Public interest, private benefit
Bob Rae’s proposals for reform of postsecondary education provoked a variety of responses, almost all of them positive. On the one hand, the former premier’s review of how Ontario’s universities are funded was praised by the Globe and Mail as refreshingly “blunt” and full of “smart ideas.” On the other hand, the Toronto Star called it a “sensible blueprint” that makes “a series of meaningful recommendations.” This, for a report whose central recommendation is to deregulate tuition fees: that is, to let universities charge what the market will bear.
Yes, yes, yes, there’s also lots in there about raising operating grants to universities and offering bursaries to low-income students and enshrining in legislation that no qualified student will ever be denied access to university or college because of the cost. And no, deregulation would not kick in until after student aid had been reformed. But still: try to imagine the conservative politician, retired or otherwise, who could get this kind of coverage for this kind of report.
A thoughtful note of discord was sounded by the Globe’s Queen’s Park columnist, Murray Campbell. “It may not be the best time to raise this,” he begins, “but isn’t it about time to abolish tuition fees for postsecondary education?” Mr. Campbell’s piece zeroes in on Mr. Rae’s central argument for making students bear a greater share of the cost of their own education — that the benefits of higher education accrue largely to them, notably in the form of higher lifetime earnings.
“Mr. Rae falls into the trap of refusing to consider higher education as part of the continuum that begins in Grade 1,” he goes on. Elementary and secondary education is free and universal. Why shouldn’t universities be as well? When “up to 70 per cent of new jobs in Ontario require postsecondary educations,” isn’t it time we “abandon the distinction between the private and public benefits of more education?” In other words, higher education is, increasingly, no longer the preserve of the elite, an option for those so inclined, but a necessity — like health care. “Why is the public benefit that flows from universal health care,” he asks, “different from the benefits of universally available education?”
There are a few answers that spring to mind. One, elementary schooling is mandatory, whereas a university degree, while perhaps desirable, is not as yet legally required. Two, parents and students have lots of time to save for higher education, whereas the kids are barely out of diapers by the time they’re eligible for kindergarten. That goes double for health care. “We should not confuse insurance against illness,” Mr. Rae writes, “with a planned decision to enrol in higher education.”
But back to Mr. Campbell. He’s right to point out that more and more employers demand some form of post-secondary education — but to say they demand it is another way of saying they are willing to pay for it. This is perhaps obvious, but it bears stating. There is another crude but popular argument against tuition fees, to the effect that the public benefits from having a lot of highly trained university graduates around, so why shouldn’t the public pay for it? To which the answer is: the public is paying for it. Who do you think pays the salaries of these graduates? The public interest in the skills they acquired in college is fully reflected in the compensation they receive. To insist the public should also pay for their tuition is to say they should pay twice.
I don’t think Mr. Campbell is making that argument. But if it’s accessibility he’s worried about, there are better ways than suppressing tuition fees. The impact of higher fees, on their own, is always exaggerated: the past week produced yet another study, this one from Statistics Canada, showing the stiff increases in fees of recent years have had no effect on participation rates. Of course, part of the reason for that is that students tend to be drawn disproportionately from the ranks of the well to do. But that was always true, even when fees were a fraction of what they are now: a phenomenon of sociology, not economics.
To lay off the cost of higher education on the broader public, then, is to suggest the average taxpayer should pay so his boss’s kids can go to university. Does that mean society has no interest in ensuring equality of access? Of course not, but accessibility is defined at a particular moment in time: the point in a student’s life when he wishes to enrol in higher education. Though it pays substantial dividends later on, at the moment he is obliged to pay his earning power is typically low. Moreover, the resulting payoff may be fluctating or uncertain, to which traditional student loan schemes are frequently insensitive.
It’s a cash-flow question, more than anything. To say that students should ultimately bear the cost of their education is not to say they must do so now. What’s needed is a system of student aid that recognizes it for what it is: an investment in human capital — an investment of a particularly risky kind, to be sure, but that’s the difference between debt and equity. If students were required to repay society’s upfront investment, not on a fixed schedule of interest, but as a percentage of their future incomes — a suggestion Mr. Rae leaves for the longer term — then public and private interests would be equally served.
2/19/2005
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22 Comments
"The public interest in the skills they acquired in college is fully reflected in the compensation they receive."
