Applying program-based increases in tuition fees would allow Quebec to catch up one fourth of its lag compared to the Canadian average

Montreal, October 20, 2008 – Increasing tuition fees on a per-program basis instead of applying a standard, global increase would allow the Quebec government to collect a quarter of the amount that the province would otherwise obtain by matching its tuition fees with the average Canadian fees. This increase would be directed to the long-term financing of universities, increasing their overall revenue by $110 million a year. Such a change could be implemented from 2012 to 2017, giving students time to adapt. Even if fees for some programs would probably increase further later on, they would not affect access to post-secondary education were they tied to an income-based repayment program for underprivileged students.

In an Economic Note released today, author Mathieu Laberge, an economist at the Montreal Economic Institute (MEI), suggests launching this line of thought right away to make “a clear first step towards a less arbitrary policy for setting tuition fees.”

Additional annual amount collected in tuition fees for each Quebec university after the proposed reform (in 2007 dollars)

Note: The detail of revenues by area of study for each university is available here.

A new approach for tuition fees

Tuition fees could be set in relation to the cost of education. Students in fields that require advanced equipment or more expensive human resources could see their fees rise. On the other hand, students in less costly fields would see theirs rise more slowly, or even drop. In such a scenario, tuition fees for all fields would match the share of the costs paid by students in social sciences and management in 2007–2008 (38.1 percent). Fees for the social sciences would therefore not change, while those for humanities would decrease slightly and those for medicine would rise substantially. “For the first time in Quebec,” says the study’s author, “each student would pay a fair share of their education costs.”

At present, since all post-secondary students pay the same tuition fees, the government bears the difference in the cost of training. For example, in 2007–2008, medical and veterinary students paid 12.3 percent and 5.4 percent, respectively, of their training costs while humanities students paid 40 percent. Under the current system of standardized tuition fees, students in a field requiring more costly training benefit from a larger implicit subsidy.

It should also be noted that the fields for which fees would rise most are generally those with the highest revenue potential – a sufficient incentive to prevent a shortage of students in these areas.

Maintaining access to post-secondary education

An income-based student loan repayment program (IBR) should go hand-in-hand with this reform to reduce its impact on underprivileged students. The IBR would be flexible enough to take into account factors such as the amount of debt to be incurred, the income of the former student and the interest rate. The IBR could also be integrated in the income tax system – payments being added to taxes due at the end of the fiscal year. Several countries have set up various forms of IBRs, suggesting that such a program can readily adapt to different education systems.

Current funding for universities is inadequate

It is impossible to predict the prevailing policy for tuition fees for post-secondary education after 2012. The Quebec government is proposing to raise fees by $50/semester until 2011–2012, meaning that students in Quebec will pay $2,024 in tuition fees per year (in 2007 dollars) versus $2,168 in 1994–1995. As such, by 2012, these increases will still only represent less than half the Canadian average for the last year of available figures (2007–2008), and tuition fees for students in Quebec will still be less than in 1994–1995, taking inflation into account.

Mathieu Laberge, author of the Economic Note Tuition fees and the long-term financing of universities, is an economist at MEI and holds a master’s degree in econometrics and international economics from the University of Nottingham.

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For more information or interview requests, contact: André Valiquette, Director of Communications, Institut économique de Montréal, Tel.: 514-273-0969 ex. 2225 / Cell: 514-574-0969 / Email: avaliquette (@iedm.org)