Postsecondary costs stunt the economy

[jacee]

Students, parents and grandparents are all hamstrung by increasing postsecondary costs, reducing the amount of money we spend on other goods and services, thus our contribution to the economy is stunted.

I was just considering my finances, whether to do renovations or put more into education savings for my grandchildren. The way tuition is going, there's no question it has to go into education savings. So I won't be buying goods and services, employing people, etc.

Instead, it all goes to universities some years from now.

And kids whose parents and grandparents can't contribute ... don't get to go, or they graduate with mountains of debt so can't buy goods and services, houses, cars etc, for years after they graduate. The money all goes to the banks.

Expect to see increasing student protests, with parents and grandparents joining in!

University costs have tripled over past 20 years: study

Study co-author Erika Shaker said the numbers sound alarm bells for Canada's future economic prosperity.

[Bonam]

This would be a valid complaint in the US but in Canada university costs are still really cheap. The study you linked says $6842 in 2016-2017. That may be triple what it was in 1990, but it's still very affordable. My tuition when I did undergrad in Canada was about $8000 per year and I paid it all just from income of summer jobs... and even if I hadn't, graduating with a student debt of $30-40k is not a really big deal, assuming one obtained a useful degree.

We need to make sure that university costs don't spiral out of control in Canada as they did in the US, with top schools charging $60,000-$90,000 / year, but there is no need to worry about things just yet.

[TimG]

Students, parents and grandparents are all hamstrung by increasing postsecondary costs, reducing the amount of money we spend on other goods and services, thus our contribution to the economy is stunted.

The system in the US is out of control largely because there is no constraints on universities who are free to raise tuition as much as they like and a federal government which provides students with whatever debt they need to pay those costs. This system is also riddled with unethical 'brokers' who profit on the naivety of students.

In Canada it is not so bad because government controls what universities can charge.

That said, university must come with a cost to students because that is the only way to ensure that students take time to think about what they are taking and why they are taking it. I would say that a fair price for a 4 year degree should be in the 20-30K range. It is large enough to provide proper market incentives but low enough that student are not forever burdened with debt hurts the economy in the long run. The difference between this cost and the cost of university must be made up with direct subsidies.

I would also like to see a system where universities are on the hook if for at least part of the debt if a former student defaults (maybe 10%). This would provide incentives to universities to make sure they are preparing students for paying work.

Edited September 12, 2013 by TimG

[jacee]

This would be a valid complaint in the US but in Canada university costs are still really cheap. The study you linked says $6842 in 2016-2017. That may be triple what it was in 1990, but it's still very affordable. My tuition when I did undergrad in Canada was about $8000 per year and I paid it all just from income of summer jobs... and even if I hadn't, graduating with a student debt of $30-40k is not a really big deal, assuming one obtained a useful degree.

We need to make sure that university costs don't spiral out of control in Canada as they did in the US, with top schools charging $60,000-$90,000 / year, but there is no need to worry about things just yet.

I don't consider comparisons to the US valid: Postsecondary there is considered a 'privilege' reserved for the well off.

ETA: This is the US way:

graduation and persistence rates are relatively static over the last decade. ...

58 percent of high income BPS students earned a BA, compared to 25 percent of low-income students;

http://etwca.wordpress.com/2010/12/14/postsecondary-persistence-and-graduating-rates-a-little-insanity-can-go-a-long-long-way/

In Canada we strive for a more equitable access for all qualifying students, regardless of family means. Postsecondary graduation has increased by 20% in recent decades as all students see it as a necessity. That will be eroded by increasing costs, with negative impacts on the economy as well.

It's another example of the erosion of the middle class, impacting multiple generations, defeating upward mobility and slowing economic growth.

Tripling in the last two decades is a serious trend that has to be reversed now to prevent the widespread economic damage that results from an under-educated workforce or one too burdened by debt to contribute to the economy.

As it is, only the colleges and universities AND THE BIG BANKS are benefiting economically, not the economy as a whole.

