Canadian Commentary

Improving Postsecondary Education in Ontario
What the Rae Review should say

December 2004

At the time of writing, Bob Rae is undertaking a review of postsecondary education in Ontario. Here is what I would submit to the Rae Review.

The core problem with tuition fees in Ontario is that they do not follow any set policy.

One of the basic goals of any overhaul of the provincial government's approach must be to define some basic principles that govern tuition, easily understood by students, voters and institutions.

Following are three ways in which such principles could be set. They are in order of importance and practicality - the first is both important and easily implemented. The last is rather speculative, but food for thought.

Creating a basic principle for setting postsecondary tuition

One of the primary issues in postsecondary education in Ontario in the past fifteen years has been the dramatic rise in tuition fees.

Tuition fees have appeared to be rising in an ad-hoc manner, ungoverned by any specific principle or formula. Tuition in professional schools in particular has risen at a dramatic rate.

The lack of any kind of underlying principle in deciding tuition has undermined confidence in the commitment of Ontario's government to the ideal of public postsecondary education.

An obvious solution is to create a basic principle that governs the setting of tuition fees.

Here is a suggested principle:

For instance, tuition could always be 30% of the cost of whatever program a student is pursuing. Or 35%.

Tuition would therefore vary depending on the cost of the program. An arts and science undergraduate would pay less, whereas a student in an expensive professional program would pay more. But both would know that their tuition was set according to a predictable formula that applied to everyone.

As well, different schools could have different tuitions because they budgeted different amounts of money for the same kind of program. If one university kept costs down in its law school, it would automatically charge lower tuitions; if another university looked to provide a more ambitious legal education, it would charge more for the same program.

If would be up to the institutions which sought to provide a more expensive program to make up any shortfall in government funding.

This principle would create confidence that tuition fees were set according to an understood procedure, and that they would not go up unless there was a corresponding increase in the resources devoted to a particular program.

As a result, this principle would help restore confidence in Ontario's public post-secondary program.

First principles of tuition policy

It would also be helpful if the Rae review of postsecondary education in Ontario articulated an explanation of why tuition in Ontario works the way it does - specifically, why students pay a portion of their costs, rather than all of them, or none of them.

Here are some of the issues that would contribute to this discussion:

First, tuition should not be free (fully subsidized by the government) for the following reasons:

On the other hand, tuition must not reflect the full cost of university for the following reasons:

(Although the socio-economic imbalance in those attending university results in some subsidization of the middle class if tuition is subsidized, this can be justified by the fact that the middle class also pays a much higher percentage of overall taxes. The middle class is therefore, in a sense, subsidizing itself.)

Therefore, tuition should reflect a part of the costs of postsecondary education, rather than the whole cost, or none of the cost.

Compensating for the brain drain

One of the justifications for subsidizing postsecondary tuition is that students with postsecondary education will repay this subsidy because they will generate more economic activity in the province as a result of their higher skills. This will, in turn, result in higher tax revenues, effectively repaying the province's original investment.

One of the underlying problems with having subsidized tuition is that students whose education has been partially funded by the Ontario taxpayers may end up working in other jurisdictions. These other jurisdictions will therefore benefit from the province's investment, rather than Ontario.

Within Canada, this can be justified by the fact that citizens with subsidized postsecondary education from other provinces also come to Ontario to work, therefore compensating for whatever training Ontario loses.

However, the loss of postsecondary-trained graduates to the United States and other jurisdictions represents a clear loss of investment, since the United States in particular does not subsidize its students to the same extent, nor does it send as many postsecondary-trained graduates to Canada to work.

Therefore, it would be logical to find a way for students who leave Canada to work after their publicly-subsidized training to repay the Ontario taxpayer for the assistance the taxpayer provided in their education. However, any such system must not expect those working in Ontario to repay their subsidy, as they already do so by working and contributing to the Ontario economy.

Here is a proposed system:

There would, obviously, be manifold details that would have to be worked out. And it would probably be necessary to involve the federal government.

However, such a system would certainly help to restore confidence in the government subsidization of postsecondary education. It would also stop Ontario taxpayers from subsidizing the training of skilled workers in the United States and elsewhere.

As well, it would help to discourage the brain drain, as students would have to factor in repaying the real cost of their education in any decision to work outside of Canada. Ideally, once they have worked in Ontario/Canada for a few years getting their debt forgiven, they will have settled and will have less incentive to leave.

I believe that these proposals would help restore confidence in Ontario's postsecondary system. While the last proposal is quite speculative, I believe the first one is eminently practical and effective, and the second one is a simple way to help make the current review more definitive.

December 2004

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