institutional fundraising as well—how many schools can compete with the University of Toronto’s $1 billion campaign? I’m not arguing for more private funding for all provinces—on the contrary, I’m pointing out that this method of funding education is inherently unbalanced and, consequently, no way to ensure an adequately funded system of higher education across the country.

The problem of institutional dependence on private finance is heightened as public funding continues to be eroded, and this is seen at all levels of the education system. To what extent will university or college policies be pressured to suit that of their sponsors or funders? And what does this ultimately say about the public accountability of these institutions?

So, given that higher education is funded less and less out of the public purse—less than 50% in some provinces—and more and more out of private sources, we need to look at the implications of our increasingly privatized system of public-ish post-secondary education.

First, the downloading of the costs of higher education.

Income Contingent Loan Repayment (ICLR)—New Zealand

While promoted as a method of making repayment of student loans more “sensitive” and realistic—tying repayment times to income—it downloaded the full cost of education on to students. In New Zealand, there has been some analysis of the impact of ICLR, by gender and by race. The research determined that the average New Zealand woman of Pacific descent (as opposed to Maori or European) will pay $12,878 more for the same qualification as her Caucasian male classmate, demonstrating the degree to which ICLR has further widened the gender pay gap in New Zealand.

The Canadian situation is somewhat more difficult to determine because of the comparable lack of information about student debt loads. However, this past March the Millennium Scholarship Foundation commissioned a study by EKOS Research Associates that found “the average for students in year 5 or more of their education is roughly $20,000. Almost one in three students owe money to private sources, with an average balance of just over $8,000. Balances can climb almost as high as those from government (up to $14,000).”

Second, the reinforcement of existing socioeconomic inequities:

Reducing access

There has been some recent analysis of the British model of higher education. In comparing participation in higher education by social class through the 1990s, Steve Machin, Director of the Centre for the Economics of Education in the Department of Education and Skills found the following shift. In 1991/92, 13% of children from the lowest social class attended university, but that number dropped to 7% by the end of the decade, after the Blair government implemented tuition fees and abolished grants. During that same period, participation by children of the professional class increased from 55% to 72%. In other words, better qualified low-income children have had their accessibility reduced while lower qualified professional class children have seen their accessibility increase.

Finally, how is the privatization of both the costs of higher education and the resultant debt load being played out in Canada?

Deregulation tuition fees

The most extreme form of the downloading of the full costs of education onto Canadian students is seen in the deregulation of tuition fees for professional programs. The University of Toronto’s decision to increase law school tuition fees to $22,000 annually prompted strong opposition from the Canadian Bar Association. The University Provost’s own study indicates that 66% of students in that law schools already come from wealthy families, and 17% from less well-off backgrounds.

In Canadian medical schools, rising tuition fees and resultant debt loads have also had an effect on both geographical choices and areas of specialization for graduates. Consequently, we are experiencing a critical shortage of family doctors in Canada for the first time. When considering the time period necessary to educate and train doctors, this shortage is one which will take years to overcome—at a time when our health care system is already being pushed to the breaking point. And as in law, medical schools are becoming the domain of the wealthy. A study published in the Canadian Medical Association Journal determined that there was an increase in self-reported family income between students who entered medical school in 1997 and those who entered school in 2000. This appears to have been most true in Ontario, where, for example, the number of respondents with a family income of less than $40,000 declined from 22.6% to 15%.

Where is the money?

Public money used to privatize the system

This is not to say that there is no money being targeted towards higher education. In fact, the federal government has put quite a bit of money into research, most recently in the last Federal Budget.  The concern is that this money will amount to building an elaborate veranda on a crumbling house. Furthermore, much of this federal money requires matching funds, either from the university or college, or the private sector. Clearly, some institutions are better positioned than others to attract the necessary corporate money—or to match the funding with what’s found in university coffers. There is also the profound and legitimate concern over the required presence of the private sector in receiving public money, and the degree to which certain private interests may trump public ones.

The fact is, Canadian institutions of higher learning need a major injection of cash to restore crumbling buildings, depleted libraries, facilities for students, the hiring of professors, and the care of institutions through well-compensated employees long before they can even think about targeted funding for research. However, it’s targeted research funding that gets the headlines, and the label of “excellence.” But again, which universities and colleges are most likely to benefit? Based on what? And how does this ensure that all students, regardless of their income, be assured of a high quality education that won’t impoverish them upon graduation?

The federal government’s enthusiasm for RESPs—and the federal contribution in the form of the Canada Education Savings Grant does little to address the issue of inaccessibility in post-secondary education. First of all, RESPs clearly benefit those who can afford them: as of 1999, 16% of children had RESPs in their name. Among children in families with household incomes of less than $30,000, only 6.3% are beneficiaries of RESPs, compared to almost 30% in households with incomes over $80,000. Furthermore, the government contribution—which precipitated a marked increase in RESP investments—could be much more effectively spent. In 2002/03 the Canada Education Savings Grant—that’s the federal contribution alone—amounted to $423 million. That would have eliminated tuition fees for 20% of Canadian university students. Even the C.D. Howe Institute has called this “a poorly targeted use of public money.”

Why should we care about accessibility in higher education?

Where are the benefits?

According to a study commissioned by the Higher Education Funding Council for England (HEFCE) graduates are less depressed, healthier, more likely to vote in elections and help with their children's education. The study, which was conducted by researchers at the Institute of Education, University of London, indicates that along with better jobs and higher pay, graduates also enjoy a number of other social and personal benefits. But in addition to having generally healthier lifestyles which cost society much less in security benefits and health care, and a higher sense of well-being, graduates are more likely to be involved in their child’s education—both in and out of school—have more tolerant attitudes, and volunteer in their communities more frequently. These benefits are evident across gender, age and social class.

Clearly there are financial justifications for having a highly educated society—graduates of university and college programs have enhanced earning potential and therefore spend more and pay more in taxes. In fact, evidence indicates that graduates pay several times over for the “cost” of society having educated them in a public system.  But, in addition, there are other benefits which are tangentially financial, and still others that speak far more to broader social progression and the kind of society in which we wish to live.

Missing Pieces: An alternative guide to Canadian post-secondary education, edited by Denise Doherty-Delorme and Erika Shaker, is available from the Canadian Centre for Policy Alternatives. http://www.policyalternatives.ca.