Will The Real Cost Of Education Continue To Rise?

Some think tanks have been cautiously warning Canadians (and really most countries in the Western World) that as a result of new austerity measures and the demographic issues that are about to hit us, the real cost of tuition for the average post-secondary student will probably continue increase (above the rate of inflation).  If you are wondering how ageing baby-boomers and their pension demands may affect the cost of education for their grandchildren, it’s important to consider the overall structure of Canadian post-secondary education.  Even though most university students feel they pay more than enough tuition (and there is a fairly strong voice for a completely subsidized education for everyone who wants it, such as in the Scandinavian system) the government still funds about 60-80% of the cost for students at post-secondary institutions.  The other 20-40% is of course passed on to the students through the various types of tuition fees that they are charged.

The Sun Never Sets On The English… Student Loans?

The situation in England over the last few years has been indicative of what other countries might expect according to some analysts.  Some people might remember an incident last year where a group of mostly young people rushed the Royals’ car and rocked it back and forth while screaming obscenities.  This was a direct result of a decision earlier that month to basically triple tuition costs overnight for English students (and thereby saving the government millions).

Cost Of Education – Invest In The Past or The Future?

With a stark new reality staring us in the face, will Canada scale back on how much it subsidizes the cost of education?  The facts are that an ageing population is putting more strain on the system than ever before.  As bureaucracy gets bigger and bigger it becomes less efficient, has a more powerful lobby, and subsequently becomes more expensive (see the recent Postal strike).  Canadians are retiring earlier and living longer, and the system simply cannot sustain itself without raised taxes or cutting services.  Raising taxes is never popular, and there is little doubt that it does result in stunting economic growth to some degree, especially business taxes.  This leaves us with the current debate that is raging in the USA right now: What is the balance between streamlining government services and raising taxes?  Will Canadians be asked to not only pay a larger part of their retirement, but a larger part of their child’s education as well?

We Are Competing Against More Than Ever Before With The Cost Of Education

I usually always come down on the side of private business, smaller government, and lower taxes, but this is one issue I think we need to look at very carefully.  There is little doubt that the world is getting to be a more and more competitive place for young Canadians.  The need for education is paramount to the survival of our economy.  It is inevitable that manufacturing jobs, and other low-skill jobs will be outsourced to the poorer parts of the world that have few – if any – labour laws; therefore, the consensus is that we must have an innovation-rich approach to creating jobs in Canada (and the rest of the Western World).  In order to facilitate this growth and innovation, we must keep our technological edge.  With our public schools in rough shape (anyone want to debate this with a public school teacher who is already considering sending his future children to private schools?) our saving grace is our elite post-secondary system.  We need to be able to get the brightest Canadians into these communities no matter what their financial background.  At the same time, I don’t believe in the idea that post-secondary education is a right and I am of the opinion that there should be some private investment into one’s educational career.

How Much Help Do We Need?

So where does the balance fall?  Should we move to a more American system that places a larger portion of the burden on individual families, yet offers many scholarships, bursaries, and grants in order to facilitate the brightest minds across their nation?  Or should we invest in our future by moving to the Scandinavian model that sees everyone who wants a university education get one?  I might be one of the only people in the debate who thinks our current compromise is actually a pretty fair one.  I believe tripling tuition overnight is a terrible move in England, and that they will be seeing the effects of that decision for decades to come.  I also think that allowing post-secondary education for free will hurt the efficiency of the program, curtail overall productivity in the workforce, and obviously result in higher taxes during a time where taxes already face upward pressure.

The current 70-30% split is a good one in my view.  Parents should plan and save for their child’s education whether they want to pursue a MSN nursing, carpentry, or a music degree, saving is always a good idea.  The nation should invest in the leaders of tomorrow.  I dislike the consequences on either side of disrupting this balance.  Ideally, I would like to see Canadians embrace the private philanthropy that has become so popular in the USA, and if I ever have an amount of money that allows me to do so I would love to create a trust that would act as a scholarship for years to come.  One other option worth exploring is to subsidize areas where Canada needs workers most.  One criticism of education and the new economy is that we are producing far too many liberal arts degrees (like the one I have on a shelf somewhere).  I think a Liberal Arts degree is a great thing to pursue for one’s own enjoyment, but the fact is that we need creative engineers in all areas to create jobs for the rest of this country.

What do you guys think?  Does the new reality mean that students should accept cutbacks just like other demographic groups, or is the best way to fuel the new economy through heavy government subsidization?  I’d love to hear some creative solutions. Is the cost of education too high?

