Letting the Students Decide: A Case for Lifelong Learning Endowments in Manitoba

Commentary, Education, Frontier Centre

If the Target Education Coalition, a group of professors, students and support staff at Manitoba’s universities had been deciding the federal election, the New Democrats would have come out on top. They liked that party’s plans to lower tuition costs and expand access with increased federal funding. But the amount spent may be less important than the method of dispersing it. Direct grants to schools leave countless undereducated Canadians out of the loop. Lifelong learning endowments, paid to students instead, would include more people and improve universities at the same time.

A startling datum from StatsCan’s Labour Force Survey reflects the pressure to develop minds capable of exploiting a knowledge-based economy. Between 1990 and 2003, 1.4 million jobs opened up in Canada for with university degree-holders, but 1.2 million positions for people without a high school diploma disappeared. According to census crunchers at the Association of Universities and Colleges of Canada, a post-secondary degree confers $1 million more in lifetime earnings. Those stark realities are packing them in at the academies.

Because university graduates pay twice as much in taxes as non-graduates, public investment in them makes a great deal of sense. But how you invest is crucial. As with so many of our social services – undertaken with intelligent motives but poorly constructed – the money we’re spending on post-high schooling does not do as much good as it could. It would pay better dividends if it were directed to the end user of the service, not the providers.

In a study called Lifelong Learning for All, the Organization of Economic Development and Co-operation measured how countries are meeting their potential for post-secondary participation. Estimates of the number of Canadians who either did not finish high school or do not possess “adult level 3” literacy range between four and seven million.

When benchmarked against industrialized countries, our rates of job-related training are about average. Four out of five high school graduates start university, but the numbers who go back for later learning have stagnated. Part-time enrolment at universities and colleges actually declined during the 1990s. That suggests we have much to do.

A paper by Michael Grant, a Toronto-based economist, argues that we could better meet these needs by restructuring the market in post-secondary education (see Letting the Students Decide: A Case for Lifelong Learning Endowments in Manitoba, link below). Changing the style of distribution might encourage providers to respond to the untapped demand. That goal could be accomplished by the use of lifelong learning endowments, giving the funds directly to citizens instead of schools.

“Manitoba and other provinces place a disproportionate weight on enrolment-based grants to approved schools,” Grant writes. “Since this subsidy is mostly distributed through institutions, the institutions themselves set the context for its availability.” The schools decide issues of access, price, service, accreditation and availability of courses. Directly paying schools an enrolment subsidy – now about $5,000 a head – affects all their decisions about those matters.

Grant knocks our post-secondary system as an “enduring vestige of dirigisme.” It concentrates too much on its main customers, young full-time learners, and fails to anticipate or respond effectively to other needs. They prefer the highest-profit option – “talk and chalk in front of hundreds of undergraduates then slough them off to the hapless T.A.” – with lots of spending on bricks and mortar. Grant chides them for refusing to “segment their market” with just-in-time learning and e-learning.

Lifelong endowments would create competition for placements because individual students would control the subsidy. To capture it, universities and colleges would have to organize their finances horizontally to reach a wider market instead of vertically with funding through inefficient political channels, and concentrate on excellent teaching service.

Grant draws his research from Australia’s vaunted 1998 West Review, which said that “the allocation of public funds needs to be far more responsive to the needs and preferences of those who use the services that universities provide, and far less dependent on centralized planning and university politics.” The Review recommended the endowment concept as a substitute, and laid out a detailed timetable for implementation.

A political squabble derailed that, but the idea remains attractive. Teaching institutions would be freed from constraints on enrolments and tuition. The list of accredited schools eligible to receive the subsidy would open the competition to foreign schools. Both these reforms would expand the range of choices available to current and potential students and improve equity, by disallowing discrimination against those who presently can’t gain admission.

Grant goes into great detail about how the endowment model would changes costs and benefits and how quality, access and stability could be maintained during a transition. He even raises the thorny issue of an unresponsive university that goes out of business. “The point of education policy should be to develop human capital,” he concludes, “not to develop institutions for their own sake.”

Target Education’s desire for better access through higher tuition subsidies leaves too many out. Lifelong learning endowments would give students more control over the allocation of resources and bring thousands of forgotten Canadians back to college.