Tuition Fees and other student costs have more than doubled over the past decade.
Maroney on Money for August 16, 1998
July’s door hadn’t even closed before the first “back to school” ads started to appear. Now midway through August, students are fighting depression with doomsday on the horizon and parents can hardly contain themselves. Kidding aside, it’s difficult to turn a blind eye to the importance of education as we move to an increasingly knowledge based economy.
Since 1981, employment has fallen by two million for those with a high school diploma or less. On the flip side, almost five million jobs have opened up for people with some form of post-secondary education. This fact shows up in the statistics for 1996 that show an unemployment rate of 5 per cent for those with a post-secondary degree; this is in stark contrast to the 15 per cent unemployment rate for those without a high school diploma.
Not only does higher education pay off in better and more secure employment but higher earnings as well. Over the 1984-1994 period, a graduate of a university, college or vocational and technical institute earned an average of 45 per cent more than someone who did not complete high school.
But what about all those years Joe Smart spends in post-secondary school earning a pittance if he’s lucky, while Joe Dropout is out there working making the big bucks? Government statistics show that even with rising education costs and the earnings forgone while studying, the average graduate can expect to receive a rate of return ranging from 8 per cent to 20 per cent in future earnings.
Tuition Fees not funny
True, complaining about excessive tuition fees is a right of passage for students attending a post-secondary institution, but it is well known that the cost of such an education has been rising in recent years. Across Canada, tuition fees and other student costs have more than doubled over the past decade. During this same period, the average Consumer Price Index has risen just 32 per cent from 104.4 in 1987 to 137.8 in 1997.
Last year alone, university tuition fees rose an average of 9 per cent across the country. In Canada, a student can now expect to pay an average of $3,120 to walk the hallowed halls of higher learning.
Tuition Fees Freeze?
In B.C. we’ve been temporarily sheltered from such increases by our provincial government’s tuition freeze which remains in effect until the year 2000. But if the ICBC rate freeze is any indication, we can expect tuition fees to jump once the freeze is removed.
Currently, the Canada Student Loans Program supports nearly one out of every three students. In 1990-1991, loan balances averaged $13,000 for those graduates who took advantage of student loans. The federal government projects this average to increase to over $25,000 next year.
Anticipating problems in the future, the federal government introduced the Canadian Opportunities Strategy (COS) as part of its February budget. The goal of the COS is to expand access to the knowledge and skills Canadians need for better job opportunities and a higher standard of living in the 21st century. Think of it this way – under the COS program, the government is prepared to help you to get an education, to increase your job prospects, so that you can earn more money. Sounds like a good deal.
The COS and what it means to students will be the subject of my next series of articles.
Jim Maroney is a chartered accountant with Andrews Brown Maroney in Maple Ridge.
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