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Ontario’s university financing is a house of cards

People across Canada were shocked earlier this month when news broke that Queen’s University in Ontario would need to make dramatic cuts to address a deficit of CAN$48 million on an operating budget of $600m.

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For Ontario colleges, the international students overwhelmingly come from just one country – India

The school in Kingston, Ontario, is part of the U15 of top Canadian research universities, but has only had modest success in recruiting international students.

They shouldn’t have been surprised. I recently published a book, The World’s Campus: Canada is a leader in attracting international students. That’s changing the country – for better and for worse. In the book, I point out the huge risks that colleges and universities are taking by relying on international tuition to pay professors and keep the lights on.

In particular, Laurentian University, based in Sudbury, Ontario, filed for creditor protection in 2021 after failing to attract enough international students – and their hefty tuition payments.

“This is very, very serious,” said Queen’s provost Matthew Evans earlier this month. “Queen’s could cease to exist if we don’t deal with this issue.”

While some Queen’s students and faculty dismissed that statement as being overdramatic, there is no question that the fiscal situation is dire. And Queen’s is not the only Ontario university in financial trouble. Ten out of the province’s 23 universities are set to post deficits this year. These deficits total a whopping $175m.

Ontario university financing has been a house of cards for several years. In 2019, the Ontario government, under premier Doug Ford, cut tuition fees by 10% and then froze them ever since. This forced schools to turn to international tuition to make up the difference.

However, the pandemic, which started in 2020, made it challenging to bring students to Canada.

With the easing of the pandemic in 2023, some Ontario universities and colleges brought in hordes of international students. According to economist Mike Moffatt, Conestoga College was the leader with 31,412 visas approved during the period January 2022 to April 2023.

Queen’s had just 1,062 visa approvals during the same 16 months. One of the difficulties it faces is being located in Kingston, rather than the Greater Toronto Area. International students are flocking to Toronto  but many are reluctant to head for smaller cities.

Moffatt’s figures indicate that Algoma was the top university for bringing in international students, with 8,762 approvals.

Based in Northern Ontario, Algoma has increased its reliance on international students by establishing a campus in the GTA. It doesn’t offer the same facilities as the main Algoma campus in remote Sault Ste. Marie. But as they say in the real estate business, it’s all about location, location, location.

International students have flocked to Toronto, lured by its multicultural mix, transportation system and part-time employment opportunities. Smaller cities are seen as remote and jobs can be more limited.

Algoma may have been taking a page from another northern Ontario post-secondary institution, Lambton College. It established a campus in the Toronto area in collaboration with a for-profit school called Cestar. Today, the combined Cestar and Lambton enrolment is 82% international students.

These numbers raise several important issues. For Ontario colleges, the international students overwhelmingly come from just one country – India. One of the benefits of international education is having students from a wide range of places across the globe interact with one another, but this doesn’t happen at the province’s colleges.

Universities have somewhat more diversified source countries, but the majority of students come from just two nations, China and India.

Secondly, colleges and universities are taking a big risk by relying on international tuition to stay afloat. It is a huge unknown whether international students will continue to flood Canada in the coming years and decades.

In the case of Queen’s, the ability to attract only a modest number of international students has put them behind the financial eight-ball. Queen’s has about 4,000 international students out of a total enrolment of 28,000. These students pay higher tuition fees than domestic students, helping to fill the coffers. However, it’s just not enough.

Other Ontario universities have brought in even more international students to cover the bills. For example, the University of Toronto has 25,000 students from overseas. International student tuition fees add up to $1 billion in U of T’s $3.12bn budget.

Pleas from colleges and universities for more government funding have fallen on deaf ears. Ontario Colleges and Universities minister Jill Dunlop has told schools to find “efficiencies” and make plans for “sustainability.”

It’s going to be a tough year for administrators, faculty and other staff at Ontario universities.

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