THE POLITICAL ECONOMY OF POST-SECONDARY

EDUCATION IN CANADAPresentation to:PADM 5227 W

EDUCATION POLICY: HIGHER EDUCATION AND SOCIETY

School of Public Policy and AdministrationCarleton University,

Ottawa, Canada

By Nick Falvo

February 6, 2014

Overview

• Access

• Return on Investment

• International Students

• Summary

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Average Tuition Fees for Full-Time Undergraduate University Students

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Incidence of Debt in Canada, 2009 - By Age

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Rising PSE Participation Rates (Ontario)

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Ontario University Participation Rates(by after-tax family income, 18-24 year olds, 2012 constant dollars)

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University Participation Rates (Ontario)

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Employment Rate by Educational Attainment (Ontario, 25 and over)

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% of Canadian University Students Who Work During the Academic Year

•1976 25%

•2008 50%

→75% of students believe this paid work has had a negative effect on their academic performance.

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The $1 Million Question

“This number—the $1-million promise—has been around for quite some time, pretty much unchallenged. It is time to pose some simple questions about it.”

— Richard Shillington

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The $1 Million Question (cont’d)

“Do university graduates actually earn $1.3 million more than high school graduates?”

— Richard Shillington

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Boothby and Rowe (2002)

•“Individual rates of return were derived by comparing simulated lifetime earnings streams of pairs of individuals. Each pair was made up of a post-secondary graduate and a high school graduate ‘clone’. The simulations were carried out using the LifePaths model of Statistics Canada.”

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Distribution of the Rates of Return for PSE

Median

BA male 12%

BA female 13%

CC male 16%

CC female 18%

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Distribution of the Rates of Return for PSE

30th percentile Median 70th percentile

BA male 5 % 12 % 21 %

BA female 5 % 13 % 25%

CC male 0 % 16 % 22 %

CC female 0 % 18 % 40 %

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Variance by Field of Study

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Variance by Field of Study (cont’d)

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Variance by Field of Study (cont’d)

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Variance by Field of Study (cont’d)

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The $1 Million Question (cont’d)

“If you assume a working career of 40 years—ages 26 to 65—the return represents a $32,500 annual ‘bonus’ over the earnings of a high school graduate, and $25,000 over a college graduate’s.”

“Is the university degree the critical factor in determining the extra income earned by degree holders?”

“Does the field of study matter?”

— Richard Shillington

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The Good

"Without international students, Nova Scotia’s university system would collapse."

— Sean Riley

President,

St. Francis Xavier University

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The Bad

“The developing and emerging economies are subsidising the rich countries by educating many through the bachelor’s degree and then losing them.”

― Philip Altbach, Center for International Higher Education, Boston College

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Growth

•Between 2001 and 2008, the # of international students in Canada grew by an average of 4% per year.

•Between 2008 and 2012, the # increased by 12% per year.

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China and India

• Between 2005 and 2012, the number of new "foreign students" in Canada coming from China more than tripled.

• Between 2004 and 2012, the number of new "foreign students" in Canada coming from India increased more than sevenfold.

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Key Findings from CCPA-BC Research

“Over their working lives, women with an undergraduate degree contribute, on average, $106,000 more to the public treasury than women with only a high school diploma;”

“Similarly, university-education men contribute $159,000 more to the public treasury than men with only a high school diploma;”

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Key Findings from CCPA-BC Research (cont’d)

“In contrast, a four-year undergraduate degree [in BC] costs $50,630, of which tuition fees make up 40 per cent.”

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Summary

• Tuition fees have been rising in Canada for the past three decades.

• Yet, individuals in the 25-44 age group in Canada have higher levels of overall household debt than any other age group.

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Summary (cont’d)

Key questions:

•Is it necessary to saddle this demographic with more debt?

•Does this not exacerbate household debt?

•Is this good public policy?

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Summary (cont’d)• PSE participation in Canada has seen a very significant

increase in the past half century.

• That said, not all groups participate equally in higher education.

• In Ontario, for example, students from lower-income households, students who are Aboriginal, students with disabilities, and students from families with no history of attending PSE have significantly lower levels of PSE participation than the rest of the population.

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Summary (cont’d)

Key questions:

•Is it possible that high tuition fees exacerbate these discrepancies?

•Could lower tuition fees help narrow these gaps?

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Summary (cont’d)• When it comes to ‘return on investment,’ in the aggregate,

university and college grads do indeed benefit financially from their degree.

• But looking at the aggregate does not give us the complete picture. For example, it does not tell us about the bottom 20% of income earners with degrees, or the bottom 10%.

• Ergo: not everyone is better off financially once they’re armed with post-secondary education. But everyone did have to pay tuition fees up front.

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Summary (cont’d)

Key questions:

•Since some people do not appear benefit financially from post-secondary education, is it fair to make them pay high tuition fees?

•In principle, isn’t it more fair to make people pay for post-secondary education through a progressive income tax system rather than a high-tuition environment? That is, pay in relation to what you make, rather than in relation to what you might make someday.

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Summary (cont’d)• Canadian universities have seen a substantial rise in

international students in the past decade, especially from China and India.

• I think this trend is caused almost entirely by the fact that international students typically pay higher tuition fees than domestic students, and this is seen as good for each respective university’s bottom line.

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Summary (cont’d)

Key questions:

•Are Canadian universities exploiting vulnerable students from the Global South?

•If yes, would there be less exploitation if international students were charged lower tuition fees?

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Summary (cont’d)

• Research done by the CCPA-BC suggests that, in the aggregate, individuals with post-secondary education work more and pay more taxes over their lifetimes…

• enough so that, as a group, they more than ‘pay back’ (to the public treasury) the cost of providing that education in the first place.

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Summary (cont’d)

Key questions:

•If the cost of post-secondary education eventually comes back into the public coffer (via taxation), why is it so important to make students pay high tuition fees up front?

•In other words, why ‘double tax’ people?

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Thank You

Nick Falvo

PhD Candidate (Public Policy)

Carleton University

Email: falvo.nicholas@gmail.com

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