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).Â I have three points to make in response to this.Â
First, while Mr. Usher is correct in arguing that moreÂ Canadians have been going to university in recent years (in spite of rising tuition fees), there remains the looming problem of rising student debt.Â Indeed, according to theÂ Canadian Federation of Students, average student debt for a four-year degree in Ontario has increased by 350 percentâ€”from $8,000 to over $22,000â€”in the past 15 years.Â Personally, I’m concerned about what the implications of this rising personal debt will be for young households.Â Mr. Usher does not raise this matter in his posting.
Second, when governments target social spendingÂ to specific groups, those very programs then become vulnerable to future cuts.Â 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:Â 682).
Such “coaltion formation” (a term used by Korpi and Palme) increases the likelihood of a social program surviving over the long term.Â 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.Â Targeted programs, by contrast (think social assistance and social housing), have not.
In other words, in a political vacuum, Mr. Usher makes some sense.Â But in the face of political realities, his proposalÂ runs the risk of beingÂ unsustainable over the long-term.
Third, it’s worth checking out a 1999 articleÂ in Policy OptionsÂ by Carleton University economists Nicholas Rowe and Frances Woolley.Â In the article, they argue that targeted social programs
are both unfair and inefficient.Â 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.Â 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.