And jobs are not available for all students to subsidize their education. Youth unemployment is higher all the time. A local hamburger stand hires only graduate students for summer jobs: Yes that's right ... It takes a university degree to get a summer job slinging burgers! Other seasonal jobs are increasingly filled by temporary foreign workers who don't have to leave to go back to school during harvest, etc.

There is no comparison to our own past experience. I went to university at a time when small student loans and larger grants and a good summer job covered all my costs.

That simply isn't the case any more. It takes students, parents and grandparents saving (not spending) just to cover tuition, not even counting living expenses! I'm assuming my grandkids will stay with me or their parents and we'll support them, limiting their choices to two universities or colleges and also limiting our spending in the broader economy. Saving for retirement is difficult to impossible for average income parents with several kids to finance through postsecondary, increasing the pressure on public funding for seniors and consuming the 'spending money' of senior grandparents too.

The impacts on the economy are subtle but insidious, and will become more obvious over time. Now is the time to reverse the trend.

Edited September 12, 2013 by jacee

[Bonam]

I don't consider comparisons to the US valid: Postsecondary there is considered a 'privilege' reserved for the well off.

ETA: This is the US way:

graduation and persistence rates are relatively static over the last decade. ...

58 percent of high income BPS students earned a BA, compared to 25 percent of low-income students;

http://etwca.wordpress.com/2010/12/14/postsecondary-persistence-and-graduating-rates-a-little-insanity-can-go-a-long-long-way/

In Canada we strive for a more equitable access for all qualifying students, regardless of family means. Postsecondary graduation has increased by 20% in recent decades as all students see it as a necessity. That will be eroded by increasing costs, with negative impacts on the economy as well.

The point wasn't comparing costs to the US, but pointing out that the whole "tuition is too high" cause is applicable only in the US, period. It's simply not true in Canada. It's like Occupy Wall Street... an imported cause, one that originates in the US and Canadians adopt it, whether or not the same situation is actually true in Canada.

It's another example of the erosion of the middle class, impacting multiple generations, defeating upward mobility and slowing economic growth.

I disagree. $6k/year tuition does not erode the middle class, this is a very affordable tuition, even without parents (or grandparents) contributing anything to the cause. For students from low income families, there are plentiful subsidies, bursaries, and financial aid options available.

Tripling in the last two decades is a serious trend that has to be reversed now to prevent the widespread economic damage that results from an under-educated workforce or one too burdened by debt to contribute to the economy.

I agree that the rate of increase is too high. However, tripling in the last few decades is in many cases because governments unlocked tuition freezes, and all the increases that would have happened over much longer time periods finally came all at once. For example, at my undergrad school, UBC, tuition rates had been locked for over a decade under the NDP. When the Liberals unlocked it, rates more than doubled over a 2-3 year period. After that, rate growth slowed dramatically. If we see evidence of continued unsustainable growth in tuition rates, I agree that steps should be taken to limit it, but current tuition rates are not unreasonable nor unaffordable.

As it is, only the colleges and universities AND THE BIG BANKS are benefiting economically, not the economy as a whole.

Students who earn useful degrees benefit economically, to a very large degree in fact.

And jobs are not available for all students to subsidize their education. Youth unemployment is higher all the time. A local hamburger stand hires only graduate students for summer jobs: Yes that's right ... It takes a university degree to get a summer job slinging burgers! There is no comparison to our own past experience. I went to university at a time when small student loans and larger grants and a good summer job covered all my costs.

Your past experience may no longer be relevant. My past experience, however, is very much relevant. I only completed university (PhD) in 2011. I started undergrad studies at UBC in 2003. Throughout that entire time span, summer jobs were widely available. And I wasn't flipping burgers, but doing paid internships relevant to my studies, which frankly ALL people that go to university should be doing.

Other seasonal jobs are increasingly filled by temporary foreign workers who don't have to leave to go back to school during harvest, etc.

Perhaps. If you have complaints about our immigration and temp worker system, I suggest you start threads about those. I too agree that bringing in large numbers of immigrants or foreign workers during times of relatively high unemployment is a terrible idea and adversely affects the existing Canadian population, including students and new grads.