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I think that there is only so much that can be charged and that point is drawing near. Eventually, competition and cheaper alternatives will cause enrollment to decline at which point universities will have to continue to attract students to pay for fixed costs. At that point, the laws of supply and demand will begin to take over.

I believe the government has a responsibility to make education and healthcare affordable for all. This means if you make more money you should pay more. Finding the right balance is not that hard. A well functioning democratic society depends on a well educated citizenry.

How about the new open education movement? Top schools such as Harvard, MIT, Berkeley, etc have been contributing content. I think usually first year classes but still amazing to see. Here’s a comprehensive list: http://www.openculture.com/freeonlinecourses Probably we won’t be seeing free post secondary education for all anytime soon. However we may see a mix of free and paid education. I think because our society needs higher education for tomorrow’s jobs, it’s pretty important to make education affordable for all. We may not decide on a Scandinavian approach but there are many mixes we could employ. Generally I think that a… Read more »

I feel for those of you in the US who have to pay so much for both school and health care. In Canada, our university is quite affordable and there are ways to get scholarships and bursaries if you are lower income. You can also get interest free loans. As far as health care goes, we pay higher income taxes but part of this goes to covering our health costs. The system works decently as a whole. If the US implemented something similar, I think people would be a lot better off.

The basic premise of education costs increasing greater than inflation bothers me! There is something fundamentally wrong that it increases so much. Something needs to be done! It seems that it increases because someone, the government or individuals pay for it. They may want to re-think the system.

I would think that eventually supply and demand would catch up with the costs of college. Cheaper alternatives would come along and students will balk at paying the high cost of tuition.

With the way student loans are provided to anyone who wants them there is no incentive to make student loans affordable. If anyone can get a loan for any amount, why not keep raising the tuition. Tuition will fall when student loan lending subsides.

Barbara Friedberg

This is a tough one. I am distressed at the rising cost of education in the US as well as the high debt levels of many college students. But Canada’s system has disadvantages as well. Either way, we need to pay for education. I’m not sure what the answer is.

Barbara Friedberg

I’lm distressed abou the amount of debt students take on. It is catastrophic for those in all but the highest paying fields. And Canada is fraught with very high tax rates. It is a tough situation without an ideal solution.

Yes. Also, student loans should be treated just like any other debt. You should have to abide by strict debt to income ratio’s. It’s crazy how they won’t let me take out unlimited loans to get homes but lenders do not hesitate to provide a person with a student loan.

I feel that if student loans were allowed in bankruptcies again lenders would be more cautions on who they provide loans too. Since consumers cannot bankrupt student loans banks have not investment risk. Hence, the lending never stops.

Hi TM, I agree government should focus on where we need the education – the education should help our economy. Totally agree it’s also needed in Engineering and not Liberal Arts. I am proud to say I’m a Liberal Arts dropout! haha I ended up going to college, got an Advertising diploma and then got another certificate in Interactive Multimedia. I couldn’t even stay a year at University because of the lack of focus with a Liberal Arts education – I didn’t realize I was a very practical 18 year old! If I could do things again I’d go into… Read more »

One more thing. Continuing and online education are booming industries. New online classes are being created everyday… Currently I can join an online class at Harvard from the comfort of my own home. Here’s a link to that resource: http://www.extension.harvard.edu/distance-education/online-course-offerings Personally I’m not so fearful of the future of education, I’m actually rather excited. It’s the first time that a person can take control of their own education, customizing their experience to their preferences. We have come a long way in technology. Our education system is fast becoming archaic. We need to be bringing in more technology into the classrooms… Read more »

Like a lot of the commenters I think this current situation we are in is a complete education bubble. It has to crash…anything that grows (this case it is tuition) 5 to 10% a year there will be an implosion….fixed costs are just not that high

Like everything else, inflation will make costs rise. However, as government (Canada) continue to keep reducing subsidies the costs will fall to the attendees.

Gerard

I’m not crazy about the idea that government or business should decide how many spaces to subsidize in a particular area based on perceived job opportunities, simply because they’ve shown how incredibly bad they are at that in the past. Ten or fifteen years ago, everybody talked about the upcoming teacher shortage, and universities were pushed to open more seats in education faculties. They went too far, and now (especially in Ontario) universities have expensive buildings and professors that they pay for by graduating far more teachers than the system currently needs. Same thing, in reverse, for nursing in most… Read more »

When education is subsidized with easy Federal money/loans, there’s only one direction to go, and that is UP!

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