Ontario's budget will make space for 20,000 new students this September with $310-million in new money for the province's colleges and universities, but all students will be left wondering how much they will pay to attend.   

The much expected "Reaching Higher Two" (the successor to the government's Reaching Higher plan for post-secondary education) that will set the direction of Ontario's higher education sector was not revealed in the budget. This leaves institutions, students, and parents wondering what the price tag of a degree or diploma will be in Canada's largest province.

From what was revealed in the budget, the outlook for higher education and students in the province is good.  At $15,500 per student, the funding for the 20,000 new spaces is significantly higher per student than the average per-student funding of approximately $8,000 at the university level. This provides the necessary funds for institutions to properly invest in the capital and operating expenses necessary to offer a quality education for these students. Overall, the government will spend more than $8.3-billion on higher education in the 2010-11 fiscal year.

Controversially, the budget also freezes public sector wages to help the province wrestle with its record deficit. The wage freeze extends to colleges and universities but will not effect current collective agreements or contracts. Post-secondary unions currently negotiating agreements will face this freeze. With memories of the 2008-09 York University CUPE strike still fresh in the province, the increased labour tension should make students at institutions with contract negotiations underway nervous. The flip-side is that the freeze will finally bring spiraling higher education costs under control. The primary driver of above-inflation cost increases in higher education have been rapid wage increases, especially for senior administrators, many of whom have seen six-figure increases in the last decade. 

The budget includes new funds for Ontario Summer Jobs programs, with an additional $39-million being injected this summer to assist employers, especially non-profits, to fund employment for students. This is in addition to the funding added last year and brings the total budget of the program to $96-million - 69 per cent higher than prior to the recession.

There is a glaring omission from the budget - the government has given no indication how much tuition will increase this September. This is very concerning as there are less than five months until tuition payments start becoming due. I called both the Minister's and Ministry communications officers. They stated updated tuition regulations will be revealed "shortly." When pressed, they did not give a timeline. From the conversations, it does not appear the announcement will occur prior to the Easter long weekend. The Ontario Legislature does not sit during the week of April 5-9, 2010, which makes it likely that "Reaching Higher Two" will be unveiled early that week.

No reason was given for the later release of this plan, but having talked to sources within the government and Ministry over the last few weeks, I've been left with the impression that a great deal of thought is being put into ensuring that any increase in tuition is offset with targeted financial aid to prevent a drop in students from under-represented backgrounds. 

If the budget is any indication, parents and students have little cause for concern that tuition will skyrocket as it did during the recession of the 1990s.

What are your reactions to the budget's effects on higher education? Continue the discussion in the comments or on GlobeCampus's or Coleman's Twitter pages, or on the Canadian post-secondary education discussion thread. 

Prime Minister Stephen Harper took to YouTube last night to answer questions from Canadians. At 31:29 in his online interview, Harper received a post-secondary education question.

"University students are expected to pay back so much money, plus interest, after furthering there [sic] education when most do not start getting a livable salary right after schol. [sic] Why is there not more assistance when it comes to student loans?" crazy4u79 asked Mr. Harper.

Mr. Harper spent the next minute and 15 seconds speaking in generalities and did not really answer the question.

"One of the things that is obviously a big concern to us over the past years, we know that younger people and new graduates have been particularly hard hit in the recession," he stated to begin his response to the question. "That's why we've introduced a number of specific programs in the last couple of years."

I went to Ottawa and covered the 2008 Federal Budget for Maclean's. The government did introduce changes to student loans, but they were administrative in nature and didn't provide any substantive relief to student loan payees. The student loan system was broke both administratively and financially.

The government addressed a lot of the administrative problems and Mr. Harper's administrative changes have helped make the student loan repayment process easier, but his government did nothing to address the overwhelming financial problems with the Canada Student Loans Program that destroys the lives of so many recent graduates.

Mr. Harper has refused to lower student loan interest, refused to increase the grace period for students to find jobs, and did nothing in the last budget to truly address the issues facing recent graduates.

To add insult to injury, one of the programs he cited in response has nothing to do with the question. The Prime Minister cited Pathways to Education as one of his government's "specific programs." The problem is that Pathways to Education does not assist recent graduates. The word "pathways" should have been a hint to the Prime Minister.

Mr. Harper's record on the student loan file is weak and he couldn't defend it. To use Internet lingo, his answer was a "HARPER FAIL."

Michael Ignatieff is on a cross-country tour this week and the Conservatives are howling "Ignatieff Prorogues Himself.” Ignatieff’s absence from Parliament is of little interest to students, but what he’s saying during his latest cross-country tour is.

Ignatieff told a group of high school students in Newfoundland that he will be proposing changes to the Canada Student Loans Program during the next election. He says he will lower the interest rate on federal student loans and will propose a loan-forgiveness program for graduates working in the public service.

CSLP is in serious need of reform, especially the interest costs placed on students in repayment. The federal government charges a 2.5 per cent above the prime interest rate for student loans. Most provinces charge 1 per cent above prime with a few charging only the prime rate.

A lot of borrowers who are in collection are there as the result of a punishing payment schedule that fails to account for the economic situation facing recent graduates.

