Ontario universities at crossroads as four-year domestic tuition freeze puts some in financial trouble

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Ontario’s postsecondary system is at a crossroads as it awaits a blue-ribbon panel’s recommendations on the system’s financial stability, including whether schools should be allowed to increase domestic tuition fees.

The eight-person panel was formed by the Ontario government in March and is led by former university administrator Alan Harrison, who assisted the government through the insolvency of Laurentian University in 2021.

The group is expected to provide recommendations on tuition policy and other matters, including how to better align education with the needs of the labour market.

It has submitted its findings to the Ministry of Colleges and Universities, which is expected to make them public at some point this fall.

“We’re at a critical juncture for the future of the sector,” said Steve Orsini, president of the Council of Ontario Universities. “Financial circumstances at the universities are hitting a perfect storm.”

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Operating grants from the province have declined by 31 per cent since 2006-2007 after accounting for inflation, Mr. Orsini said.

Eight Ontario universities ran deficits in 2021-22, according to Mr. Orsini. Queen’s University projects a $62.8-million operating deficit this year. The University of Guelph is expecting a $19-million deficit, its third consecutive shortfall. Smaller, northern universities such as Nipissing are in a precarious position and desperate for a new deal with the province.

The biggest universities appear to be in good shape. The University of Toronto, for example, had a surplus of more than $550-million last year, while Western’s was $116-million and the University of Waterloo’s was $53-million.

And nearly all publicly funded colleges ran surpluses last year, thanks to high numbers of international students. Conestoga College posted a surplus of more than $100-million, while the average surplus across the college sector was $27-million.

Increasingly, an institution’s financial health is tied to the share of international students in its population. International students pay three to 10 times more in tuition.

In recent months, though, the rapid expansion of international study permits has become a hot political issue for the role it plays in exacerbating the rental housing crisis. The federal government has discussed placing a cap on visas.

Mr. Orsini said international enrolment at universities has “levelled off,” even if it has increased rapidly elsewhere, because universities recognize they are limited by their commitment to provide housing and health supports for students.

Kevin Wamsley, president of North Bay’s Nipissing University, which has roughly 4,500 full-time students, said universities in recent years have “jumped in with both feet” in an effort to attract international students, but Nipissing was slow to follow. The school’s projections call for a tripling in international student revenue in the next few years to maintain a balanced budget.

“That’s really one of the only levers you can pull,” Dr. Wamsley said.

Northern universities face different cost pressures because their size makes them more expensive to operate on a per-student basis. A new tuition and grant framework could help ease some of the pressure to recruit abroad.

“We see pain points in the system when you have a long-standing, outstanding institution like Queen’s University having difficulties,” Dr. Wamsley said. “I’m hopeful that the blue-ribbon panel will make significant recommendations for a tuition framework and a grant system that is sustainable.”

Queen’s, in its submission to the blue-ribbon panel, estimates that the domestic tuition freeze has cost it $179.4-million since 2019. The university says it has cut costs, deferred hiring and delayed capital projects to cope with the funding shortfall, but it can’t do so indefinitely.

“Without the ability to increase domestic tuition, the quality of the student learning experience will be put at risk,” Queen’s said in its submission. “Cuts to student services and faculty-to-student ratios, as well as greater pressure to accept international students over domestic students will all become more likely.”

The Canadian Federation of Students has criticized the government for not having a student representative on the blue-ribbon panel. It said the government has treated students as an afterthought and has disregarded their needs by focusing only on cutting costs and increasing revenues.

After Laurentian’s insolvency, then-Ontario auditor-general Bonnie Lysyk took a closer look at four smaller Ontario universities, including Nipissing, to assess their financial management and health.

She concluded that the government’s decision to cut and then freeze domestic tuition fees had contributed to making universities financially dependent on international students, mainly from India. That strategy appears even riskier now that diplomatic tensions threaten to interrupt visa processing in that country.