Students should pay for the entire cost of education — later

If you were trying to make an argument against higher education, you could not do a better job of it than the striking students of Quebec. A more self-serving, self-satisfied, self-dramatizing collection of idiots could not have been assembled in one place without prolonged exposure to Foucault and Lacan.

The students have been “on strike,” i.e. skipping classes, for months in protest against a scheduled increase in tuition fees. Until lately they have relied upon intimidating other students and annoying the public; in recent days they have displayed an escalating propensity to outright violence. All in response to a plan that, while it will oblige them to pay much more than they were, will still leave them paying much less than students in the rest of Canada.

The 75% increase in fees over five years would raise the basic undergraduate tuition fee to $3,792 — versus the $5,000 or more common in other provinces. That would still leave Quebec’s undergraduates paying just 17% of the costs of their education. Indeed, it is just enough to return fees, frozen for many years in the province, to where they were in 1968, after inflation.

Nevertheless, that could still pose a barrier to students from poorer families. That is, it might have, had not the province offset the increase in tuition with an equally hefty increase in bursaries: enough to entirely wipe out the increase for anyone on low income.

So what we are left with is a collection of mostly well-to-do students — for that is who, disproportionately, go on to higher education, for reasons that have less to do with fees than with family background, starting with whether their parents did — agitating against any increase in the amount they contribute to their own education, preferring instead that they should be supported out of general revenues. And, by and large, I agree with them.

Well, in a way. All of the things I’ve said above are true, not just of Quebec, but for the country as a whole. Students, especially in undergraduate programs, still pay a fraction of the cost of their education, though they tend to come from wealthier-than-average families and though the cost of their education, as every study shows, will be repaid many times over in the higher earnings they will enjoy.

That argues pretty strongly that students should pay a greater share of the tab. Indeed, I’d argue they should pay all of it. This isn’t only a matter of fairness. When universities depend on students, rather than governments, for the greater part of their revenues, they will devote a lot more energy and resources to their core mission — teaching students — than they do now. Conversely, students who are paying full freight will devote a good deal more time and attention to getting the most out of the experience than, for example, I did.

But to say that students should pay more does not mean they should pay now. It isn’t so much the cost of tuition that can impede accessibility as the timing. It’s all very well to provide assistance to students in need, but it is sometimes unclear exactly who is in need: just because a student’s parents have adequate income does not mean he does. Student loans, meanwhile, impose the same monthly payment schedule, regardless of the ups and downs — or just downs — a recent graduate’s earnings may experience.

So while it is true that there is little correlation between tuition fees and access overall — about the same proportion of Quebec’s population goes on to higher education as in the other provinces — that does not mean all is well. The one-third increase in student fees (after inflation) across the country over the last decade has been accompanied by a similar increase in student debt. Even at current historically low interest rates that cannot be an easy thing to carry around. One-third of graduates reported difficulties repaying their student loans in 2007, versus one-quarter 20 years before.

As I say, it’s cash flow that’s the issue, not the amount. So: What if, instead of paying tuition now, students could pay it later? That is, what if they were staked all or most of the money up front, and repaid it over the course of their working life? Only what if, instead of repaying principal plus interest in fixed amounts, as with conventional loans, they paid a share of their earnings? As they earned more, they’d pay more; as they earned less, they’d pay less.

The model is not new. It’s sometimes called an income contingent loan, or a graduate tax. But in reality, it’s not a loan or a tax. It’s an investment. Think of a student as a kind of high-tech startup firm. Like students, these entrepreneurs are often wary of taking on debt, again because of cash-flow uncertainties. (For their part, banks aren’t always keen to lend to them, given the difficulties of assessing the risks of such enterprises.) So typically they turn to venture capitalists, who take a share of a firm’s equity in return for their investment, rather than charge interest.

That’s what the government (it could even be the universities themselves) would be doing here. In return for investing in students’ “human capital,” they’d be entitled to a share of students’ lifetime earnings. That’s not only fairer to students, it’s fairer to everyone: fix the cash-flow question, and you can begin to ask students to pay the full cost of their education.

Indeed, a modest scheme along these lines was proposed earlier this month by the Charest government, in an attempt to mollify the strikers. It doesn’t seem to have worked.

Original Article
Source: national post
Author: Andrew Coyne