Should We Reduce University Tuition?

On Thursday, the Globe and Mail’s post-secondary education blogger, Alex Usher, wrote this piece, in which he argues that any increased government assistance with the goal of increasing access to university ought to be targeted to low-income students (and not consist of an across-the-board tuition reduction).  I have three points to make in response to this. 

First, while Mr. Usher is correct in arguing that more Canadians have been going to university in recent years (in spite of rising tuition fees), there remains the looming problem of rising student debt.  Indeed, according to the Canadian Federation of Students, average student debt for a four-year degree in Ontario has increased by 350 percent—from $8,000 to over $22,000—in the past 15 years.  Personally, I’m concerned about what the implications of this rising personal debt will be for young households.  Mr. Usher does not raise this matter in his posting.

Second, when governments target social spending to specific groups, those very programs then become vulnerable to future cuts.  In a 1998 article in the American Sociological Review, Walter Korpi and Joachim Palme argue that

surveys have shown that universal and encompassing programs receive considerably more support among citizens than do means-tested or income-tested programs (Korpi and Palme, 1998:  682).

Such “coaltion formation” (a term used by Korpi and Palme) increases the likelihood of a social program surviving over the long term.  For example, in spite of fiscal belt-tightening throughout OECD countries since the early 1970s, industrialized countries have seen very substantial increases in both pension coverage and health care spending.  Targeted programs, by contrast (think social assistance and social housing), have not.

In other words, in a political vacuum, Mr. Usher makes some sense.  But in the face of political realities, his proposal runs the risk of being unsustainable over the long-term.

Third, it’s worth checking out a 1999 article in Policy Options by Carleton University economists Nicholas Rowe and Frances Woolley.  In the article, they argue that targeted social programs

are both unfair and inefficient.  Unfair because if Canadians decide people shouldn’t have to bear the entire cost of raising children, having a hip replacement or acquiring an education, their exemption from cost shouldn’t vary according to their income.  Inefficient because clawbacks add to the effective marginal tax rate faced by the recipients of social programs, thus increasing the distortion of their work, leisure, investment and saving choices.

5 comments

  • Great blog Nick. I especially like the point that means tested social programs are the most likely to get cut. The one point I would add to your argument is that universal programs are being paid for through a progressive system of taxation, hence middle and higher earners should already be paying more. Cutting their access to the programs seems a bit like a double whammy and as you point out is likely to erode support for them.

  • What some of you anglos don’t know is that Quebec already has reduced and even more heavily subsidized university tuition than the ROC. Result? No, it does not result in a better educated public, a more robust working class, or a higher grade of language quality. It results in a staggering number of eternal students who bounce from one program to the next, never finishing the degree, and with little or no regard for the cost of their never-ending escapade through the post-secondary system.

    I am all for reducing tuition for students stemming from extra low income families, orphans, kids in foster care for their _first_ _degree_ _only_ as long as they keep the grades at a minimally acceptable level and that they go into a field of study with reasonable expectation of a job that netly benefits the public purse.

    In fact, I would not mind allowing “target students” a free education altogether. Just as long as it is a hand up, not a hand out. For students w/o a family structure, just working part time to pay living expenses and books is enough of a responsibility — a burden that could prove insurmountable before the tuition is added to the mix.

    But Quebec has shown us that lower tuition creates as many problems as it solves if there are no clear guidelines and limits to the generosity of the taxpayer.

  • Excellent piece, Nick, but Usher’s analysis is spurious for another reason that is worth noting. Usher has made career of constructing arguments in favour of a privately financed system of education, with little regard for evidence or lived experience.

    He has consistently blown the same horn: enrollment continues to increase despite fee increases. Ergo, fees do not equal a barrier to access.

    This argument is bogus because Usher ignores the fact that over the same period, post-secondary education continues to become ever-more essential to finding gainful middle-income employment. In fact, today over 70 percent of new jobs require a post-secondary education. So, young people are in no position to opt-out of higher education, no matter how high the fees. I think you will find that people are generally willing to go to great extremes (beg, rob or steal, as they say) for the essentials of life. These essentials are: a roof over your head, food on your plate and, increasingly, a diploma on your wall.

