Who will pay the bills for the education dream? – by Don Drummond and Daniel R. Woolf (Toronto Star-April 1, 2011)

The Toronto Star, which is the largest circulation newspaper in the country, has an enormous impact on Canada’s federal and provincial politics as well as shaping public opinion.

Don Drummond is Matthews Fellow in global public policy at Queen’s University. Daniel R. Woolf is principal and vice-chancellor of Queen’s University.

We have reached the point in the post-secondary education system where significant
new thinking is required to reconcile a higher participation rate with the reality of finite
government resources. This will require willingness to rethink a system that cannot be
sustained. (Don Drummond and Daniel R. Woolf – April 1, 2011)

In this knowledge-based era, the economic spoils are increasingly going to those with higher education. In recognition, Canadian governments are setting ambitious targets for post-secondary education. Commitments to higher education are a part of every federal party’s campaign platform and this week’s Ontario budget includes funding for more than 60,000 new post-secondary education spaces over the next five years.

But owing to governments’ fiscal woes, students and their families will continue to bear a rising portion of the total costs of a quality post-secondary education. For many, this will remain manageable and the return will be a lifetime of higher earnings and increased quality of life. But without dramatic reforms to Canada’s financial supports for students, more and more will find the path to higher education blocked by financial obstacles. The damage will carry across generations because a key determinant of pursuing higher education is parents’ level of education.

About 70 per cent of the jobs of the future are projected to require some form of higher education. The Ontario government’s reaction is typical of several provinces in setting a target that 70 per cent of the province’s adult population should complete a post-secondary program, up from 62 per cent. TD Economics estimates that with such targets, post-secondary education funding must rise at least 4 to 5 per cent a year until 2016. The federal government’s post-secondary education contribution is embedded in the Canada Social Transfer, which is fixed at a 3 per cent annual growth rate until March 2014. Provinces have been warned not to assume that growth rate after that date, and it is unlikely provinces would increase funding faster than the federal pace.

That leaves the students. On average across Canada, university tuition went up 4 per cent for the 2010-11 academic year, after 3.6 per cent in 2009-10. Average tuition in Ontario is $6,307 and other fees bring the bill to more than $7,000. Living expenses and travel for those attending schools away from home drive the cost much higher. Tuition now covers almost half of total funding for Ontario universities, up from less than 20 per cent as recently as the late 1980s.

The math is simple but alarming. If total funding needs to rise 4 to 5 per cent a year or more, and government funding rises no more and possibly less than 3 per cent, then tuition increases must be at least 5 to 7 per cent per year, or around triple the likely rate of inflation.

This presents a compelling case for governments to do their utmost to protect post-secondary education spending within overall spending restraint. Failure to at least maintain the current post-secondary education spending growth rate and failure to give institutions latitude on tuition will inevitably lead to an erosion of quality, which speaks to Canada’s competitive advantage.

Ottawa and the provinces spend billions every year supporting students’ financial needs. But much of this support is delivered through tax or savings vehicles, which disproportionately help students and families with higher incomes. The system is complex and surveys indicate low-income families, in particular, are not aware of the available supports, nor of the enormous return on investment that higher education provides in greater lifetime earnings.

The recent introduction of low-income student grants is promising, as are some recent provincial initiatives such as Ontario’s measures to address students’ needs in particular circumstances. Nevertheless, these moves do not alter the fundamental challenge before students. For too many, the only option is taking on an ever-higher debt load.

For the rest of this column, please go to the Toronto Star website: http://www.moneyville.ca/article/967089–who-will-pay-the-bills-for-the-education-dream