So, if a benefit of people getting university degrees is having more informed citizens who will do a better job of ensuring that our government functions as an effective democracy, that will be reflected in the salary paid to a university graduate?
I disagree. Obviously, the student gets part of the benefit to society back in wages, but hardly all.
That's why it makes sense for them to pay a % of their tuition, but not all (or none).
To put it another way, universities are more than just job training programs.
Ironically, Canadian universities have become much more like job training programs than their (usually more expensive) American counterparts. A traditional liberal education seems to be more valued in the US, where an undergraduate degree is seen as a foundation for future, specific job training.
Heavily subsidized tuitions can have the effect of trivializing the post-secondary academic experience. As a Canadian who had the privilege of attending a private US college, returning to Canada for graduate school and attending a semester in England, I can tell you from personal experience that the number of aimless "career students" on campus and the cost of tuition are inversely related (British students were protesting Whitehall's proposed tuition increase from nil to 250 pounds a year while I was in England in 1994). You don't see many students in the US taking more than four years to complete their undergraduate degree because it is cost-prohibitive to do so.
Another observation: in the US, graduation day is marked as a major family celebration, with even extending family members attending commencement because it marks a significant academic accomplishment for the student and, importantly, the culmination of decades of economic sacrifice for the student's family. In contrast, I have several Canadian friends who didn't even bother attending their own graduation ceremonies at Queen's or Western, let alone have family members attend.
Canadian universities are job training environments! HA! Anyone who has received a bachelor of arts (the majority of university students, by the way) in the last decade will tell you what bull that is...
As much as I hate to admit hit, the Rae report actually did a decent job. It recognized the need for more base funding for universities, while at the same time recognizing that a tuition freeze (or reduction) would be disasterous and unsustainable.
1. Bob Rae is to be thanked for the key line of his report, to the effect that deferred repayment removes the intimidation of loan creating up-front costs, hence improving accessibility. I support this wholeheartedly.
2. I would suggest that only the more elite US colleges value liberal arts to the extend portrayed, and that in other US degrees, where the currency of the degree lies in its title and not the institution, specialization outstrips Canada.
Emmett, no disagreement with your assessment of the fate of recent BAs. What I should have clarified in my first post is that the currency of a BA in Canada is diminished; there is much more pressure in Canada to enter a specialized program right out of high school in order to have a fighting chance at a job four years down the road. That is what I meant by job training; today one has the choice of either a well-rounded education (learning how to learn) or a narrow course that gives you a better shot at employment.
"Two, parents and students have lots of time to save for higher education, whereas the kids are barely out of diapers by the time they’re eligible for kindergarten."
The parents might have that time and money if they aren't themselves burdened by student debt. Suppose your household were sending $400-$500 per month to the bank to pay off student loans. (Less than the burden of some families I know.) What then?
As student debts grow ever larger, how much time (and money) will tomorrow's debt-laden graduates have to save for their own childrens' higher education as they pay of their ever-larger debts over ever-longer periods?
This problem is only going to get worse and worse.
Furthermore, this claim is--quite simply--laughable, if you intend it as an actual description of the current state of affairs:
"but to say they [employers] demand it [a higher education of their employees] is another way of saying they are willing to pay for it. This is perhaps obvious, but it bears stating."
Employers aren't willing to socialize costs while privatizing the benefits that flow from those same costs?
You can't seriously be making that argument, can you?
Is the average undergraduate education of enough intellectual and critical value that the public should wholly subsidize it? No. Definitely not. The content and scope of the general BA is empty.
A university education does, however, keep that individual OFF the job market. What would happen if even 25% of the current student population were to move into the job market? It's difficult even now for graduates to obtain jobs. Many end up doing the 'Teach English Abroad' tactic, for they can't find a job in Canada.
Others remain at home, supported by family; others move into low skilled jobs which have no reference to their university 'skills'. Others leave the country for the US.
Canada has to move out of its present economic mode of relying on the US as technological and scientific innovator, as business entrepreneur, as developer of factories and markets - while Canadians merely function as 'employees' of gov't funded corporations (Via Rail, Air Canada, the bureaucracy etc); or as employees in factories that copy US-developed drugs (copying removes the enormous funds required for research & dev't); as primary resource producers and so on.
I'll suggest that a major role of undergraduate reality is keeping people off the non-existent job market. The question to explore would be how many graduates do we enable? That is - can our economy promote and support a level of operations that is focused around innovation and development? I'll say - NO.