Ignatieff states that the federal government needs to take a leadership role in post secondary education by creating a dedicated transfer payment for post secondary education.

To encourage universities to recruit, enroll, and graduate students from lower socio-economic backgrounds, Ignatieff proposes the federal government create financial incentives for schools.

These ideas represent good public policy. For many years, post secondary education policy has been driven by political desires to funnel money into schemes that will deliver votes from upper-middle to upper class families.

During the 2008 federal election campaign, the Liberals proposed replacing current federal tax credits with in-study grants, to provide significant relief for student loan borrowers in their repayment phase, to create more needs-based grants, and to guarantee every student a loan of $5,000.

Ignatieff’s appears to be making post secondary education a major part of his pre-campaign speeches. If he continues, Canada may finally have a serious debate about higher education.

Coleman's Campus blog: The second wave of financial bad news is about to hit universities

The Great Recession is effecting post-secondary institutions right across the country and is forcing higher education to make tough choices. McMaster University, in my hometown of Hamilton, is no exception. Recent events at this university are illustrating the current reality and behind-the-scenes preparations for more financial constraints that are occurring at every Canadian university.

The planned end of McMaster's Art History program is a good example of the complexity of decision making within academia. In short, the Dean of Humanities at McMaster, Dr. Suzanne Crosta, has proposed a realignment of programs within the university's School of The Arts, which will result in the end of Art History as a major at McMaster.

The funding that is required to continue Art History as a major will instead by used to create a program offering both a bachelor's- and master's-level fine arts degree as part of an expansion of McMaster's studio arts program.

(The Hamilton Spectator has a good article summarizing the situation.)

On the surface, there are no budgetary cutbacks involved in this decision. Scratch beneath the surface and financial considerations are clearly visible - McMaster's Dean of Humanities is strengthening her faculty in preparation for the coming fiscal restraint that will determine the direction of the sector for the next five years.

There will be financial cutbacks coming at most universities in Canada and McMaster is no exception. However, the causes will not simply be government funding restraint, nor the decline in endowments played up in the media (as these aren't used for operating funds, anyway). Instead, it will be fiscal problems caused by the financing habits of the past that are going to be the primary drivers of the coming austerity.

Pension plan deficits, heavy debt loads from decade of borrowing, and severe drops in the size of endowments are creating the "perfect storm" that is about to hit universities.

Another future potential danger is a drop in universities' credit ratings. As endowments have dropped with the markets, they have become smaller assets, which can make universities look like greater risks for loans. This could affect the credit rating of institutions as measured by Dominion Bond Rating Service and Standard and Poors. Any decrease in credit rating will increase interest charge cost for an institution - charges which will have significantly more impact on budgets than the temporary stop of interest payouts from endowments (in other words, universities with lower credit ratings might have to spend more paying off interest costs on loans and less on operating budgets).

This brings us back to our example: McMaster Art History.

Last year, McMaster's AA credit rating was confirmed by DBRS but not without the university having its trend classification listed as "negative." Noting the downturn in the financial markets will both decrease endowment assets and increase pension deficits, DBRS was not optimistic about the university's future credit rating. Combined with other financial concerns the report states "DBRS expects the downward pressure on the University's rating to continue to intensify over the coming year." 

McMaster's credit rating report for 2010 will be released by DBRS in late March or early April. If McMaster's credit rating drops, it will create serious financial problems for the university.

The closure of the standalone Art History degree at McMaster must be seen in the overall financial context of the university. For decades, Canadian universities have been allowed to be unfocused and offer a wide range of degrees - in short, to be all things to all people. With fiscal constraint now the theme, universities have started closing down small programs that do not fit into the interdisciplinary areas that institutions are starting to focus themselves on. Programs that cannot be justified based upon enrolment or contribution to the research focus of the institution will be cut by central administrations during the next few years.

Instead of waiting for the central administration at McMaster to cut Art History due to its low enrolment and lack of fit within the health science focus that McMaster is adopting, the Dean of Humanities sees the writing on the wall and is acting proactively in preparation for the coming financial cuts. By reallocating the faculty's current School of the Arts budget into high demand studio arts programs, the School of the Arts will be spared the worst of coming budget cuts by no longer being the low-hanging fruit on the budget tree.

While student politicians are upset at the Dean and accusing her of betraying the humanities, they are failing to see the storm just over the horizon. She is moving her faculty into the future model that will have to be adopted by all Canadian universities - they have to be focused and cannot offer every possible niche program.

Emotions are high at McMaster and the current Art History students are naturally upset to see a good program which they love being shut down due to forces outside their control - finances and low enrolment. The Dean is guaranteeing every current Art History student will be able to graduate and receive the courses they need to continue into graduate programs; even three years from now, when enrolment in the program will be down to a handful of fourth-year students.

Universities across the country will be forced by fiscal reality to cut programs and this story will be repeated many times over the next few years.

What is most concerning about the McMaster example is that the institution's financial fundamentals - while bad - are in better shape than most other institutions. According to my sources, McMaster's long-term debt per full-time student is only in the $6,600 range and the AA credit rating the university has held is the second highest possible rating and the highest level achieved by universities in Canada.

What will happen at other universities?