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For many years, successive governments in Ontario have followed the path of least resistance when funding postsecondary education – cutting back on provincial grants and turning to students to pay higher tuition to make up the shortfall.

As a result, at a time when educational attainment is more important than ever, we are investing less in postsecondary education and charging higher tuition than at any time in the past 30 years.

The Ontario Postsecondary Education Review established in May 2004 is a chance to set out a new path to excellence and greater accessibility. Instead, the review’s work to date, as judged by its publications and consultations, has framed a set of narrowly constrained choices leading down that same path of least resistance, to higher tuition and ever-greater barriers to access.

The purpose of this study, commissioned by students, faculty and staff in the university and college sector, is to broaden the debate by challenging assumptions that underlie the current narrow perspective – such as that public funding is inherently regressive and that higher tuition does not impede accessibility – and by pointing to alternative models that might open up the range of options for reform.

• Ontario’s investment in both colleges and universities has been in steady decline, as a share of GDP and on an inflation-adjusted per-student basis, for the past 30 years.
• To match the ratio of operating grants to GDP in the rest of Canada, grants for universities would have to increase by $1.15 billion. To match the ratio of grants to GDP for colleges in the rest of Canada, Ontario’s grants to colleges would have to increase by $810 million.
• Ontario’s investment in college and university infrastructure collapsed from a high of more than 0.5% of GDP at the peak of the building boom in the late 1960s to 0.1% of GDP in the late 1970s. Since then, with the exception of the capacity increases required to prepare for the double cohort in the late 1990s, our postsecondary education system has been running on fumes.
• While B.A. level university graduates can expect to earn, on average, between 30% and 40% more than high school graduates, there is a substantial degree of variability around that average. For one-quarter of university graduates, the “premium” for postsecondary education is actually negative, meaning they earn less than the average high school graduate. For another 25% of university graduates, the premium is greater than 80%.
• Contrary to the claim that subsidized university tuition constitutes a subsidy of higher-income taxpayers by lower-income taxpayers, an analysis based on personal income tax data shows the benefit from subsidized tuition is distributed relatively evenly across individual income groups.
• In a hypothetical calculation of the impact of reducing tuition and paying for it in an acrossthe- board income tax increase, the net benefit among individuals claiming the tuition tax credit is virtually constant in the middle-income range and is actually eliminated for higher-income taxpayers.
• A review of the studies of the impact of tuition on participation concludes that increases in tuition lead to declines in enrolment, particularly among low-income students.
• Loans with income contingent repayment provisions may have perverse equity implications. They can result in graduates with the same incomes facing substantially different marginal income tax rates, based on the incomes of their parents, with children of poor parents paying higher tax rates than the children of wealthy parents.
• Income contingent loans also replicate labour market inequities faced by graduates, so that to the extent that women, visible minorities and people with disabilities face earnings discrimination in the job market, the lower earnings

 Complete report pdf version

Hugh Mackenzie, Principal
Hugh Mackenzie & Associates
Toronto