I'm tired of this student debt nonsense. My final year of University - admittedly in the early 60's my tuition was $800.00.
I was hired at $5000.00 per year or a little more than 6 times my tuition. An Arts course in most Can. universities is less than $5000.00 per year times 6 equals $30,000.00 even a Gov't clerk with high school earns this much and more. How - get a job - any job - as early as you can after school holidays etc. Start at 10 or 11 as I did - save your money, no debt - ample and varied job experience to get a good job by recruiters.
Agree with “ I’m tired of this student debt nonsense”
My numbers were the same ratio as anonymous’. The
key is to be able to have access to loans that can be paid
back from future income. Students may have to delay purchase
of an Ipod and a BMW. Tough. Also let the trades in on the
Loan assistance programs . And let’s take the stigma out of the idea that a plumber is a lesser person then someone with a degree in “Studies of the ancient Mayans who were wiped out because they kept voting Liberal”
nomdenet
Students may have to delay purchase
of an Ipod and a BMW. Tough.That's nonsense. Delay puchase of an Ipod? It took me 11 YEARS to pay off my student loan. Ipod? I was lucky to buy Kraft dinner, let alone a BMW.
Student debt is a serious problem and this blanket 'tough' nonsense is not a serious solution. Letting students pay later and over longer periods of time is helpful, but it only prolongs the problem, not solves it.
Rae's report is interesting, but I don't see the real long-term solutions there. Making people pay more is great, if you're the one receiving the money. Raising tuition does one thing and one thing only - it makes it more difficult for lower-income students to attend college or university.
To anonymous suggesting that student debt is nonsense:
I got a job when I was younger, saved my money have a job now while at university but require student loans to pay a $9000 a year tuition and living expenses.
And hears to the thought that maybe children should be able to enjoy their youth and not have to work for a few years of their lives.
declan:"So, if a benefit of people getting university degrees is having more informed citizens who will do a better job of ensuring that our government functions as an effective democracy, that will be reflected in the salary paid to a university graduate?"Declan - care to provide any evidence that university-degreed citizens are either "more informed" or that they do any kind of job to "ensure that our government functions as an effective democracy?" Based on casual observation, Canada's ability to function as an "effective democracy" has declined over my 50-year lifetime, all while both the absolute number and the proportion of degree-holders in our society has increased.
While I can buy the argument that there are (some) positive externalities to graduating another engineer, hard scientist, or medical doctor, I am less convinced in the case of those who hold anthropology, sociology, or women's studies degrees (to name only the most obvious culprits). I suspect that to the extent there are externalities in developing such degreed individuals they are negative, although I grant that this is based on mere casual observation, just as is your claim that they will improve our democracy. At least I am intellectually honest enough to admit it, rather than simply asserting it in order to advance an argument.
No doubt, a literate population assists in operating a democratic state - but once past the grade twelve level of vocabulary and understanding I believe that the marginal benefit of further study to the polity as a whole is vanishingly small.
Cheers,
Dean
Dean, I think you missed reading the second word in the part of my comment you quoted which was 'if'.
The status quo in which we publicly fund universities is based on the idea that there are public benefits to university education, a fairly widespread belief.
Andrew was suggesting that these benefits would be *fully* captured in the wage offerred to a graduate, and I was pointing out an example of a benefit which wouldn't be captured.
Your assertion that these benefits don't exist is a separate argument.
Personally, I think that the kind of critical, analytical and investigative thinking skills it takes to be a good, for example, anthropologist, would have value beyond the field of anthropology.
This view is clearly shared by business since they offer higher salaries to anthropology majors than they do to high school grads, even for work which has nothing to do with anthropology.
The fact that there is a benefit to society which goes beyond the benefit to business seems pretty clear to me to. But that's (obviously) just my opinion.
I'll disagree with the taken-for-granted axiom that a basic undergrad degree, particularly in the social sciences, produces a more informed, more critical and more aware population.
In many cases, it simply brainwashes them into a passive socialist and leftist mindset, immune to and unable to critique national and international issues and where they remain entombed for the rest of their lives.
So what if a company gives more money to someone with a degree in Anthropology than someone with only a high school degree? It's not the discipline they are paying for, but the union-based decree that you must pay a university grad, regardless of the discipline, more than a high-school grad. The university grad may be less useful, because more brainwashed, than the high school grad, but above all - it doesn't mean that a university education means that you are a benefit to society.