That simply isn't the case any more. It takes students, parents and grandparents saving (not spending) just to cover tuition, not even counting living expenses!

Completely false. You bought into media hype that tells you these things. The reality is that university remains affordable to all students in Canada, whether they get any financial help from their parents or not. I've been there, done that, ran through all the budget numbers, just a few years ago, and have many friends that are still doing it. You are far removed from the situation and it sounds like you don't have a good grasp of costs and budgets involved but simply believe media talking heads that rant about the issue, when in reality their rants are applicable solely to US private schools.

Edited September 12, 2013 by Bonam

[jacee]

The point wasn't comparing costs to the US, but pointing out that the whole "tuition is too high" cause is applicable only in the US, period. It's simply not true in Canada

It isn't comparable to the US which only aims to educate the elite rich.

It is true in Canada that increasing education costs prevent EQUAL access regardless of family income.

I disagree. $6k/year tuition does not erode the middle class, this is a very affordable tuition, even without parents (or grandparents) contributing anything to the cause. For students from low income families, there are plentiful subsidies, bursaries, and financial aid options available.

Not plentiful enough.

Show me a link that proves your claim that family income isn't a barrier to postsecondary.

I agree that the rate of increase is too high. However, tripling in the last few decades is in many cases because governments unlocked tuition freezes, and all the increases that would have happened over much longer time periods finally came all at once. For example, at my undergrad school, UBC, tuition rates had been locked for over a decade under the NDP. When the Liberals unlocked it, rates more than doubled over a 2-3 year period. After that, rate growth slowed dramatically. If we see evidence of continued unsustainable growth in tuition rates, I agree that steps should be taken to limit it, but current tuition rates are not unreasonable nor unaffordable.

Show me the link that supports your claim.

"not unaffordable" ... for whom? Low income families? We are trying to make postsecondary accessible to ALL qualifying students, not only those whose families can afford it. How does a low income family - under $30,000 - afford to spend 20% of their income on tuition? What if they have 2-3 kids ?

Students who earn useful degrees benefit economically, to a very large degree in fact.

Saddled with student debt the size of a mortgage, they are not contributing to the economy.

This thread is about the damage that high education costs are causing to the entire economy.

Your past experience may no longer be relevant. My past experience, however, is very much relevant. I only completed university (PhD) in 2011. I started undergrad studies at UBC in 2003. Throughout that entire time span, summer jobs were widely available. And I wasn't flipping burgers, but doing paid internships relevant to my studies, which frankly ALL people that go to university should be doing.

Perhaps. If you have complaints about our immigration and temp worker system, I suggest you start threads about those. I too agree that bringing in large numbers of immigrants or foreign workers during times of relatively high unemployment is a terrible idea and adversely affects the existing Canadian population, including students and new grads.

Completely false. You bought into media hype that tells you these things. The reality is that university remains affordable to all students in Canada, whether they get any financial help from their parents or not. I've been there, done that, ran through all the budget numbers, just a few years ago, and have many friends that are still doing it. You are far removed from the situation and it sounds like you don't have a good grasp of costs and budgets involved but simply believe media talking heads that rant about the issue, when in reality their rants are applicable solely to US private schools.

That is the direction ours are going, which is why it's critical to reverse the trend before the economic fallout of such elitism becomes too severe. Edited September 12, 2013 by jacee

[Boges]

Students should have to give evidence they have a plan to become employable in-order to receive an OSAP loan.

If you want to get a BA in History you should provide evidence (based on market conditions) that you are going onto a post-graduate program that actually gives you skills that the economy needs.

But of course people that teacher philosophy, history, human rights etc would be out of a job.

[dre]

It's like Occupy Wall Street... an imported cause, one that originates in the US and Canadians adopt it, whether or not the same situation is actually true in Canada.

