One Thought to Start Your Day

JANUARY 13, 2025 | ALEX USHER

To start, let’s look quickly at college income by source. Figure 1, below, shows that college income did rise somewhat in 2022-23, due mainly to an increase in tuition income (up 35% between the nadir COVID year of 20-21 and 22-23). But overall, once inflation is taken into account, the increase in college income really wasn’t all that big: about a billion dollars in 2021-22 and about the same again in 2022-23, or about 6-7% per year after inflation. Good? Definitely. Way above what universities were managing, and well above most sectors internationally? But it’s not exactly the banditry that some communicators (including the unofficial national minister of higher education, Marc Miller) like to imply.

Figure 1: College Income by Source, Canada, 2017-18 to 2022-23, in Billions of $2022.

Figure 2a/b. College Income by Source, Ontario vs Other Nine Provinces, 2017-18 to 2022-23, in Billions of $2022.

Figure 3 drills down a little bit on the issue of tuition fee income to show where they have been growing and where they have not. One might look at this and think its irreconcilable with Figure 2, since tuition fees in the seven smaller provinces seem to be increasing at a rate similar to Ontario. What that should tell you, though, is that the base tuition from which these figures are rising are pretty meagre in the seven smallest provinces, and quite significant in Ontario. (Also, remember that in Ontario, domestic tuition fees fell by over 20% or so after inflation between 2019-20 and 2022-23, so this chart is actually underplaying the growth in international fees in that province a bit.)

Figure 3: Change in Real Aggregate Tuition Income by Province, 2017-18 to 2022-23, (2017-18 = 100)

Figure 4 answers this question in precise detail, and once again the answer depends on whether you are talking about Ontario or the rest of the country. The biggest jump in expenditures by far is “contracted services” in Ontario—an increase of over $500M in just two years. This is probably as close a look as we will ever get at the economics of those PPP colleges that were set up around the GTA since most of this sum is almost certainly made up of public college payments to those institutions for paying the new students had arrived in those two years. If you assume the increase in international students at those colleges was about 40,000 (for a variety of reasons, an exact count on this is difficult), then that implies that colleges were paying their PPP partners about $12,500 per student on average and pocketing the difference, which would have been anywhere between about $2,500 and $10,000, depending on the campus and program. And of course, most of the funds spent on PPP were spent one way or another on teaching expenses for these students.

Figure 4: Change in Expenditures/Surplus, Canadian Colleges 2022-23 vs 2020-21, Ontario vs. Other 9 Provinces, in millions of 2022

2022-23 of course was not quite “peak international student” so this analysis can’t quite tell the full story of how international students affected colleges. We’ll need to wait another 11 months for that data to show up. But I doubt that the story I have outlined based on the data available to date will not change too much. In short, the financials show that:

• Colleges outside Ontario were really not making bank on international students.
• Within Ontario, over a third of the additional revenue from international students generated in the 2020-21 to 2022-23 period was paid out to PPP partners, who would have spent most of that on instruction.
• Of the remaining billion or so, about a third went into new construction and another 20% was “surplus,” which probably meant it was intended for future capital expenditure.
• The increase in core college salary mass was miniscule—in fact only about 3% after inflation.

If there was “empire building” going on, it was in the form of constructing new buildings, not in terms of massive salary rises or hiring sprees.