Make university free or less costly - and you'll remove more from the employment market and then, put an enormous, enormous tax burden on these same people when they do become wage-earners.
The problem is, we don't have enough jobs for people, and so, we ship them off to university.
With the internet, education is more and more moving out of the institutions and into the hands of the individual. Does knowledge dev't have to remain confined within institutions?
To anon who complained my student debt issue is nonsense - please read the post again, I mentioned only tuition related to starting salary. I was a poor farm kid from the country that also paid for board and food when I could afford it. I still ended up with $0.00 debt, at graduation. The reason I did not include living expese is that many students live at home.
There's more to post-secondary education/training than university.
I've run the numbers: if I could get the same type (pay-wise) of summer jobs I had (including a couple of summers at minimum wage and/or less than full-time) I'd graduate debt-free again as I did way back when. Some jobs were better than minimum wage, but none were lavish.
I lived simply. Some people who did not live so simply took out loans and graduated with debt. No sympathy here.
declan"Dean, I think you missed reading the second word in the part of my comment you quoted which was 'if'."No - I read it, but it seemed to me that you meant "since" not "if." If that mischaracterizes your position, I offer my apologies.
"Andrew was suggesting that these benefits would be *fully* captured in the wage offerred to a graduate..." If he was suggesting that, he is mistaken, since there must be a margin between the benefits derived by employing a certain individual and the wages and benefits paid to that individual. I think his argument was that the benefits are sufficiently captured in the graduate wage that there is no need (nor argument) for public subsidy to education, aside from mechanisms to overcome the cash flow problem when a student undertakes their post-secondary studies.
"This view [that there are additional benefits to post-secondary eduction in the form of improved critical thinking skills] is clearly shared by business since they offer higher salaries to anthropology majors than they do to high school grads, even for work which has nothing to do with anthropology."Due to the gate-keeping functions of the University and college admission functions they may be (fairly) assuming a higher degree of ability among PSE graduates in general than non-PSE graduates. If so, then the proper comparison is between anthropology grads and PSE dropouts. Even if not, this does not necessarily imply that the benefit of the critical thinking / learning (etc) skills brought to bear by anthropology grads are not fully reflected in their wages, even if those wages are higher than those paid to high-school graduates.
I think it is a bit of a stretch to claim general societal benefits for PSE in addition to the (paid and unpaid) benefits that accrue to the employer of the graduate in question - I don't rule them out; but I would need to see more than hand-waving to be convinced. I think it is even more of a stretch to claim that these purported benefits are realized through the improved functioning of our democracy. We have steadily increased the number and percentage of PSE graduates in our society over the past 40 to 50 years; I see scant evidence that our democracy operates any better (or any worse) than it did 40 years ago. In that case, it is difficult to reject the null hypothesis that increased levels of PSE have no effect on the functioning of democracy.
Cheers,
Dean
Let's show the nice people the "numbers".
Before I begin, my point is this: public policy should not be designed for the excetptions or exceptional, but rather the general post-secondary experience. If what I describe below violates this premise, then by all means bring it up.
My tuition is precisely the Canadian average. $5,500. I have living expenses of about $10,000 per academic year (almost 2/3 of that is rent and basic groceries - the rest is books, dinners out, beer, laundry, clothing upkeep, random things like Christmas/Valentine's gifts, amortized computer expenses, etc.). Not at all unusual - terribly typical, I would argue. And doesn't include travel for academic opportunities, exchanges, etc. My program is intense, and competitive. Taking a job on the side is not realistic. To do so would almost certainly sacrifice my marks, and directly impacts the sort of job I can expect upon graduation.
Now, how much cash do I have to earn during the four, sometimes 3.5 summer months to avoid debt?
My tax rate is about 20%, combined federal and provincial, and I have about $15,000 of tax credits (basic exemption, $400/mo., and tuition). So, that's an extra $1,000.
After extending my living expenses over those months (an extra $5,000), I need to gross $5,375 per month during the summer to avoid debt.
