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Rising tuition fees: A debt sentence for Ontario families

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Recently the Financial Post suggested a steady diet of Kraft Dinner and encouraging 13 year olds to become more entrepreneurial were strategic elements in helping students bear the rising cost of higher education. (I'm exaggerating -- but only just.)

Because I guess the problem that needs to be addressed isn't that tuition fees in Ontario have increased by 244 per cent over the past 20 years (adjusted for inflation) -- although the article did concede that fees were high. Or that the cost of higher education is being increasingly downloaded onto families who are already struggling under record levels of debt and years of stagnant incomes. Or that the funding relief that is in place often requires low-income families to take on additional debt to qualify for grants, or comes in the form of RESPs that overwhelmingly privilege those who have extra money left over every month to put aside for their child's education (read: the wealthiest).

No. The real problem: today's students have a sense of entitlement and aren't content to live on a diet of peanut butter and KD. Oh, and kids in grade 7 haven't gotten with the program and started to put money aside each month to help them pay down the debt they'll have when they graduate from university.

The recent CCPA report Under Pressure: The impact of rising tuition fees on Ontario families examines the impact that rising tuition fees, years of income stagnation and record levels of household debt are having on families who are now also bearing the brunt of ongoing downloading and deregulation in the university sector.

Because that's the thing. Families do what they can to help their child pursue a degree and graduate without a staggering debt burden. But families are increasingly struggling to make ends meet themselves, so the additional expense of higher education requires a number of kitchen table budgeting sessions and frequent games of priority roulette where families decide what responsibilities can be shuffled, delayed or cancelled altogether. Postponing retirement, downsizing a home, taking out a second mortgage or a dedicated line of credit, maxing out credit cards -- all of these are on the table. And the irony is, even with these collective sacrifices, students often graduate with debt anyway.

Suddenly all those university graduates living in their parents' basements make a whole lot more sense.

To illustrate what tuition fee increases and stagnant incomes have wrought, we looked at tuition fees compared to household income from 1990 to 2011 -- and calculated the number of days it would take families in various income quintiles to earn the equivalent of four years of tuition fees.

For a middle-income family in 1990, this means 87 days -- and 195 days in 2011. For a low-income family it means 270 days, rising to 673 days in 2011 -- almost two years of household income. And these calculations require dedicating every cent of income for the duration -- forgoing living expenses and other basic daily priorities. Like food. Which we know families cannot do.

(An ironic side note: since this is after-tax income, it means that every cent would be going to user fees -- above and beyond the portion of tuition fees that are actually public and paid for by our taxes.)

For deregulated professional programs the difference is even more evident. While in 1990 the tuition fees for a degree in law, medicine or dentistry were comparable to other undergraduate fees, in 2011 we're looking at the middle-income household equivalent of somewhere between seven months of wages for engineering and almost two years for dentistry. For low-income families in 2011, we're looking at dedicating household income for anywhere between two years (engineering) to six and a half years (dentistry).

The thing about professional programs -- already very economically and socially stratified -- becoming even more expensive is that in addition to being less accessible to more students they also result in debt loads of $80,000-$100,000. And debt loads of this size can often encourage medical and law school graduates to think twice about going into family medicine (and Ontario needs family doctors) or doing pro bono work when it's simply much more lucrative to specialize in other areas of medicine or law that may not benefit the greatest number of people.

So we all lose out.

The students for whom debt repayment becomes their priority, rather than full community engagement and participation. The families, who have stretched themselves to the limit trying to spare their children from debt -- and in the process have significantly altered their own financial situation. And Ontarians, who watch a new generation graduate from university preoccupied with debt, often unable to contribute to society to the extent that they would like and where they are most needed because of a debt load that requires them to pursue a more lucrative use of their degree.

Here's the kicker: the 2009 Ontario corporate tax cut cost an estimated $1.6 billion for fiscal year 2011-12. That's more than the cost of rolling back undergraduate university tuition rates to 1990 levels (adjusted for inflation and a growing student population) -- $1.5 billion for the same year.

There are other options: if Ontarians see the benefits of financing a more accessible system of higher education through our income tax, for just $100 a year for the average family, fees could be reduced to 1990 levels. For an average of $170 a year, undergraduate tuition fees in Ontario could be eliminated.

$170 (on average) per household: no matter how you slice it, even over a lifetime of paying taxes, it doesn't even come close to what we charge students in tuition fees to pursue an undergraduate degree.

So when it comes to creating a more equitable, educated populace, it seems we have a few options to consider.

We can continue to download into families already drowning in debt, and watch a new generation of Ontarians have to scale back their dreams and abilities because of the financial situation that has been bequeathed to them by governments that prefer stopgap measures as opposed to actually providing real opportunity and investment.

We can pretend that budgeting and saving and "living on the cheap" is a solution to what, for so many Ontario students and their families, is an untenable situation.

Or we can do what's best for Ontario and its families -- along with doing the math.

This article first appeared in Behind The Numbers.

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