Its not that simple... Tuition costs in Canada are increasing at about 4-5x the overall rate of inflation, and faster than any other sector. You can make a subjective judgement that prices are still ok now, but trend is still going to generate concern. And an even bigger concern should be the macroeconomic reasons for this. The cost of things like healthcare and education are increasing relative to the costs of other things because these things are going up because they arent subject to as much global competition as other sectors are.

You basically have two different economies. You have the global economy which a lot of Canadians work in, and a siloed off domestic economy, and the people in the former are finding it increasingly hard to buy services from the latter.

Inflation adjusted tuition costs have gone from $2400 dollars in 1991, to $6100 today, and they are projected to be just under $8000 by 2016.

So the concern is not that Canadas prices are as high as the US, its that they are increasing at roughly the same rate for the same reasons, and we will eventually have the same problem here.

Edited September 12, 2013 by dre

[Boges]

University's don't have to respond to market conditions. They can pay a professor 6 figures to teach students something that won't help them get a job, and no one can say bleep about it.

[dre]

University's don't have to respond to market conditions. They can pay a professor 6 figures to teach students something that won't help them get a job, and no one can say bleep about it.

That IS a market condition. Enrollment is very high and theres lots of demand for these services. We should encourage students to study in other countries and make sure theres loans available for Canadians that want to study abroad. Make Canadians schools have to compete for these students and youll see prices start to come down.

[Bonam]

It isn't comparable to the US which only aims to educate the elite rich.

Not at all true. These kind of statements discredit yourself and your argument.

We are trying to make postsecondary accessible to ALL qualifying students, not only those whose families can afford it. How does a low income family - under $30,000 - afford to spend 20% of their income on tuition? What if they have 2-3 kids ?

They don't. The students qualify for financial aid and student loans.

Saddled with student debt the size of a mortgage, they are not contributing to the economy.

I don't know on what planet you are buying houses, but a mortgage in Canadian city is 10-100x the size of the student debt we are talking about. Student debt after 4 years of tuition is $20-30k if they didn't work at all during university. A mortgage is gonna be $200k (if you're living somewhere reasonable) to $2 million (if you're someplace like Vancouver).

[Bonam]

Inflation adjusted tuition costs have gone from $2400 dollars in 1991, to $6100 today, and they are projected to be just under $8000 by 2016.

So the concern is not that Canadas prices are as high as the US, its that they are increasing at roughly the same rate for the same reasons, and we will eventually have the same problem here.

As I said previously in response to jacee, I agree that the rates of increase are excessive and should be monitored, and if they continue much longer, should be limited. However, arguments that the current tuition fees are exorbitant, or make people unable to go to school, or that parents (and apparently grandparents!) have to save their whole lives to send kids to school for 6k/year, that this is crushing the economy, are counterproductive to the argument, because they are not true.

Tuition rates have room to roughly double in Canada (or go up by about 6x in Quebec) before they are problematic and become a significant burden.

[Bonam]

That IS a market condition. Enrollment is very high and theres lots of demand for these services. We should encourage students to study in other countries and make sure theres loans available for Canadians that want to study abroad. Make Canadians schools have to compete for these students and youll see prices start to come down.

Universities "abroad" are not much cheaper in most countries that have good universities, especially ones where you might have a reasonable chance of transferring accreditation and qualifications back to Canada. Furthermore, tuition costs for foreign students are typically much higher than for students that are residents of a given country (in the US and Canada, a foreign student typically pays ~3x more than a resident; foreign students paid ~23k for the same program that I paid ~8k for). A Canadian student going to the US, Europe, Australia/New Zealand, Japan, South Korea, etc, will pay a lot more than they do in Canada and incur more debt. A student going to Zimbabwe is as likely to come back home in a box, and if not, will have received an education that will not make them competitive with other job seekers in Canada.

