In recent years, Canadian as well as many other countries have seen massive rises in the cost of tuition and other related costs of post-secondary education. Tuition, which in 1990 cost a modest $1,464 per year (approximately $2200 based on current figures) in Canada, shot up almost 300 per cent to an average of $6,600 by 2013. Furthermore, the average individual debt load per student is now about $27,000, as more students rely on government loans like OSAP to pay for the growing cost of school. Despite the increased cost of education, little has happened to utilize the growing amount of educated young-adults who often face sparse job prospects as well as low wages non-reflective of their degrees. It’s true when they say that a university degree in the modern economy is nothing more than a high school diploma as more students require further education like a master’s degree to have any credibility from an employment perspective.
Why we should have free post-secondary education
When I was planning on attending post-secondary, I knew the burden would fall onto me to pay for school. To that end, I feel I have managed my debt load very well often working two jobs to help make up the cost of living that OSAP doesn’t provide. However, I like millions of Canadians still owe massive amounts of debt to OSAP. By overburdening our youth with debt, we are creating a cycle of poverty with many students realizing post-graduation that paying for rent, cellphone bills, car payments and student loans, is simply too much to afford. Even if the average University graduate was working 40 hours a week and working more often than not at a minimum wage based job ( usually earning anywhere from $11 to $13 an hour) they will literally have nothing left after bills. There’s a reason they’re called “student debt slaves”. The problem with charging ludicrous amounts for tuition, is that it stifles student’s mobility post-graduation to start a family, take out mortgages, get car loans and have a general freedom to explore a variety of employment as well as engage in activities typically associated with adulthood. In fact, free education has a direct correlation with mobility following post-secondary education. According to “Leaving Home Ain’t Easy: A comparative longitudinal analysis of ECHP data”, found that only two per cent of Swedish men lived at home with their parents compared to 25 per cent in Spain and 32 per cent in Italy, a statistic that highlights both the impact of Sweden’s free education when compared to countries who like Canada, do not provide free education.
Paying back OSAP
As mentioned before, many students try and pay back OSAP but quickly realize they are in way over their heads financially. Currently, OSAP is owed about $450 million in outstanding student debt and every year spends approximately $30 million in repayment assistance helping about 110,000 former students pay off their debt. Currently in Ontario, there are about 200,000 students who cannot make their loan payments and have suffered garnished wages, plummeting credit scores and having their income tax seized by the government.
Annually, 30,000 students default on their loans adding approximately $75 million in outstanding debt owed to OSAP. This does little to stop OSAP’s continued 13 per cent interest per year on loans which only helps to further exasperate defaulted loans some of which stretch back to 20 years ago according to OSAP.
OSAP defaulters by the numbers
According to the 2013 Canada-Ontario Integrated Student Loan Default Rates for Ontario Post-secondary Institutions, of the 49,748 students who attended University and were recipients of loans, 2,215 defaulted on their payments representing 4.5 per cent of the total amount of those enrolled in University. Colleges which had about 43,211 recipients had 5,708 students default on their loans or 13.2 per cent overall and private career colleges had 11,655 recipients with 2,190 defaulters or 18.8 per cent.
Could post-secondary education be free?
Put simply, “yes we could”, but it would require a massive shift in how we view taxation and government involvement in education. According to CFS Ontario in 2011, the Canadian Government loaned approximately $1.68 Billion to students as well as provided $1.56 Billion in government spending on education tax credits, saving schemes as well as loan assistant programs for students. These statistics coupled with the fact that students collectively paid about $4.2 Billion in tuition in the 2012/2013 academic year show that eliminating the cost of tuition is relatively not that far off if we altered how we collected taxes.
According to CFS, by implementing a few changes we could increase our annual revenue by $9.5 Billion and thus easily make tuition free. This could be done by,
- restore the corporate income tax rate back to 2009 levels (from 11.5 per cent to 14 per cent)
- restore the capital tax for financial services (which was phased out and eliminated in 2010)
- introduce a financial transactions tax at 0.1 per cent
- apply a uniform rate for Business Education Taxes (BET) and index education taxes
- raise income tax rate on incomes over $250,000 by 2 per cent
- eliminate the differential rates for stock options and capital gains
What countries provide free education?
For those who think that only Switzerland offers free education, there are actually a number of countries that offer free post-secondary. Currently there are Argentina, Barbados, Brazil, Cuba, Czech Republic, Denmark, Finland, Germany, Ghana, Greece, Hungary, Iceland, Iran, Ireland, Kuwait, Libya, Malta, Mexico, Morocco, Norway, Poland, Scotland, Slovenia, Sweden and Trinidad & Tobago. Other countries that charge nominal fees to attend post-secondary are Austria, Belgium, France, Kenya, Luxembourg, Spain and Switzerland.
Conclusions: Why would we want free education ?
Free education or in the practical sense, free tuition, is beneficial because it allows students more mobility following graduation to start careers, invest in creating their own careers and be able to end being totally dependent on their parents post-graduation. Also, it would help to radically tax-incentivize educational funding, which currently is incurring huge deficits as well as hundreds of millions of dollars in outstanding loan payments. Lastly, free tuition would help create a culture of education within Canada in which students and youth can focus on developing skills as well as their country in a more productive, stress—free environment. Education, the business of investing in our future, should be seen as a public service and thus, should at least not require students to pay tuition as the cost of attending post-secondary education. Tuition itself is only about 50 per cent of the associated cost of education with textbooks, transportation and living expenses easily equaling if not surpassing the cost of tuition in any given year. Lastly, with a few basic adjustments to our taxation process, as well as a realization that we are already providing in any given year 75 per cent of the total funding students are using for tuition, we could easily create a system in which 100 per cent of students’ funding for tuition is paid for by the government.