Rising tuition: An economic crisis for universities and students alike

Written By: Amit Shteyer

Tuition – a word we all know and an amount we dread paying. It is a fee that most of us, or our parents, cannot afford without the help of scholarships or OSAP. In light of the pandemic, these payments are even harder to make and universities have not been much help in easing this burden.

Most Canadian universities have been hiking up tuition, which has caused unease amongst students. Across Canada, students from universities, including University of Toronto, Western University, and University of Calgary, have been petitioning against this. Their main concerns? One, paying more for their education while the same access to tutorials, labs, and resources are restricted. Two, paying these increased tuition fees while in the middle of a recession. Universities were not prepared for the digital transformation brought on by the pandemic, and the increased costs are borne by students rather than the institutions. But, the real issue is not the 3-4% increase in domestic student tuition. It is international student fees and hikes.

International students pay the highest tuition fees, see the most consistent and harsh increases to that tuition, and lack government support that is available to domestic students. On April 22, the Board of Governors at the University of Guelph decided to freeze domestic students’ tuition while increasing international students’ tuition fees by 10-15%. Further, international students are left out of key government aid programs such as CESB (1). This inconsistency in tuition and the large yearly increases have been the cause for ongoing anger amongst students.

So, why has tuition in Canada become so high over time? How has COVID-19 led universities to increase tuition even further? And why is tuition so elevated specifically for international students and constantly on the rise?

The ongoing tuition battle
Tuition is not as low as it once was. For years now, students across the country have been complaining about tuition fees and their yearly increase. In the mid 80’s, tuition for an undergrad degree in arts at university was under $1000. Comparably, in 2020, Statistics Canada states that the average tuition for an undergrad program is $6,463 up from $5,366 in 2012 (2).

Most people would argue that the yearly increase in tuition is due primarily to inflation. However, if tuition were to increase at the inflation rate from 1984 until today, then the average tuition would have been $2,208 in 2012 and $2,269 in the last year (2).

So, how did we actually get to this point? It is based on the way universities are funded, and defunded. In the 1970’s, the provincial governments funded about three quarters of the cost of university degrees. Since the 1990s, this government spending was slashed in half as Canada fell into deeper debt. More programs have been implemented to fund education including student loans and the Canada Education Savings Grant (CESG) since the 1990s (3). Still, universities needed to recoup their margins somewhere and that place was the students that attended their institutions.

With rising tuition, universities have increased their financial aid for students, but this inadvertently contributes to the problem. The amount spent annually on scholarships and bursaries by universities is $2 billion a year. This helps students tremendously. However, money spent by universities on scholarships and bursaries also pushes tuition fees upwards, creating a vicious cycle (3).

The effect of COVID-19 on post-secondary institutions
The pandemic has brought on the acceleration of digitization, increasing the costs of universities as they try to make up for lost years. It’s become evident that that digital transformation was not on the mind of many of these schools prior to the pandemic. Canadian universities and colleges have been historically deficient of the resources and expertise required for online learning. Only 16% of university students learned primarily online throughout 2019 and digital spending has made up only a small fraction of education budgets. Prior to lockdown, it was predicted that technology spending would have reached only 4.3% by 2025. Two thirds of Canadian institutions mentioned that a lack of digital transformation prior to COVID-19 was mostly due to faculty resistance (4). These increased costs of new equipment, resources and time spent by staff are one of the main causes of tuition increase.

Universities have had to look to alternative resources to make the transition to online learning possible of over 2 million students. For example, the University of Waterloo hired over 300 summer students to assist with this transition (4). While the University was commended for helping these students find summer employment in the midst of a financial crisis, it ultimately cost the university. And this cost is not borne by the institution, but by domestic and international students.

Lower enrolment will also affect universities come fall, and with it will come declining revenues. With COVID-19 leading to online learning, studying in Canada has become less attractive for international students. About 26%, or 168,000, of study permit holders come from countries with very aggressive online censorship. This means that they may not even be able to access Canadian education resources. Since the lockdown, new student arrivals have declined and are expected to continue on this trend. Schools should expect many enrollment deferrals to continue until at least Winter 2021 (4). A lower number of international students paying for school inevitably leads to higher fees for those individuals to make up for the loss.

Institutions also fear and predict that their enrollment rates will decline due to individuals’ inability to pay tuition. Findings by faculty of the University of Dalhousie determine that enrollment decline will range between 14-29%. Even with the tuition increase put in place as a mitigant, there is a potential decline in tuition revenue as high as $37.8 million (5). This is to be expected as the number of newly issued international student permits dropped by 45% in March from prior year due to travelling restrictions and processing delays. These students alone provide universities with $6 billion in tuition every year (4). This shows a correlation between the increase in tuition, specifically in regards to international tuition, and a decrease in post-secondary institution revenues.

The international tuition phenomenon
There has been a constant gap between international and domestic tuition across Canada. The province of Ontario places a cap on the annual increases in domestic tuition. However, international tuition is unregulated, allowing universities to raise this tuition at their discretion (1). This is the reason why at all universities across the country, international students pay almost quadruple of what domestic students do. In 2020, the average tuition for a full time Canadian student at the University of Brock is under $6,100, while that of an international student is nearly $28,000 (6).

International students have seen increasingly large rises in their tuition fees year over year as their tuition rates have been exempt from provincial regulations. Tuition rates for international students at the University of Brock rose from $21,501.95 in 2015 to $27,885.60 in 2020. Meaning that over the period of 5 years, their tuition increased by 30%, while domestic students have actually seen a decrease in their tuition (6).

