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 Grade1,” 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.