I would love to take a summer job which pays at the equivalent of $64,500. And they exist. But they're few and far between. Much more typical is about $10/hr at 40 hrs/wk, or $6,400 gross (but wipes out the tax bill). Which leaves a gap of $14,100 for loans to fill. Multiplied over four years, and that's $56,000. Now, lots of people live at home. And lots have roommates, or live off KD, etc. But not all students, can, nor do, nor should have to. Living in luxury is not a reasonable expectation, but living in poverty cannot be a policy premise either.
Now. I don't advocate universal post-secondary tuition. But I do argue in favour of freezing tuition levels at their current levels, and/or introducing widespread debt forgiveness programs above certain ceilings for different areas (as does Alberta). A widespread expectation of $56k in debt cannot do anything for accessibility, nor be good for our economy (delays in housing starts, starting or expanding a family and all the attendant economic activities, etc).
er, universal *free* post-secondary tuition.
Well matt, seeing as tuition is only 27% of your yearly outlay, and reducing that to 0% would still have you in hock to the tune of $40K by the time you've graduated, I'm glad to see that you're not in favour of universal free post-secondary education. I do wonder why you don't think you should be held accountable for your living expenses while you're at school, though. Because you think they're "terribly typical", perhaps?
Dude, would you care to rephrase?
What I think you asked is "why do you take a stand on tuition when most of your expenses are cost of living?"
Which is an excellent question. My trite answer would be to say "yes" to your invocation of my "terribly typical" claim.
But a better response, I think, is to gently point out that you're buttressing my argument (and that I'm not arguing for reimbursement of the cost of living; just against the exacerbation of student debt). That is, one must live, and if one cannot work to live owing to studies, then one must borrow.
Or, one cannot escape from the necessity of studying during an education, which implies certain costs.
I'd like to conclude by adding two more factors into the fix, lest the debate become more myopic.
First, imagine the scenario I've painted (and again, I urge challenges to its reasonability) stretched over 6, 7, or 8 years as graduate, law, or medical studies are pursued. Also, factor much larger tuitions, i.e. Waterloo engineering, U of T med/law, U of A dentistry, etc. etc. which are double or quadruple what I've described. My model applies to an undergraduate experience, but post-secondary education often does not stop there, and again public policy must be able to deal with that necessary reality.
Secondly, recognize that debt is a disincentive in itself. Noone who acquires it thinks of it as free money.
Ugh, always with this hand-wringing over how much it costs to go to university and who is going to pay...
The key issue surrounding universities in Canada is their mediocrity and what that means for this country's competitiveness in the future. Somewhere around the dawning of Trudeaupia most middle class Canadians got it into their head that their children should be able to go to university as long as they got okay grades, and that the tuition should be reasonably affordable. The quality of that education was and continues to be a secondary concern. The result was an explosion in expansion at existing universities and the inauguration of many others - Trent and Lakehead to name two of many. Quality dropped like a stone - not surprisingly. What also fell away was the desirability to learn a skilled trade - welding, cabinetmaking, tool and die etc. It is something of a shame to many in the middle and upper-class if their child doesn't get the marks to enter a university. this ignores the fact that many of these trades require more education time on an ongoing basis than many university degrees and earn far more than the average university graduate (for example: I have several welders as clients that make over $250,000 per year and are required to take up to 60 hours per year in training to maintain their certification). We have shortages in these trades and a surplus in liberal arts degree-holders as a result. I digress...
The economist a few months back cited a survey of the top 30 universities in the world - 27 were in the US, the exceptions were Oxford, Cambridge and the U of Tokyo. No Canadian Institutions. This is due primarily to the lowest common denominator approach that prevents any aggressive attempt by a university to drive towards excellence - the system simply doesn't reward it. No government funding is predicated upon it and our tax system provides no incentive for individuals to contribute to post-secondary institutions - the main driver behind the US's system. A lack of private funding means a lack of private direction - our universities are quasi-governmental in their management, in their goals and in thus, their results.
Many will squawk that the US system is a bad one to emulate as it has astoundingly high tuition rates compared to Canada's. But these are offset by far more numerous scholarships for those with the ability but not the means. Also let me ask you this: If you were a parent with the means and your child had the ability, would you rather see them graduate from Stanford or Toronto? Also how many Nobel laureates do we produce on average versus the US and how many Canadian university graduates go on to create globally dominant software, or communication or whatever companies?
Bob Rae's report and Andrew Coyne's semi-positive review of it demonstrate that Canadians just do not get it - they cannot see the forest for the trees.