Universities are using international students as their “cash cows”. With the declining amount of provincial grants, universities are looking for a way to make up for losses. There is a direct correlation between the ongoing decrease in government funding for post-secondary education and the sharp increases in international student tuition. The ministry of advanced education stated that the number of foreign students in Ontario increased 88.5% over a period of six years from 2010. Revenue from their tuition rose from $620 million in 2011 to $1.28 billion in 2016, as shown below. This demonstrates a 107% increase within a span of 4 years which makes up the majority of post-secondary revenue (7).


Figure 1. Tuition revenue increases from international students year over year since 2010. Retrieved from CBC News (2017).

This leaves international students in a very difficult position. There is a common misconception that international students are all extremely wealthy. However, a survey conducted by Ontario Undergraduate Student Alliance found that 55% of international students struggle to afford tuition every semester. In addition to not having access to certain government programs, a student visa for foreign students only allows them to work 20 hours a week while being a full-time student (6). This further deteriorates their chances of being able to finance their education. The inability to afford tuition affects these students’ decision to return next semester. A recent survey for the federation and the Canadian Association of University Teachers revealed that almost one third of students asked said they may not attend school in the fall in light of the current situation (8).

Demand for post-secondary education
Now, you may be asking yourself, how can universities get away with this constant increase in tuition? Well, there is always very high demand for post-secondary education. Canadians are willing to pay the increased amount every year because it’s effective. In 2015, the average university graduate who worked full-time made 63% more money than a high school graduate. The rising competitiveness of the job market allows for the constant increase in tuition fees (9).

Unfortunately, these tuition increases have a lifelong toll on students. 50% of university undergraduate students graduate with some sort of student debt. Three years after graduation, nearly 23% of bachelor’s graduates still owed over $25,000 in student loans. This impacts individuals’ life goals and financial stability for the rest of their lives (9).

Conclusion
The battle surrounding tuition hikes has been going on for years. Due to North America’s strong belief in high education and its effects, demand for it will only keep rising. This in turn will allow universities to maintain high costs. It is one of the main reasons for which Canada will unlikely become like countries such as Germany, where post-secondary education is offered for free.

Increases in tuition have always been disproportionate between international and domestic students. At the same time, it is those international students who are having a hard time paying tuition during COVID-19 and that are leading to declining revenues of post-secondary institutions. Although there is a direct relation between decreased government funding and increases in international tuition, there seems to also be a correlation between rising international tuition and diminished university revenues. So, are the continuous and high hikes of 10-15% on international student fees, even during COVID-19, really helping universities in the long run?

Although International tuition may always be relatively higher, increases year over year should be regulated or contained to avoid the ridiculously large yearly burden, especially during a pandemic. Canadian institutions are struggling during COVID-19 but so are the students that have travelled halfway across the world for a good education. Post-secondary schools need to start factoring in the effects on their students when making decisions surrounding the current situation.

  1. Keung, N. (2020, May 28). The University of Guelph is hiking tuition for international students amid COVID-19 – and they aren’t happy. Retrieved July 27, 2020, from https://www.thestar.com/news/gta/2020/05/27/the-university-of-guelph-is-hiking-tuition-for-international-students-amid-covid-19-and-they-arent-happy.html
  2. Carrick, R. (2020, July 27). 2020 vs. 2012 vs. 1984: Young adults have it harder than ever today. Retrieved July 27, 2020, from https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-2020-vs-2012-vs-1984-young-adults-have-it-harder-than-ever-today/
  3. Alini, E. (2018, September 05). A vicious cycle: Why tuition is so high and will likely keep going up. Retrieved July 27, 2020, from https://globalnews.ca/news/4414387/canada-tuition-college-resp-2018/
  4. Schrumm, A. (2020, June 01). The Future of Post-Secondary Education: On Campus, Online and On Demand. Retrieved July 27, 2020, from https://thoughtleadership.rbc.com/the-future-of-post-secondary-education-on-campus-online-and-on-demand/
  5. Dalhousie University. (2020, June 24). Dalhousie University 2020‑21 Fiscal Update. Retrieved July 27, 2020, from https://www.dal.ca/covid-19-information-and-updates/updates/2020/06/24/dalhousie_university_2020_21_fiscal_update.html
  6. Kirwin, E., Kabaki, M., Czegeny, L., Dayton, J., Morrison, H., Nickel, N., . . . *, N. (2020, March 30). The fight for affordability and equality for international students – . Retrieved July 27, 2020, from https://www.brockpress.com/the-fight-for-affordability-and-equality-for-international-students/
  7. Crawley, M. (2017, July 12). Ontario universities ‘using international students as cash cows,’ critics say | CBC News. Retrieved July 27, 2020, from https://www.cbc.ca/news/canada/toronto/international-students-universities-ontario-tuition-1.4199489
  8. The Canadian Press. (2020, May 29). Students upset as some Canadian universities hike tuition fees. Retrieved July 27, 2020, from https://www.ctvnews.ca/canada/students-upset-as-some-canadian-universities-hike-tuition-fees-1.4961036
  9. Royal Bank of Canada. (2018). The Cost of Credentials: The shifting burden of post-secondary tuition in Canada (Rep.). Retrieved July 27,2020, from http://www.rbc.com/economics/economic-reports/pdf/other-reports/Tuition_June2018.pdf

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