Universities are Subsidizing Graduate Students at the Expense of Undergraduates

Universities have perverse incentives encouraging them to enroll increasingly more graduate students. In order to meet the needs of both the students and the economy, universities will need to be forced by ministers of education to align their incentives with the social and economic needs of the country.
Published on April 2, 2012

Undergraduate students across Canada are expecting unacceptable increases in tuition fees and other services.   This is particularly evident in Quebec, where students are already protesting the increases in their tuition fees even though their fees are the lowest in Canada, and in Ontario, where students are complaining because their fees are the highest.

Nevertheless, provincial governments have been increasing their support of post-secondary education.  The income to colleges and universities increased from $29.4 billion in 2004-05 to $37.4 billion in 2008-09, the last year that data were available.  This represented a 27.2 per cent increase when the Consumer Price Index increased by only 9.4 per cent.

However, much of this money has been directed at building graduate programs and enrolling graduate students, and not educating undergraduate students.  Not surprisingly, the return on the investment—for both the individual and the economy—is much higher for undergraduate students than for graduate students.

Over the last ten years, the number of full-time equivalent undergraduates has increased from 559,978 to 708,296; the number of full-time equivalent master’s students has increased from 52,365 to 81,592; and the number of full-time equivalent doctoral students has increased from 24,608 to 40,969.

In other words, undergraduates students have increased by 26.5 per cent, master’s students have increased by 55.8 per cent, and Ph.D. students have increased by 66.5 per cent.  At present, there are as many Ph.D. students as there are faculty members in Canadian universities.

These data suggest that there are perverse incentives for both professors and university administrators to enroll increasingly more graduate students at the expense of undergraduate students.  Admitting graduate students is controlled by professors who receive many advantages in working with competent graduate students.

First, professors would rather supervise small seminars with graduate students than teach large classes of undergraduates.  Moreover, the work is interesting and relatively easy because graduate students largely teach themselves.

Second, skilled graduate students help professors conduct their research, which increases the prestige of both professors and universities.  In a quiet moment, graduate students will admit that they often work six days a week, ten-hour days, for very little pay doing “slave labour” on professors’ research projects.  Professors and administrators know that bringing in research grants and publishing articles and books are more valued than teaching undergraduates.

Finally, Ph.D. students often teach the large introductory courses that professors won’t teach.  In fact, graduate students are an inexpensive, highly motivated, and disposable labour force.  And, because these students are paid so little, they subsidize other activities in their departments with administrators and professors reaping the rewards.

Given this perverse system, it is little wonder that many doctoral students drop-out before obtaining their degrees.  Recent statistics, in fact, show that more than 40 percent of Ph.D. students do not graduate within ten years.

Essentially, the system is not designed to graduate Ph.D.s, but to produce ABDs (All But Dissertations).  This is probably good, because in 2008 only 5,421 of the almost 41,000 Ph.D. students graduated when there were only 2,600 new academic positions at Canadian universities.

Unfortunately, neither the Canadian Association of University Teachers nor the Association of Universities and Colleges of Canada have good reasons for changing the status quo because both university professors and administrators are advantaged.  Thus, the provincial ministers of education, coordinated by the Council of Ministers of Education, should carefully examine the enrollment, graduation, and employability of both undergraduate and graduate students in every province.

But, to change the incentive system at universities, the ministers of education will need to work together in forcing universities to do things that professors and administrators would rather not do—like improving the education of undergraduates and admitting fewer graduate students.  Only then will undergraduates receive the quality education that their tuition fees are paying for.

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