Edited September 12, 2013 by Bonam

[dre]

Universities "abroad" are not much cheaper in most countries that have good universities, especially ones where you might have a reasonable chance of transferring accreditation and qualifications back to Canada. Furthermore, tuition costs for foreign students are typically much higher than for students that are residents of a given country (in the US and Canada, a foreign student typically pays ~3x more than a resident; foreign students paid ~23k for the same program that I paid ~8k for). A Canadian student going to the US, Europe, Australia/New Zealand, Japan, South Korea, etc, will pay a lot more than they do in Canada and incur more debt. A student going to Zimbabwe is as likely to come back home in a box, and if not, will have received an education that will not make them competitive with other job seekers in Canada.

Thats not always the case... I have a friend studying business in the Czech republic right now, and not only is her tuition less, but living expenses are lower by a factor of 4. You would have to look at things on a case by case basis, and you have to look at not just tuition but living expenses.

Tuition and living expenses in Canada combined are normally about 30 K per year or about $2500 per month.

The cost per month (tuition plus living expenses) for an international student to study in Finland is 700 Euros. 800 Euros in Austria, same in Norway, Sweden, German, etc.

All of these countries have tuition free universities for international students.

[Boges]

That IS a market condition. Enrollment is very high and theres lots of demand for these services. We should encourage students to study in other countries and make sure theres loans available for Canadians that want to study abroad. Make Canadians schools have to compete for these students and youll see prices start to come down.

Ironically that's what we should do with public education. See voucher system.

[jacee]

Students should have to give evidence they have a plan to become employable in-order to receive an OSAP loan.

If you want to get a BA in History you should provide evidence (based on market conditions) that you are going onto a post-graduate program that actually gives you skills that the economy actually needs.

Funny that ... how the market changes so fast and proves predictions wrong.

Students are in no position to predict the job market: Employers can't even accurately predict their own future needs.

Postsecondary institutions that have tried have been frustrated, because the job market changes rapidly and unpredictably.

[TimG]

That IS a market condition. Enrollment is very high and theres lots of demand for these services. We should encourage students to study in other countries and make sure theres loans available for Canadians that want to study abroad.

Actually, we should completely rethink the 'time served' model of education. People can be educated effectively with online courses done by qualified presenters. There is absolutely no value in paying 100 different profs around the country to stand up in front of a room and teach the same material.

Universities should focus entirely on the interactive part of education (e.g. labs and study groups). Of course, this means there will be a lot less demand for tenured positions and more demand for lab techs and teaching assistants.

Edited September 12, 2013 by TimG

[Boges]

Funny that ... how the market changes so fast and proves predictions wrong.

Students are in no position to predict the job market: Employers can't even accurately predict their own future needs.

Postsecondary institutions that have tried have been frustrated, because the job market changes rapidly and unpredictably.

When someone who has been in the work force for awhile finds themselves out of work and want help from the government for re-training they are told the onus on them to prove they want to go into a field where job prospects are great.

Right now it's not a good investment of public money to give out loans for someone wanting to get into teachers college.

[hitops]

Funny that ... how the market changes so fast and proves predictions wrong.

Students are in no position to predict the job market: Employers can't even accurately predict their own future needs.

Postsecondary institutions that have tried have been frustrated, because the job market changes rapidly and unpredictably.

Which ones have tried exactly? and how? Having been involved in the post-secondary education for the better part of the last 12 years, my perception is that universities make almost not attempt to do this. Why would they? The incentive of a university administrator is to balance the books and her her/his job. That means bring in more cash, which means enroll as many students as possible.

It doesn't matter if the degrees help them whatsoever, or contribute any kind of useful skills or economic impact in the future. The incentive for the university is simply to make as many programs/departments/courses as possible, because that widens the potential poor of tuition-payers. The other incentive is for the prestige of the uni and it's bosses. None of that is necessarily tied in any way to future national prosperity.

And the underlying reason for this......is simply because it's ultimately regulated and funded mostly by the government. They cannot move quickly enough to adapt to the needs of society in reality, and any job with government funding is basically impossible to remove somebody from, and usually costs and lot in salary and benefits. So, we get higher and higher tuition.

