Universities need higher fees to get through recession: report

The recession will hit post-secondary institutions hard in the next few years, and governments should allow dramatic fee increases to help deal with a shortfall in revenues, a new report says.

The report on Canadian university funding by the U.S.-based Educational Policy Institute (EPI) says that the increases — coupled with an appropriate bump in financial aid — are needed to maintain the quality of education at post-secondary institutions.

The report was released Thursday by Toronto-based EPI Canada, a for-profit subsidiary of the larger body, which counts Lloyd Axworthy — former foreign affairs minister and now University of Winnipeg president — as one of its board members.

As a result of the recession, universities have been hit by declining endowments, which the report estimates have gone down in value by between 15 and 30 per cent. As income dips and unemployment rises, the report predicts there will also be more demand for financial aid, which could cost the federal government up to $400 million.

The report also predicts a paring down of private donations and eventual cuts in public funding as governments try to balance books after years of deficit spending.

"We are about to head back towards conditions last seen in the mid-1990s, when resources were so squeezed that at some universities, science students would not see the inside of a laboratory until third year," the study says.

One of the most contentious suggestions for dealing with the problem is that provincial governments should allow universities to raise tuitions.

Manitoba could kick-start hikes

Manitoba, which has instituted tuition freezes, could be the catalyst for changes, the study says.

The province has commissioned Benjamin Levin, the Canada Research Chair in Educational Leadership and Policy from the University of Toronto, to come up with recommendations on tuition, due this spring.

If Manitoba, feeling the recessionary pinch, decides to reverse its tuition-freeze policy in the wake of the Levin recommendations, there could be a domino effect across Canada, the report says. That might lead fees to rise by as much as 25 per cent over the next couple of years, giving universities an additional $1 billion to $2 billion in revenue.

"Money on that scale could go a long way to plugging the holes that will inevitably be created by the declines in endowment and public funding over the next four years, but fee hikes of this magnitude will undoubtedly be resented by the middle class," the report says.

"Given the break Canadian families have had on tuition for most of the last decade, this is the most obvious place to start."

Students unimpressed

The report's stance on tuition hikes drew fire from some student groups.

"Pretty much every government in the world is saying that they can't increase taxes and yet the Educational Policy Institute is essentially suggesting that there should be an increase to what is a flat tax to students, which is tuition fees," Shelley Melanson, chair of the Canadian Federation of Students' Ontario branch, told CBC.

Linda Franklin, president and CEO of Colleges Ontario, said in a statement that fees should "remain affordable."

"But it is important to be aware of the operating-cost challenges that colleges face. Governments cannot ignore this problem," she said.

"The Ontario government must address the operating-cost issues in its March 26 budget."

Thursday's report says that on average, Canadians can bear the cost of paying more, as they are paying a lower percentage on their income on post secondary education than they were a decade ago.

Governments can also ease the pain by trimming tax-credit programs and diverting those funds to providing financial aid grants to young, low-income students.

Among the report's other suggestions on how to make up the shortfall:

• Increase international student enrolment to boost revenues.
• Institute hiring freezes.
• Make cuts to library spending.
• Allow one-time pay outs for older staff who can be replaced by younger, less expensive employees.
• Defer building maintenance projects.
• Reductions in graduate scholarships.