With labour day behind us, university students across the country are preparing for a new school year. Although students across the country may all share the same fear of final exams, students and their families in the ten provinces are not all equally afraid of the tuition bills that will soon be arriving. That’s because tuition levels vary widely from province to province. While full time undergraduates in Alberta, Saskatchewan and Ontario pay an average of over $5, 000 per year in tuition fees, undergraduates in Manitoba pay just $3, 400. In Quebec, tuition fees are even lighter- students there pay an average of just $2,300. Students love low tuition levels, but they represent an inefficient and unnecessarily expensive policy approach for financing postsecondary education.
The development of a well-educated workforce is universally recognized as essential for Canada’s prosperity, and most people agree that a high level of participation in post-secondary education is good for the country. Low tuition levels, however, are unnecessary for achieving this objective because a large portion of the benefits of postsecondary education are experienced by the students themselves in the form of higher expected lifetime earnings.
The financial benefits of a university degree are substantial, and we can therefore count on large numbers of young people to recognize their own self-interest and pursue higher education without the extremely low tuitions of Manitoba or Quebec. In fact, a 2007 study for Statistics Canada examined postsecondary education participation rates across Canada and found they were strikingly similar in Saskatchewan and Manitoba despite much higher tuition in Saskatchewan. This analysis showed 76 per cent of young adults in Saskatchewan had participated in some form of postsecondary education, compared to 72 per cent in Manitoba. For university participation specifically, 44 per cent of young people in Saskatchewan had attended university- exactly the same as in Manitoba.
Similarly, Ontario actually showed a higher university participation rate than Quebec despite the fact tuition levels are more than twice as high in Ontario. In short, the evidence suggests the cheap tuition offered by Manitoba and Quebec strain government budgets but do little to boost postsecondary participation.
Proposals to increase tuition rates are always met with howls of protests (often from students themselves) that higher tuition will reduce access for young people from economically disadvantaged families. But this issue can be addressed more efficiently by offering targeted subsidies and favourable loans to provide assistance to individuals who have a real financial need. This accomplishes the objective of ensuring equality of access at less cost to the taxpayer than low tuition which subsidizes the affluent as well as the disadvantaged.
Arguments for low tuition rates on the grounds that they benefit young people from low-income families are misguided. In fact, the benefits of low tuition levels flow disproportionately to economically comfortable members of society. University students are much more likely to have grown up in affluent families, and have, on average, higher lifetime earnings themselves than people who do not advance beyond high school. Those who do not pursue post-secondary education receive none of the benefits of low tuitions – but they are required to pay some of the costs, through higher taxes on their earnings. Low tuition rates are therefore a regressive subsidy that force a less affluent group of people – those who do not pursue postsecondary education – to bear some of the costs associated with educating a much more affluent group- those who do.
The cut-rate tuition levels in Manitoba and Quebec do little or nothing to boost university participation and are an inefficient strategy for ensuring access to higher education. The real effect of rock-bottom tuition in Manitoba and Quebec is to transfer public funds into the pockets of society’s wealthier and better educated. A smarter and fairer policy is to require students to pay similar tuition to that paid in the other provinces, while using scarce public funds where they are really needed.