Posts tagged with recession.

Students as cash cows

Joey Coleman, November 25, 2009 at 4:08 PM

 

I was interested in two stories last week, in which students are being seen as easy revenue sources; one by a university, the other by a city. Though these striking situations are American, we are seeing some disturbing trends in Canada, too.

 

The University  of California system, home to some of the world's greatest public universities, is dealing with a $813-million (all figures in USD) cut from state transfer payments. In Pittsburgh, the city is facing a $15-million deficit. Both are looking to students to fill their budget gaps.

 

The University of California system is following the traditional method of deficit plagued universities and raising tuition, but in this case, by a stunning 32 per cent. The tuition hike will increase revenue for the UC system by approximately $505-million in the coming year, and about $175-million of this money will be directed to increased financial assistance for low income students.

 

The remainder of the budget deficit will be filled by cuts to staffing and budgets with many professors seeing their pay cut by 9 to 10 per cent because of mandatory furloughs. Officially, pay for senior administrators within the UC system has been cut by 10 per cent, but many senior administrative positions have actually seen pay increases this year.

 

The tuition increases have resulted in protests by student and labour activists. Links to coverage of the protests can be found at the Student Activism blog maintained by Angus Johnston: http://studentactivism.net/

 

The tuition increases in California have sparked a national debate in the United States regarding tuition policy. The New York Times "Room for Debate Blog" weighed in Monday publishing the opinions of six parties on how American public universities should "balance fiscal responsibility and equal opportunity." The opinions are well worth reading.

 

No surprise to my regular readers, I believe public higher education accessibility policy should focus on targeted aid instead of the present system of blanket subsidies of tuition for all socio-economic backgrounds.

 

The other story is much more interesting from a political standpoint. The mayor of Pittsburgh, Luke Ravenstahl, proposed a novel new tax to plug the city's deficit: a 1 per cent sales tax on all tuition payments for students attending post-secondary institutions in the city. The tax, which the mayor expected to raise $16-million in its first year, would have seen students pay between $27 and $403 on top of their tuition.

 

The mayor claimed the tax is justified because post-secondary institutions are exempt from paying property taxes to the city, students use city services, and the city incurs policing costs from student parties. He called it a "fair-share" tax and announced the tax proposal less than a week after winning re-election to another term.

 

Thankfully, after opposition locally and pressure from the both the state government and parties interested in higher education, a state board overseeing the city's budget rejected the idea.

 

But the mayor's idea is unlikely to go away. He wants to introduce it anyway and let the courts decide whether the city can impose this tax.

 

It's a politically brilliant idea. Cost-effective and easy to collect, it would quickly result in new money for city coffers. And, most importantly for politicians, because students tend to not vote, it is unlikely to harm a politician's chance of being re-elected.

 

But it is poor public policy: It targets a specific group without any consideration of the ability of that group to afford the tax and fails to account for students living off-campus, who contribute to the property tax base of the city. It also creates the impression that students are not welcome in Pittsburgh; exactly the wrong message that any city wishing to still be relevant in 10 years should be conveying. 

 

Canada isn't immune to the targeting of students by municipal governments. The City of Oshawa imposed a $250-per-bedroom annual licensing fee against rental housing near the joint campus of the University of Ontario Institute of Technology and Durham College. The fee, which will soon be implemented following the dismissal of appeals by the Supreme Court of Canada on Tuesday, is being looked at by other municipalities in Ontario.

 

Students have also been hit harder than the rate of inflation, with average undergraduate tuition fee increases nationally of 3.6%  and an inflation decline of 0.8%, according to Statistics Canada. Graduate students faced an even higher tuition fee increase.

 

As the effects of the recession continue, it will become increasingly likely that students will be asked to pay up with increased tuition and user fees.

 

Students only have ourselves to blame for this: Few of us vote and we're going to keep paying the price until this fact changes.

 

(GlobeCampus Editor: You may also be interested in Joey Coleman's piece on the recession's effects on students)

Tagged with recession, student, fee, tuition | Comments (5) |

Get ready for the second wave of recession flu

Joey Coleman, September 10, 2009 at 10:47 AM

 

Student-funded lobbying organizations have been making a big deal about the high student unemployment rate this summer. Rightfully so, as tens of thousands of students couldn't find the work necessary to fund the minimum financial contributions expected of them by student loan programs.

 

These students start the year with a deficit they'll never be able to overcome on their own. They cannot fund this deficit by increasing their hours of part-time employment; any extra money they make during the academic year will be clawed back from their student loans. In Ontario, an unemployed student is expected to contribute at least $2,710 to their studies; regardless of the fact they don't have this money.

 

The recession has hit the poor hardest, and the unequal socio-economic distribution of suffering extends to the student job market. Students from the lowest socio-economic backgrounds have less resources to use when looking for a summer job. Their parents don't have golf buddies whom they can reach out to and assist their children to find a summer job. To compound difficulties, their families are the least able to assist them in covering this deficit.

 

The challenge these students face will have to be dealt with before Christmas. If their difficulties are not addressed before the second term, there will be a significant drop in university retention rates as students hardest hit by the recession run out of funds. A recent poll conducted by Ipsos Reid, paid for by RBC Royal Bank, showed 50% of university and college students expect to run out of funds before the end of the academic year; 35% of returning students expect to hit the financial wall before Christmas.

 

Current students facing financial difficulty during the academic year are not the next recession story in higher education; they'll be the third wave of "recession flu." The segment of our youth population next to walk the plank of this financial crisis are recent graduates.

 

November is the end of the six-month student loan repayment "grace period" for the graduating classes of 2009. The unemployment rate for 15- to 24-year-olds, according to the most recent numbers from Statistics Canada, is 16.3%. The overall unemployment rate is 8.7%. The rate is reflective of the number of people looking for work. It is not unreasonable to assume a significant portion of the youth unemployment rate consists of recent graduates searching for meaningful employment.

 

Thousands of recent graduates could be without the financial means to start repayment of their loans. This will be the first real test of the government's new repayment scheme. Recent graduates will continue to add to their student loan debt and, for some, even partial payments may be too costly to afford.

 

If past experience is any guide, the response of student-funded lobbying organizations will be reactionary; they'll put out news releases in the middle of November after someone else sounds the alarm. The media will dutifully cover the story; the opposition parties may even call for the government to do something (don't count on it; they'll be focused on problems affecting demographics that actually vote), Christmas will arrive, everyone will stuff themselves with turkey and forget about the problem in time for the new year.

 

If student-funded lobbying organizations such as the Canadian Alliance of Student Associations and the Canadian Federation of Students wish to prove their relevance; they must become proactive in responding to the recession. They must seize the political opportunities these hard times have created. They must lobby for and succeed in securing relief for recent graduates included in any bill the government tables to reform Employment Insurance.

 

Now is the time to: get the student loan repayment "grace period" extended to one year; stop the accumulation of more debt during the "grace period" by making it interest free; convince the government to stop profiting from student loan interest by dropping the rate to one point above prime or lower; and push for the establishment of a secretariat for youth issues.

 

Tagged with poor, recession, interest, unemployment, student, employment, graduates, youth, repayment, loans, insurance | Comments (11) |