We sometimes have the impression that the in-flight spring has left the great financial challenge facing our universities unresolved. That our institutions are dragging the devil by the tail so much, with students and income stagnant.
Posted on April 19
The issue is big, knowing its importance for our development. To see it clearly, I researched the financial statements of Quebec’s top nine universities from 2013-2014, as well as dissecting Quebec government grants.
Surprisingly, university revenues are far from stagnant. And the good growth can be explained, in particular, by the boom of foreign students, from whom they obtain tuition fees that are 3 to 10 times higher than those of Quebecers.
In the last four years, in particular, operating revenues of top universities have increased by nearly $650 million, or 20.5%, well above inflation for the period (8%). This is without taking into account that in its latest budget, the Quebec government increases the resources allocated to higher education for the next year by another 6%.
The number of full-time Quebec students peaked in 2017, followed by a slight decline after that. On the other hand, the number of international students has exploded. It went from 15,715 in 2006 to 41,350 in 2020, all full-time cycles combined, according to Statistics Canada.
French, Chinese, Indians, Americans, Iranians, Moroccans, Senegalese: all these young foreign brains flock to our universities, whether for bachelor’s, master’s or doctoral degrees. So much so that today, they represent 1 in 5 students, twice as much as 15 years ago. Meanwhile, young people in English Canada have stagnated.
Obviously, the universities rolled up their sleeves to attract an international clientele and partly remedy the lack of income.
It has to be said that the government has given them flexibility to do this, gradually deregulating the fees that can be charged to international students.
Previously, a university hosting an international student pocketed the high tuition fees, but saw the government subsidy reduced by an equivalent amount.1. The practice discouraged efforts to attract new foreign blood, with little impact on revenue.
Some justified it by the fact that it was the English universities, notably McGill and Concordia, that saw their classrooms filled with international students. The international funds returned to the kitty were as a form of equalization with the francophone universities, although there was never a redistribution formula.
Since 2018, international rights have been deregulated: the government allows universities to fully manage the funds of their international students, especially at 1.er cycle. It no longer subsidizes them, but on the other hand, universities are free to charge foreigners whatever fees they want and don’t give anything else to the government.
The effect was quick. In 2020-2021, fees charged to international students by our universities reached US$26,054 per year in 1er cycle, a 27% increase in four years, according to Statistics Canada. The increase is twice what is required for Quebec students (+13% to $2,626).
Ten years after the maple spring, the picture has changed a lot. At the time, tuitions represented 20% of the university’s operating income. Last year, that share jumped to 27%, according to my analysis.2.
From the start, I hoped to conclude that it was the English-speaking universities that benefited. In fact, the bribes that McGill withholds represent approximately 43% of its revenue in 2020-2021, compared to 28% in 2013-2014, which makes it more independent from governments. At Concordia, it’s 35% versus 20%.
However, French-speaking universities also benefited. In the last four years in particular, average tuition fees per student (+31%) and Quebec subsidies (+18%) have increased slightly more than at English-speaking universities (+28% and +13% respectively) .
And if you take a closer look, you’ll see that an increasing proportion of students from outside Quebec are choosing our French-speaking universities. It is still not the majority, but even so, 15 years ago, this share was 41% and today it is 48%.
Recovery comes mainly from 1er cycle. And certainly not English Canadian students, who still predominantly opt for McGill, Concordia and Bishop’s (94% in Bachelor’s and 80% in 2ndand cycle).
The boom in foreign students and the deregulation of fees do not explain everything. Undeniably, the government has reinjected resources into universities for four years, we recognize in the community.
Added to this is the substantial increase in the number of graduate students (master’s and doctorate), who need more government resources than in the 1ster cycle, because these programs are more expensive. This phenomenon increases revenue per student, but it also brings higher costs for universities.
Again, this increase in graduate students, of about 12% over the past four years, is almost entirely explained by the boom in international students, according to Statistics Canada.
In short, the situation for universities is brighter than I expected. It remains to be seen whether the new revenues are enough to fill the apparent gap with universities in English Canada.
A recent study by economist Pierre Fortin, commissioned by the Bureau de coopération interuniversitaire, found the network needed $1 billion to be comparable to Ontario. This difference is measured before the re-injection of $250 million from Quebec’s latest budget.
Another study, commissioned by the Ministry of Higher Education, would confirm that there is a gap with Ontario, but not as large as that calculated by Pierre Fortin. To be continued.
1. It should be noted that prior to deregulation, universities still maintained the mandatory institutional fees charged to non-Quebec students.
2. This ratio expresses the proportion of tuition fees that universities maintain, after subtracting the revenues recovered by the government for international students.
UQTR dominates other universities
The University of Quebec at Trois-Rivières (UQTR) has seen the biggest increase in revenue in recent years among top universities, far ahead of the University of Montreal or Concordia University.
Between 2017 and 2021, UQTR saw its average tuition fees per student increase by 45%. When adding government subsidies, its operating income increased by 26% per student, or three times inflation in the period (8%).
This is a clear turnaround for UQTR, which was criticized by the Auditor General of Quebec in 2015 for its governance issues and its mismanagement of real estate projects. Since then, the UQTR has gone from an operating deficit of $10.5 million in 2015-2016 to a surplus of $15.8 million last year.
Regarding the strong growth in income, “the deregulation of tuition fees for international students had a big impact, as did government reinvestments”, explains UQTR Vice-Dean, Administration and Finance, Charles Nadeau.
Another element in favor of UQTR: the sharp increase in the number of students in the second and third cycles. “It’s part of our development shift,” explains Mr. Nadeau.
For this, UQTR recruited professors dedicated to research and supported those already existing at the university, which has encouraged the arrival of undergraduate and graduate students, mainly from abroad, whose fees are higher.
Additionally, among the four universities with faculties of medicine, Université de Sherbrooke had the biggest increase in operating income per student, at 24%. The University of Montreal is last (+17%), in particular due to rather weak increases from its affiliated schools (HEC and Polytechnique).
At Université de Montréal, we recognize that the increase in tuition fees over the last four years (which I estimate at 22% per student for UofM) is partly explained by international students, who pay more, as well as by the increase in basic education fees (13% ).
As for government grants, also with an increase of 18% per student, they are attributable to the increase in graduate students in particular, which, however, cost more to train, says the University.
At first glance, McGill University has more funds to serve its clientele, at $22,560 per student, than others, for example Laval University ($18,230).
However, comparisons are difficult to make. First, McGill’s tuition is a bit overstated, the establishment doesn’t separate base fees from other fees in their financial statements.1. Above all, government resources are not paid on a per-student basis, but according to training costs, which vary widely by program.
For example, at graduation, a dental student costs 8.7 times more to graduate than a psychology student and 4.1 times more expensive than an engineer. The income paid by the government therefore depends on the composition of the university student body.
Finally, as many foreign students are no longer accounted for by the government through deregulation, it is difficult to adequately compare their training costs across universities according to their program.
1. McGill University’s responses did not allow for an estimate of the proportion.