The other reason is simple. Everybody assumes today that university is critical, and so the demand is really high. This will always increase costs. Also, in previous generations it was assumed that you help to provide for your own education, if you go at all. Today kids just expect mom and dad to foot the bill, and of course they often will, and this again drives demand and thus prices. Kids who are not themselves making sacrifices, don't take it seriously, leading to a proliferation of the problems mentioned above, mainly taking pointless degrees that seem interesting at the time.

Edited September 12, 2013 by hitops

[jacee]

How does a low income family - under $30,000 - afford to spend 20% of their income on tuition? What if they have 2-3 kids ?

They don't. The students qualify for financial aid and student loans.

I don't know on what planet you are buying houses, but a mortgage in Canadian city is 10-100x the size of the student debt we are talking about. Student debt after 4 years of tuition is $20-30k if they didn't work at all during university. A mortgage is gonna be $200k (if you're living somewhere reasonable) to $2 million (if you're someplace like Vancouver).

Student jobs may pay for living expenses while working, but loans for school tuition and living expenses are common, and do approach mortgage size. None of them are buying a starter condo until student loans are paid. Let's hope they find something better than a bread and butter job, or they won't be able to make the payments.

[Bryan]

If anything, I think it's remarkable how affordable our university is in Canada. I recently paid for my son's first year of university, and the total tuition was barely any higher than it was when I went to the same university 20 years earlier. The big cost increase was the books. He had several that were approaching $300 each.

[Topaz]

TVO is doing a show on students and it was revealed that getting a BA doesn't guarantee a good paying job. Some students who go to college sometimes ended up making more money than university grads, unless of course, they are doctors, lawyers etc. Many of them were at least 25,000 in debt and some more depending on if they could get a part time job and if mom and dad could help them. The lucky ones were the ones that could live at home and go to school. I feel sorry for the young people today, we, boomers have really screwed up their world, high unemployment is 40 % for students.

[hitops]

TVO is doing a show on students and it was revealed that getting a BA doesn't guarantee a good paying job. Some students who go to college sometimes ended up making more money than university grads, unless of course, they are doctors, lawyers etc. Many of them were at least 25,000 in debt and some more depending on if they could get a part time job and if mom and dad could help them. The lucky ones were the ones that could live at home and go to school. I feel sorry for the young people today, we, boomers have really screwed up their world, high unemployment is 40 % for students.

Thanks for being willing to take the blame, but I think the fault lies with the parents and the kids themselves. You are absolutely right, colleges and trade schools today often turn out kids with more marketable skills than many BA programs. It really depends on the BA.

You touched on a reality we are seeing more and more. On the one hand you can do a 18 month course in something useful like becoming a welder or electrician, for instance. You then apprentice at $20 for 4 years and then start making $30-40. A guy or gal willing to do some hard work and get a little dirty can do this easily. Not only that but his cost of living is lower, because he is probably also the type who can change his own oil and reno his own house. In the other example you have a kid who grew up in the burbs, and sees manual labor as undesirable. He goest to uni because that's what his parents say to do, gets a degree in geography can't land a job. He or she is now 4 years behind the first guy/gal, $40 000 in debt, with nothing useful to the world, and probably still expecting to walk into a $70,000 job that's clean, pleasant and with lots of time for coffee.

Today university offers a whole lot of useless, and also some useful, but I don't believe many kids can tell the difference out of high school. The scandal is that taxpayer's are subsidizing huge of amounts of unproductive nonsense at universities across the country.

Edited September 13, 2013 by hitops

[ReeferMadness]

The title of this thread just shows how brainwashed people are and how screwed up our priorities have become. We should be less worried about a stunted economy and more worried about the stunted minds of the citizens.

[Bonam]

TVO is doing a show on students and it was revealed that getting a BA doesn't guarantee a good paying job.

Of course it doesn't guarantee a good job. Nothing guarantees a good job. That being said, the choice of degree can have a strong impact on how likely it will be for one to find a good job. People need to consider their employment prospects when picking a degree. A lot of people take relatively useless degrees and then wonder why they cant find a job, but it's no mystery at all.