    So the fact that students and their families continually prove willing to subject themselves to undue hardship in order to secure the opportunities that an education can afford, is no proof that the cost isn’t detrimental.

    Usher also seems to equate access with getting your foot in the door, no matter what program you study. So, a would-be computer programmer who can’t afford $9,000 annual fees who enrolls instead in a college course for computer technical support and winds up working in a call centre, would be counted as a success story in Usher’s statistics. A budding lawyer who can’t afford $21,000 annual law school tuition fees and instead studies criminal justice and ends up working as a parole officer would also boost Usher’s enrollments stats.

    If education is supposed to help people unlock their potential, then should not they be able to study whatever suits the abilities and interests?

    As you have rightly pointed out above, Usher’s limited analysis of “cost” is devoid of consideration of *consequences* – he refuses to contemplate the impact of a debt-filled future. In light of our recent and dramatic recession (fueled in so many ways by the burst of the mortgage bubble and record levels of personal debt), it is irresponsible for any economic or social policy analyst to ignore the dangers of an entrenchment of the culture of debt.

    I am glad that you continue to call bulls**t on Usher’s ideological agenda which consistently mistakes politics for statistics.

  • While I’m certainly not one to praise Alex Usher and every move he makes, your counter-article leaves precious little substance to grasp at. Let me try and address your three points in order:

    1. You mention the impact on rising debt-loads, and how Usher doesn’t mention this.

    You know why he doesn’t mention this? Because it’s not relevant to his point of targetted assistance to lower income students! There are many inter-related factors that lead to student debt – tuition is just one piece, while cost-of-living public debts, and private debts are, in most jurisdictions, the much larger piece of the puzzle. He is not suggesting that the tuition of the high-income students subsidizes the lower-income students, he is suggesting that the state does it.

    And then here comes the paradox. If we can (improperly) stratify students into 3 categories – “low income”, “middle income”, and “high income”, let’s see what happens to debt levels. If ‘low income’ students are given targetted assistance, their debt levels will fall drastically. If ‘medium income’ students are given programs like debt ceilings (in place in provinces like Ontario and New Brunswick), their debt levels can only rise to a certain cap. If high-income students are given nothing, they will still not be taking on debt. Overall “average student debt” will actually be lowered under his proposal.

    2. You suggest targetted programs may be vulnerable to future cuts.

    While the facts you cite may be grounded in an peer-reviewed study, the nature of the argument is that “people will not like the program so they will vote in governments that reverse it”. This entire argument is replacing Usher’s statistically cited efforts that targetted grants will help a portion of the population (and universal increases are not helping anybody), with the premise that people don’t want it to happen. What your analysis is missing is the premise that the program might actually work and the evidence will show that it is unwise to cut. Right now, we have the evidence to show that it will work, so we will not be undertaking some “gamble” with public money. This is evidence-based policy change, unlike the “feel-good” policy change of lowered universal tuition. Usher has cited the statistics showing that no-tuition countries do not see the educational attainment rates which we desire.

    3. Your last argument cites the opinions of two academics that targetted programs are unfair and inefficient.

    And once again, this is a matter of personal viewpoints. They are “unfair and inefficient” for the particular individuals that might have pay slightly more than if the equivalent public money was spread out evenly. But they are much more fair and efficient for the overall aggregate society, which will be saving money by bringing lower-income families out of cycles of poverty and depression. The public doesn’t tend to believe that giving money to rich people is an effective or efficient use of money, but that’s precisely what univeral tuition breaks do, when families can afford the expense right now.

    I’ll wrap my comments with a caveat, in that I am assuming that Canadian governments will not be inheriting substantial windfalls of money. I too, believe that tuition levels are currently to high. And if governments had multi-billion dollar investments to make in education, all tuition levels could drop. But I am grounding my comments in economic realities that governments might have a few million (a few hundred million in the richer provinces) to spread around. If we can’t fix everything, let’s address the highest-need areas first. And right now, one of the highest-need areas involves access levels for lower-income students, where targetted grants have been shown to work better than universal tuition decreases.

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