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Canadian university surpluses hit $7.3bn with international fee boost

Canadian universities had record surpluses during the pandemic last year – with international tuition fees contributing a growing share of revenues and boosting the bottom line.

In the past decade, tuition revenues have become more important to schools, increasing from 21.5% of total revenues to 28.8%. Photo: iStock

Investment income hit a record $5.4 billion in 2020/21, increasing operational surpluses

Statistics Canada, the government’s data agency, reported this week that university surpluses hit a total of $7.3 billion in 2020/21 as post-secondary institutions shuttered classrooms to reduce the spread of Covid and shifted to online learning.

University revenues jumped 12.8% to $46.3 billion. At the same time, expenses fell 3.8% to $39 billion.

In the past decade, tuition revenues have become more important to schools, increasing from 21.5% of total revenues to 28.8%. Meanwhile, the government share of funding has slumped to 32.5%, the report said.

While international tuition varies by program and university, international students on average paid three times the tuition of domestic students.

“This trend may be related to a steady shift towards more reliance on tuition fees – particularly from international students – to fund universities’ operating activities,” the report said.

The Canadian Federation of Students has called the international student fee differential “exorbitant” and is demanding that the provinces make education more accessible for all students.

When universities moved classes online, some international students complained, arguing that tuition should be reduced if they were denied the full experience of on-campus education. Their pleas fell on deaf ears as most universities held the line on international tuition.

“It is disappointing that the Statistics Canada report demonstrates that although some universities had significant surpluses, it did not have a positive financial spillover effect on students experiencing online learning,” said Patricia Barros Ayaz, a student from Turkey who attends Dalhousie University in Halifax, Nova Scotia.

On the positive side, she said Dalhousie waived part of its mandatory charges for students who were taking online classes and living abroad. “For example, while I was in Turkey, I did not have to pay for the health plan, the bus pass, athletics or recreation facilities,” she told The PIE News.

Ayaz credited the school with working hard to make the e-learning experience feasible and secure. “The university invested in the training of many workers and provided students with technical support.”

Several provinces provided extra funding to universities during the pandemic to help with the transition to remote learning. For example, the Ontario Ministry of Colleges and Universities doled out $164 million to schools to modernise classrooms and support online classes.

Soaring stock markets also boosted post-secondary institution revenues. Investment income hit a record $5.4 billion in 2020/21, increasing operational surpluses. However, the report warned that stocks have dropped this year so this record is unlikely to be repeated.

The Statistics Canada report cautioned universities about financial risks. “As the reliance on international tuition revenue has increased among a large number of universities, so has the risk of financial losses if a drop in international student enrolments were to occur,” the agency said.

While the StatsCan report addressed universities – not colleges – all post-secondary institutions are vulnerable. In Ontario, colleges rely on international students for 68% of their tuition revenue.

Alex Usher, president of Higher Education Strategy Associates, has calculated that higher international student revenues make up over 100% of the growth in operating budget expenditures in Canadian universities and colleges since 2009.

His reckoning is slightly different to the Statistic Canada data, which only covers universities.

“That [growth] is not true for every single institution, obviously, but on aggregate it is true,” he said.

“Who in their right mind would want to put a hold on international student growth?”

“Given this, who in their right mind would want to put a hold on international student growth?  That said, some institutions are more interested (and successful) than others. The inability to attract international students is one of the three or four most important causes behind Laurentian’s slide into [creditor] protection.”

Bonnie Lysyk, the Ontario auditor-general, warned of the dangers in a study last year. “We found that the ministry has not developed a strategic plan for the sector to help mitigate the risk of a sudden decline in international students and the impact it could have on the college sector, students and the government,” she said.

“However, Canada is starting to run up against some real barriers to international student growth, particularly with respect to housing, which is causing real pain in some communities,” Usher added.

In May, Usher predicted that Canadian post-secondary institutions are “very close to the end of the road on international student number growth”, with accommodation most likely to be the “blowback”.

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