Zero Tuition Makes Zero Sense

Alberta, Ben Eisen, Commentary, Education, Uncategorized

The Liberal Party of Alberta has proposed gradually reducing user fees for post-secondary education in Alberta, phasing tuition out entirely by 2025. Party leader Raj Sherman justified this proposal on the claim it will encourage more young adults to pursue higher education, contributing to the province’s long-term prosperity. However, the evidence suggests that eliminating tuition would have little impact on people’s decisions to pursue post-secondary education and would absorb public resources that would be better spent on other priorities.

In announcing his zero tuition plan, Sherman argued that the burden of tuition in Alberta is a major reason for the province’s low rates of participation in post-secondary education (participation rates express the percentage of young adults who continue their education after high school). Sherman claims that as fees go down, post-secondary education rates will increase substantially.  These claims do not withstand scrutiny.

It is true that Alberta’s participation rates for post-secondary education and university in particular are among the lowest in the country. However, identifying high tuition levels as the cause is a mistake. Several other provinces where tuition rates are similar to or higher than Alberta’s have impressive participation rates. Ontario, where the average tuition for undergraduates is substantially higher than in Alberta, has post-secondary and university participation rates well above the national average.

Cross-provincial comparisons show no positive correlation between provinces that have lower tuition levels and those that have high rates of post-secondary participation. This means that provinces where tuition is very low such as Quebec, Manitoba and Newfoundland tend not to have higher participation rates than provinces where tuition is higher. Further, in the specific case of young adults from low-income families, participation rates do not tend to be any stronger in low-tuition provinces than in other parts of the country. 

This evidence suggests that even in provinces with higher tuition, fees are not major barriers to post-secondary participation. Speaking about the situation in high-tuition Ontario, Ross Finnie, co-author of a recent study on post-secondary participation, states that because of existing subsidies combined with financial aid, the current policy structure “by and large ensures accessibility for those who would otherwise face financial barriers.” The same is true in Alberta.

When young adults decide whether to pursue post-secondary education, they weigh a wide range of costs and benefits. The primary cost of post-secondary education is not the tuition a student pays – it is the lost earnings that result from remaining outside of the full-time workforce for several years. On the other hand, the long-term benefits of higher education can be large, including the probability of increasing lifetime earnings potential.

These are the important considerations that shape people’s decisions about whether to pursue higher education, and these factors are themselves influenced by many variables including local labour market conditions for high school graduates and the proximity of colleges and universities to population centers. Increasing subsidies or even eliminating tuition in Alberta is unlikely to be a decisive factor that persuades large numbers of young people to continue their schooling.

If tuitions climb high enough, as they have in many parts of the United States, they can create a barrier to post-secondary education for qualified students. This is a loss for the individuals in question, and for the entire economy. There are public benefits associated with a qualified individual’s decision to pursue higher education, and it is therefore appropriate that this choice be partly subsidized. Further, there are significant barriers to entry in the higher education industry that restrict competition (it is very hard to open a new university), which means governments should regulate tuition to protect students from gouging.  

However, there are also substantial private benefits of higher education that flow to the students themselves, including higher lifetime earnings. So it is entirely reasonable that we require students and their families to assume some of the costs, freeing public resources to invest in other priorities. The evidence shows that doing so, at least at the level of high-tuition provinces like Ontario and Nova Scotia, does little or nothing to discourage participation.

Getting the right balance between public and private investment in higher education is difficult, and simplistic solutions at either extreme will not produce optimal results. Just as it would be a mistake to eliminate all subsidies and price regulations, it would be a mistake to remove tuition entirely. Raj Sherman is right in stating that the development of a well-educated workforce is essential for Alberta’s prosperity.  As a strategy for getting there, however, moving to zero tuition makes zero sense.