Government Investment in Canada’s Post Secondary Education System
Canada is a very well-educated country; over half of all Canadians have some level of post-secondary education (PSE). PSE includes university, college, apprenticeships, and other certificates and diplomas, however, most of the data in this report focuses on college and university. In this report, we will examine the evolution of post-secondary school in Canada since the end of World War II: trends in enrollment, tuition, return on investment for students, international student policy changes, and revenue streams. Are Canadian post-secondary schools meeting the needs of the Canadian economy and the students? Is the debt taken on by students worth the cost of education? How does government investment in post-secondary schools impact enrollment trends? Moving into the next decade, how will Canada’s schools have adapted to economic trends?
Canada has 223 public and private universities and 213 public colleges and institutions (Council of Ministers of Education, Canada 2021). Post-secondary schools meet the demand of students by offering traditional programs but also leading the way in innovation and research. Offering students cutting edge programs that anticipate the need of an ever-changing business environment, PSE institutions will continue to adapt, and by analyzing the supply and demand of PSE, we can have a glimpse into possible future trends.
Post-Secondary Education in Canada Post WWII
PSE was not always available to the masses, in fact, until World War II, post-secondary school in Canada was exclusive to the elite class who needed to prepare for leadership roles in society. In the 1950’s post-secondary school became available to the greater public and during this time of growth, it became understood that education was directly related to personal income and economic growth. Universities experienced massive growth in the 1960’s and 1970’s due to several factors which included the baby boom and a changing labour market. In the 1990’s participation reached a new high with over 50% of the population receiving post-secondary education (Kirby, 2009). Since the early 1990’s women have accounted for 55–60% of university students in Canada (Walsh, 2018).
Government Contributions and other Revenue Streams
Canadian post-secondary schools have always received government contribution, although the amount dedicated from provincial and federal government has changed over the years. In recent decades, the percentage of school revenues coming from government has been decreasing while the amount coming from tuition has had to make up for the shortfall.
The government’s share of university funding has fallen by almost half while tuition costs have risen by 2.7 times (Walsh, 2018); it appears to be the case that the demand for PSE remains high so the market is capable of bearing the increasing tuition costs.
According to Statistics Canada 57.5% of working age Canadians are graduates of post-secondary school, leading the G7 with the most graduates. Given the high rate of graduation, it might seem that there is little reason to subsidize education, however, the government may be interested in promoting university degrees as Canada is 4th amongst the G7 for bachelor’s degree or higher (Statscan 2022).
Although government funding has historically been a core revenue stream for post-secondary institutions, tuition and self-generated revenue have been growing strongly since 2008, and 2016 was the first year that other revenue streams outpaced contributions from government. The tuition fee income at colleges and universities has more than doubled since the 2007–2008 school year and tuition income has ballooned from $8.7 billion to $17.3 billion in 2022. Although there was an increase of 29% from domestic students, the most dramatic increase is from international students with a 441% increase since the 2007–2008 school year (Usher, 2022). When adjusting for inflation, 100% of the tuition increase from 2009–2010 to 2021–2022 has been from international students.
Canada has a very well-funded post-secondary education system, second in the world only to the US. In 2016, expenditures on institutions from private and public sources amounted to 2.3% of the Gross Domestic Product which is just shy of the US at 2.5% and is over 50% higher than the OECD average (Usher, 2022). Prior to the economic downturn in 2008 government contribution to universities was rising at the same rate as tuition, about 6% per year. However, the government decreased contributions in 2009; while tuition for both college and universities continued to rise 6% per year, government contributions stagnated. Colleges and universities both receive about the same amount of funding from tuition (30%) while contributions from government make up 55% of income for colleges compared to 46% for universities. Sources of self-generated income include investments, donations, and other non-government or tuition revenue streams. Universities create a whopping 25% while colleges come in at 12–14% of self-generated revenue (Usher, 2022).
Although tuition has increased, so has the cost of educating a student. Canadian Universities spent $31,500 per full time student in the 2015–2016 academic year compared to $26,000 in the 1980s, adjusted for inflation (Walsh, 2016).
government make up 55% of income for colleges compared to 46% for universities. Sources of self-generated income include investments, donations, and other non-government or tuition revenue streams. Universities create a whopping 25% while colleges come in at 12–14% of self-generated revenue (Usher, 2022).
Although tuition has increased, so has the cost of educating a student. Canadian Universities spent $31,500 per full time student in the 2015–2016 academic year compared to $26,000 in the 1980s, adjusted for inflation (Walsh, 2016).
Schools Adapting to Industry Needs
The need of industry is constantly changing; we have seen this very recently with the adoption of artificial intelligence. Post-secondary institutions in Canada need to adapt to meet these needs and while some schools will lead the way with innovation, research, and program changes, other institutions will lag and adapt in a more reactive manner.
An interesting example of adapting to external forces can be seen in the lower birth rates of the early 80’s and 90’s. Fewer teachers were needed in schools, therefore universities limited the number of enrollments into teacher training programs. In the late 1990’s when commodity prices started to increase, the economy expanded and created a large demand for apprentices; enrollment in apprenticeships peaked in 2013 with 470,000 registered apprentices, up from 175,000 in 1997 (Usher, 2022).
The 4IR or the fourth industrial revolution is quickly changing how the world operates. Post-secondary schools will need to keep pace or stay ahead of these changes. This includes technological advancements such as advanced engineering, human-machine interaction, and artificial intelligence (N.A. 2022). This will also be an opportunity for schools to offer training programs for those in the workforce that will need constant upskilling.
