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Why the NDP’s new ‘free tuition’ plan is terrible, awful, no-good policy (unless you’re rich)


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Over the long weekend, delegates at the NDP’s annual convention in Ottawa officially vowed to eliminate tuition fees. Resolution 3-18-18, adopted Sunday, calls for the party to work towards “eliminating tuition fees and all administrative fees” at Canadian post-secondary institutions.

Setting aside the awesome headache of working out a free tuition plan with all 10 provinces, there is reason to believe that this policy is a uniquely flawed instrument of social justice.

Below, why free post-secondary tuition, one of the darling policies of the modern progressive movement, is, in the words of Canadian economist Kelly Foley, the “LEAST effective way to promote equality.”

Free tuition would disproportionately hand money to the wealthy
The wealthier the Canadian, the more money they’re likely to spend on post-secondary education. According to Statistics Canada, nearly 80 per cent of children from the richest fifth of Canadian households go to post-secondary education. Among children from the bottom fifth, the rate is less than 50 per cent. So, by eliminating tuition fees, the benefits would disproportionately accrue to the wealthy Canadians already sending their kids to university. It’s similar to a government program that would subsidize Whole Foods receipts. Sure, some lower income folks would have access to healthier food, but a whole bunch of wealthy kale-eaters in Kitsilano and Westmount would stand to receive four-figure handouts from the feds. The technical term for this is a “regressive” measure; a policy that becomes more lucrative the more income you make. The situation is much the same in the United States, home to the world’s most expensive post-secondary education. When Democratic presidential candidate Bernie Sanders made free tuition a key part of his platform, a paper by the Brookings Institution concluded that the policy would give “significant benefits to relatively affluent students.”

Note: Subsidizing Whole Foods would also be terrible NDP policy.

The most expensive part of university isn’t tuition
In Canada, the largest single cost of going to university is living expenses: Rent, food, clothing, public transportation and all the other necessities of life that must be paid for without the help of a full-time job. The University of Alberta warns its students that living in Edmonton will cost a minimum of $21,000. McGill University tells prospective students they can expect to rack up at least $14,000 per year in living expenses. Compared to these figures, the average Canadian tuition is only $6,373. This is why economists generally argue that if a government truly wants to make education more affordable, it’s more efficient to spend money on generous bursaries targeted at lower income students. That way, promising students from marginalized backgrounds can be given both a free ride at college and also a roof over their heads.

The peripheral expenses of attending university include being able to buy proper clothing.

It won’t put all that many more low-income kids in university
The free tuition camp might argue that free tuition is a regressive policy only because universities are currently packed with rich kids. Eliminate tuition, they say, and lecture halls will instantaneously fill up with the poor and marginalized. However, this assumes that a student’s desire to attend university is purely an economic calculation. Research by University of Ottawa economist Ross Finnie has found otherwise. A 2014 paper by Finnie dug into previously unavailable Statistics Canada data and found that “cultural” factors, not household income, were a much more relevant predictors of whether a Canadian youth would enter post-secondary education. The children of visible minority immigrants, for instance, enter university at a rate 20 points higher than other Canadians. Conversely, Finnie’s study suggests that youth currently eschewing post-secondary will continue to do so even if it’s free. “Simply keeping tuition low, or lowering it across the board, is a very blunt instrument that will likely not change participation very much among low income and otherwise disadvantaged youth,” Finnie wrote in an email.

Skyrocketing student debt burdens are no longer a thing
Resolution 3-18-18 opens with the sobering statistic that Canadian student loan debt has now reached $28 billion. Inflation and a steadily growing population has indeed ensured that Canadian student loan debt has “never been higher,” but it is incorrect to say that this is because education is becoming progressively less affordable. “The burden of carrying a student loan has fallen significantly over the past decade,” reads a 2014 blog post by Alex Usher, president of Higher Education Strategy Associates and a vocal critic of free tuition policies. While students were indeed hammered by student loan debt during a period of dramatic federal cost-cutting in the 1990s, Usher argues that the post-secondary graduates of the 2010s aren’t having any more trouble paying off their loans than the graduates of 1992. Taxes are down, interest rates are down and post-graduate incomes have remained relatively stable. Lump it all together, and in 2014 it cost a post-secondary graduate 7.9 per cent of their after-tax income to service a student loan — exactly the same as in 1992.

It’s not like Canada has a problem with getting people into university
Right now, Canada probably has more of its people in post-secondary classrooms than almost any other state in the history of civilization. Of Canadians between 25 and 34 years of age, 60.6 per cent have attained some degree of tertiary education. Compare that to countries with free post-secondary: Germany (30.5), Finland (41.1), Sweden (47.2) and Norway (48.6). In fact, the only country with a higher rate of tertiary education is South Korea, where university costs about the same as in Canada. Meanwhile, Canada leads the world in university graduates who earn less than half of the median income. Part of this is due to high numbers of degree-holding immigrants who can’t get their credentials recognized. But it’s also due in part to “degree inflation,” the notion that a degree becomes less valuable when more people have one, thus prompting employers to boost their application standards. Incidentally, this very problem was raised by the NDP as justification for free tuition. The resolution’s preamble laments that “post-secondary education is required for 70% of new jobs.”

<span data-mce-type=”bookmark” style=”display: inline-block; width: 0px; overflow: hidden; line-height: 0;” class=”mce_SELRES_start”></span><a href=”https://data.oecd.org/chart/555i” target=”_blank”>OECD Chart: Population with tertiary education, 25-34 year-olds / 55-64 year-olds, % in same age group, Annual, 2016</a>

Tweaking university costs probably won’t do squat for inequality
It’s rational for student groups to support free tuition. From Bombardier executives to the Senate of Canada, all kinds of groups are known to favour policies in which the government covers the tab for their expenses. Groups such as the Canadian Federation of Students, though, generally try to appear less self-interested by framing the issue as one of community good. “Post-secondary education is one of the biggest things that creates opportunity, equality, and community-building skills,” writes the organization in a 2016 statement. However, a 2015 analysis by the Institute for Research on Public Policy sifted through decades of wage data and determined that post-secondary education wasn’t all that good at pulling Canadians out of poverty. Of the factors that did affect wage inequality — such as resources booms or technological changes — researchers found that the “education level of the workforce” was almost irrelevant. “Education and training policy is not a silver bullet for solving inequality,” it reads.

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