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The Progressive Economics Forum

Should Students Pay One Flat Fee for a Degree?

Yesterday afternoon, Alex Usher–who regularly blogs for the Globe and Mail on post-secondary education–blogged about an innovative concept proposed by the (now ousted) Liberal Party in New Brunswick’s recent provincial election campaign.  The proposal is for universities to charge students one flat fee for the cost of a degree.  Usher argues in favour of this move on the basis that it would give students and their families “more certainty in pricing.”

Needless to say, one’s position on such a policy should depend largely on what that flat rate would amount to.  I suspect, for example, that most of my brothers and sisters in the student movement would be inclined to favour such a policy if it were a flat fee of, say, $10,000 for a four-year degree (considerably less that the current cost of a four-year degree in most Canadian provinces).  They’d be much less likely to favour it if it were $75,000.

But assuming for a moment that a new flat-fee system could be revenue neutral in the aggregate (i..e somehow designed not to generate more revenue for universities), I think it has the potential to advantage lower-income students.  For example, let’s consider a relatively low-income PhD student who does not have much in the way of financial support from family, and little if any funding from their own academic unit or external sources (i.e. SSHRC, CIHR, etc.).  I believe that a student in this situation is usually inclined to take on a good deal of part-time employment–sometimes 25- or 30-hours per week of paid employment.  All other things equal, such a student will take more years to finish their degree than a well-funded student who takes on little if any paid employment while in school.  The former will take longer to finish their degree and pay more tuition over the long term.  Yet, in the end, both students end up using the same amount of university resources (i.e. faculty time, library services, etc.).  Thus, I’ve often wondered:  since there is, in essence, one flat fee required to educate a student, why not have one flat tuition fee?

(It is this kind of thinking, in part, that resulted in universities charging “post-residency fees”–rather than full-fledged “tuition fees”–to graduate students who had finished their course work but continued to work on their thesis.  Since the 1990s, however, many universities have eliminated such post-residency fees and opted instead to charge full tuition fees to graduate students in the latter stages of their degrees.)

I would also worry, however, what a “flat fee” would mean for students who do not complete their degrees.  If a person were to drop out of a four-year degree, say, two months into it, it would be rather unfair to charge them the full fee.  And if provisions were made to not charge the full flat fee to a student in such a situation, then it wouldn’t be a flat fee, would it?

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Comment from Travis Fast
Time: September 29, 2010, 4:56 pm

Hi Nick,

Last point first. Given the whole system is credit based the flat fee can be levied on a percent of the total credits completed.

Why don’t we just move to a flat tax increase for each year students attend PSE. So if you attend for one year your marginal rates go up X percent and so on. No student loans, no interest payments and based on “user pays”. I would have much rather financed my 4 + 2 + 6 years that way. But then again all the debt I took on was to pay for living costs as my tuition was covered by scholarships for all but 2 years of study. Tuition in my experience was not the major cost. Although by the end it was around 40% up from 15% when I started.

Comment from Julia Vyse
Time: September 30, 2010, 5:51 am

Point of order: “Yet, in the end, both students end up using the same amount of university resources (i.e. faculty time, library services, etc.).”

As a mature student working full-time while I complete my BA, I can assure you this is not true. Access to these facilities are limited by regular work hours and faculty time is almost never after 5pm. As such, working students like myself are vastly more limited in accessing the tools we need to complete our studies, all the while paying the same amount as non-working students.

Comment from Purple Library Guy
Time: September 30, 2010, 2:22 pm

Now if the flat fee were zero, it would solve all the questions of how to pro-rate fees for partially completed degrees.

Comment from Nick Rowe
Time: October 2, 2010, 3:27 am

Interesting idea. But I think your last paragraph is what kills this idea for me.

A student who starts a degree is making a risky investment, spending a lot of time and money in the hopes of getting a degree and getting a better job. If the student had to pay the full costs, even if he stopped part way through, that would only increase the risk for the student. Not good for either student or university (because fewer students would want to go to university if it were more risky).

Plus, it gives universities the wrong incentive. Right now, universities have an incentive to retain students, so they return for their second year. It takes quite an investment for the university to attract a student, and losing that student in second or upper years is something the university won’t want. But if the student has already paid fees for 4 years, if he quits or is forced out at the end of first year, it means the university can save the cost of teaching him in upper years. So universities would have less incentive to teach well and offer the right courses so that students want to return and are able to return. In fact, they would have a strong incentive to get rid of as many students as possible. Not good.

No. I really hate this idea, after thinking through your last paragraph. It goes totally against everything I worked for in university admin for 6 years.

Comment from Brandon L
Time: October 9, 2010, 6:22 pm

My solution, end student loans, that is what is bidding the price of education up to unsustainable level. Price collaspes, and finally one job worth of savings can be enough to be educated again.

Universities can charge ever increasing incrments, as they lobby for increased funding to stundent loans.

We see in housing, people taking out loans. Often which they cannot afford, causing housing prices adjusted for income, to be out of their historical range.

Easy Credit in both these markets have drove the price of afforadble housing and education, to unsustainable levels, that will cause us to get more involved in real estate, and higher education.

I also really do not want to pay the lifestyles, of many acedemics, who drive vehicles, I can only dream off.

As one pointed out, the incentive from a flat fee, would hurt kids, that the university deemed to expensive to teach compared to previous expenditures, for which ever cousres they take.

I see no postives from getting involed further. Just years of headaches…

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