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International fees hold up Canadian HE as gov’t backing slips

As higher education institutions across Canada have seen declines in government funding in recent decades, they have looked to international students as a "handy source of extra income".
September 12 2023
4 Min Read

The CAN$2 billion Indian students are expected to pay into the Ontario college sector in the 2023/23 academic year is more than the provincial government contribution, figures suggest.

As higher education institutions across Canada have seen declines in government funding in recent decades, they have looked to international students as a “handy source of extra income”, starting in the 2010s, the new The State of Postsecondary Education in Canada report from Higher Education Strategy Associates details.

While the average international ratio at university level is 17.6% and at college level is 21.6%, it states that the international share in colleges across Ontario has now risen above one-third of the total.

The ratio is expected to increase further this academic year, when international students are expected to make up over half of the student body within the Ontario college sector. Between 2016/17 and 2019/20, international student numbers in the system have roughly doubled.

As international students’ tuition fees are higher than those for their domestic counterparts, some 76% of all tuition fees in that sector come from international students, it continues.

“Since a majority of these international students come from India, it turns out that Indian students not only contribute twice the amount of money to the college system, on aggregate, that Canadian students do, they also contribute slightly more than does the Government of Ontario,” the report states.

Photo: HESA

The paper asks how it can be possible that Indian students are putting more cash into the college sector than the provincial government.

“The answer is simply this: Ontario institutions, faced with deep cuts in income, have acted precisely the way the government asked them to — that is, by acting entrepreneurially and securing new forms of revenue,” it says. “This isn’t a mistake: this is exactly what the Ontario government requires.”

It adds that Ontario is an outlier among other provinces as the government’s per-student funding at universities is at 57% of the average of the other nine provinces. “On the college side it is a mere 44%,” it notes.

Additionally, institutions in other regions have not found “so many ways to raise money from private sources”, but the report suggests more provinces could follow Ontario.

“Ontario’s funding situation is, in a word, abysmal,” it says. Other provinces are “heading in the same direction”, with the possible exception of Québec. It will not be easy to reverse 45 years of disinvestment by governments, it continues.

“This policy of gradual disinvestment is not an artefact of a particular government or ideological fad, it is the product of a profound consensus among Canadian governments, both federal and provincial, that postsecondary education is not a worthwhile investment,” the document reads.

“Consumer convenience” and tuition fee freezes are favoured by political parties and “presumably” by voters over the health of colleges and universities.

“Some radically new strategies are required if the entire country is not to end up like Ontario,” it says.

Since 2008, 100% of all new operating income in Canadian higher education has come from international tuition fees, the report says.

International students, not the domestic cohort, have been the reason for tuition fee income at higher education institutions doubling from 2007/08.

“International fees are now approximately five times domestic fees”

In the 13 years to 2021/22, aggregate institutional revenue from domestic tuition fees has increased by 23% compared with the 471% growth from international fees.

Demographic declines in the Atlantic provinces have led to slower enrolment growth when compared with other regions. It would have been even slower if not for “significant increases in international student enrolments, particularly in Prince Edward Island”.

The paper acknowledges that Canada’s higher education system is “among the world’s best funded” when looking at international Gross Domestic Product comparisons but warns that it is “moving further from a Western European model of a largely publicly funded system”.

Instead it is moving “towards the model of other anglophone countries where postsecondary education may be mostly publicly owned, but it is ‘publicly-aided’ rather than ‘publicly-financed’,” it suggests.

Higher fees from international students have also aided institutions under pressure financially, with the gap between domestic and international student tuition fees “[continuing] to widen”.

Domestic undergraduate student tuition has increased “roughly inflation plus 2% until quite recently”, while those for internationals have “been rising at inflation plus 5%”.

“In 2022-23, international student tuition averaged $36,123 per year, up from $18,540 (in inflation-adjusted dollars) in 2006-07. International fees are now approximately five times domestic fees while 15 years ago they were just three times domestic fees,” it said.

Canadian institutions are not “pricing themselves out of the market” yet, but there are “increasing pressures from communities around the number of international students being recruited in the wake of various housing crises”, the report notes.

The average fees in the two provinces attracting the greatest number of international students, Ontario and British Columbia, are now reaching over $45,000 and over $30,000, respectively.

“In the rest of the country, international student fees are more modest,” the report says. In Newfoundland and Labrador fees are “a comparatively trifling $16,786”.

While reasons for the gaps are unclear, “presumably provinces without a major metropolis feel they may have more difficulty attracting international students and price themselves accordingly”, it states.

“Intriguingly, universities mostly seem to set their prices below the average operating cost per student. This is presumably why so many of them claim not to be making money from international students despite the higher fees.”

Marginal student costs “can be quite low, meaning that even when charging low fees an institution is better off accepting more international students”.

The report also mentions Public-Private Partnership arrangements, particular in Ontario, where the “line between public and private colleges has been blurred substantially” in recent years.

“Presumably provinces without a major metropolis feel they may have more difficulty attracting international students”

The arrangements – whereby private colleges were paid by public colleges to teach international students that they had recruited – have “super-charged” the recruitment of international students to Ontario colleges, the report says.

It also allowed students, “particularly from India, to get on a path to permanent residency while working and living in the Greater Toronto Area”.

While briefly banned by the Wynne government which was in power in Ontario until 2018, the Ford government has brought them back and “greatly encouraged” them, HESA says.

“Now, virtually all the non-Toronto-area colleges have these kinds of PPP arrangements.”

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