University of Toronto

Office of the

Student Debt Redux

July 16, 2012

In a previous post, I flagged shifts in domestic student indebtedness that we have observed over the past few years at the University of Toronto. A recent article (May 25, 2012) in The Chronicle of Higher Education provides a perspective on the situation south of the border. The latest estimate for the total post-secondary indebtedness in the USA is approximately $1 trillion, a rather startling number. Dividing by ten, the equivalent in Canada would be $100B — a sharp contrast with the actual total of $15-20B of student indebtedness that we have been hearing about recently in Canada.

If these two totals are more or less accurate, what explains the big per-capita differences? Three potential factors come to mind. First, Canada’s federal-provincial programs of student assistance offer more bursaries than their US counterparts. Second, we have almost no private universities and colleges. And tuitions for Canadian public universities are still markedly lower than their American public counterparts. See, for example, the table below showing our tuition fees for students entering Arts and Science compared to similar fees at peer institutions in the American Association of Universities.

Tuition and Required Fees
University of California Berkeley
University of California Los Angeles
University of Virginia
Michigan State University
University of Michigan (Ann Arbor)
University of Washington (Seattle)
University of Texas (Austin)
University of Illinois (Urbana)
Penn State (University Park)
University of Toronto
University of Toronto
† In $US, adjusted for purchasing power. ‡ In current $CDN.

Third, Canada’s high post-secondary participation rates are driven in part by high attendance at community colleges. The US overall not only has more baccalaureates per 1000 population, but has much higher participation in second-entry programs and graduate studies.

While I find these comparisons reassuring, they do not change my earlier recommendation, i.e. that a watching brief on student debt is warranted. I understand that, analytically, it is not straightforward to determine the extent to which indebtedness is affecting career choices. It is even more challenging to determine from a normative standpoint what is fair and unfair as regards the distribution of debt in relation to either student/family incomes or the balance of private and public benefits derived by students in different programs. Given those difficulties, I expect Left-Right debates in this realm will continue to feature competing anecdotes and heated rhetoric. But that does not excuse inactivity. A sound understanding of student indebtedness will help us frame better policy options for both tuition fees and student aid in the current period of public funding restraint, and thereby help ensure that both the quality and accessibility of higher education are protected in hard times.