The Cost of Education for Students
Students attending post-secondary school do so with the intention of a higher income and career potential post-graduation. Is that a realistic expectation and is the cost worth it? Three years after graduation, 23% of graduates with a bachelor’s degree still owed over $25,000 in government student loans (Walsh, 2018).
College is a more affordable option for students looking for post-secondary education. With college costing approximately half of university tuition, enrollment in Canadian colleges rose 33% from 2000 to 2018. Many colleges have partnered with universities to offer transferable programs, reducing the overall cost of a university degree for students.
According to the 2021 Census, people 25–64 years of age with higher education earned a higher wage. The higher the education, the higher the individuals earning potential. Even those with a high school diploma as their highest level of education made $8,000 more per year than those
with no high school diploma. There is also a large gap between those with a bachelor’s degree ($72,200) and a college diploma ($53,950) (Statistics Canada, 2021).
What is interesting is that those with a bachelor’s degree, master’s degree or doctorate saw their wage increase from 2019 to 2020 while all others saw a decrease. This could be a result of layoffs during the pandemic but could also indicate that jobs that require higher education are more stable.
Average income for Canadians 25–64 years of age based on highest level of education:
It appears that even with the increased debt, over a career, higher education is worth the cost and almost necessary. The middle class in Canada is now defined as those with a personal income between $53,359 and $106,717 (Pitman, 2023). By that definition and the data given, someone would need at least a college education or apprenticeship to make a middle-class wage. Even those with a doctorate would still be included in the middle-class earning bracket.
Changes in International Student Permits
In January of 2024, the government of Canada announced a reduction in the study permits that will be available to internation students: the cap for 2024 will be 360,000 permits, a 35% decrease from 2023 (Canada, 2024). Reducing the number of international students is meant to prevent post-secondary students from arriving without the proper supports in place however, historically, post-secondary institutions have utilized international student intake to drive revenues. As an example, Conestoga College dramatically increased international student intake and as a result they have a surplus of $106 million. In 2014–2015 their surplus was $2.5 million (Mallees, 2024). Mallees writes that the growth has faced criticism from students and faculty alike. Faculty have been displaced from their offices to make room for more classrooms, and adequate housing and transportation was not established prior to the sharp increase.
The Future of Post Secondary Schools in Canada
To maintain our strong standing as a world leader in education, Canadian post-secondary institutions will need to keep adapting; these changes must include continuously evaluating the needs of industry and maintaining a tuition that has a strong ROI for students. They will have to adapt to a smaller revenue stream from international students if the trends continue. Since 2009, Canadians are having fewer children: 2022 saw the lowest reproductive rate in over a century. (Statistics Canada, 2024) Changing international student policies, record inflation and economic downturn is creating a very competitive PSE market. Schools have been able to adapt in the past; many possible solutions and opportunities lay ahead for Canadian post secondary schools.
References:
Council of Ministers of Education, Canada 2021 https://www.cmec.ca/299/education-in-canada-an-overview/index.html#:~:text=Canada%20has%20223%20public%20and,213%20public%20colleges%20and%20institutes.
Kirby, Dale (2009, April) Journal of Applied Research on Learning, Widening Access: Making the Transition from Mass to Universal Post-Secondary Education in Canada http://en.copian.ca/library/research/jarl/widening/widening.pdf
Walsh, Gerard (2018, June) The Cost of Credentials, The Shifting burden of post-secondary tuition in Canada https://thoughtleadership.rbc.com/wp-content/uploads/Tuition_-June2018.pdf
Statscan( 2022, November 30) Canada leads the G7 for the most educated workforce thanks to immigrants, young adults and strong college sector, but is experiencing significant losses in apprenticeship certificate holders in key trades https://www150.statcan.gc.ca/n1/daily-quotidien/221130/dq221130a-eng.htm
Usher, A. (2022). The State of Postsecondary Education in Canada, 2022. Toronto: Higher Education Strategy Associates https://higheredstrategy.com/wp-content/uploads/2022/09/SPEC_2022-1.pdf
Statistics Canada (2021) https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=9810041101&pickMembers%5B0%5D=1.1&pickMembers%5B1%5D=2.1&pickMembers%5B2%5D=3.1&pickMembers%5B3%5D=4.5&pickMembers%5B4%5D=5.2
Pitman, Melanie (2023, December 5) What is Middle Class Income in Canada, MoneyGenius
https://moneygenius.ca/blog/middle-class-income-canada
Government of Canada (2024, January 22) News Release https://www.canada.ca/en/immigration-refugees-citizenship/news/2024/01/canada-to-stabilize-growth-and-decrease-number-of-new-international-student-permits-issued-to-approximately-360000-for-2024.html
Mallees, Nojoud A. (2024, April 30) Conestoga College under fire by students, union leaders for aggressive international student recruitment, CBC News https://www.cbc.ca/news/canada/kitchener-waterloo/conestoga-college-mecca-international-students-1.7189040
N.A. (2022, August 17) What are Industry 4.0, the Fourth Industrial Revolution, and 4IR? McKinsey & Co. https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-are-industry-4-0-the-fourth-industrial-revolution-and-4ir#/
Statistics Canada (2024) Canada’s fertility rate reaches and all time low in 2022. https://www150.statcan.gc.ca/n1/daily-quotidien/240131/dq240131c-eng.htm
