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You’re poorer than you think

by Nathalie Laflamme April 1, 2014 0 comment
You’re poorer than you think

Tuition fees have increased, but universities remain underfunded

Tuition fees have been indexed. Tax credits for university students have been slashed by 12 per cent. Universities across the province remain underfunded. And yet, the pots and pans have stayed in kitchen cupboards.

In previous years, any person studying at a postsecondary institution was eligible to get a tax credit equal to 20 per cent of their tuition fees. This rule also applied to any exams that cost money, and the amount could be transferred to parents or even grandparents.

As of this semester, the rate has changed. The government lowered the tax credit to eight per cent.

For a Quebec resident studying at Concordia taking five classes per semester, tuition fees amount to $2,224 per year, according to Concordia’s tuition fee calculator. Twenty per cent of that amount represents a total of $444.80. Eight percent of the tuition fees, on the other hand, amounts to $177.92.

Photo by Nathalie Laflamme

This means that, this year, students who pay income tax will pay $266.88 more when filing their taxes than they did last year. For the students who do not pay taxes, their parents or grandparents will have to face a reduced tax credit.

Over three years, this lowered tax credit rate will cost students a total of $800.64. This new rate will be applied to tuition fees from the semester that started in the winter 2013 semester.

To most students, this represents a lot of money. For the government, it will amount to a ton of money. According to a document published by the CQFF (Centre Québecois de formation en fiscalité), this change should bring $61 million to the government of Quebec between 2014-2015, and $78 million in 2018-2019.

The Parti Quebecois has stated that the money they get from this cut will be reinvested into loans and bursaries.

“The decrease in tax credits associated with tuition fees in and of itself looks like it would be bad for students, but I’ve heard many people involved in student governance argue that, since the money is being rerouted through loans and bursaries, it might actually be beneficial in the long run,” said current Concordia Student Union President Melissa Kate Wheeler. “The CSU is obviously opposed to any funds, be they through tuition itself or tax credits, being taken away from students. However, for this particular issue, it may be a little more complex.”

In 2012, tens of thousands of students lined the streets of Montreal to fight the proposed tuition fee hike. This period in Quebec’s history is known as the Maple Spring. The Quebec Liberal Party’s original plan was to increase fees by $325 per year over five years. After students acted out, the Liberals changed their plan to an increase of $254 over seven years, with an indexation of tuition. Regardless, students continued to march in the streets, banging on pots and pans.

The original plan would have cost a student completing a three-year undergraduate degree $975. This tax credit cut will cost the same student $800.64.

Léo Bureau-Blouin was president of the Fédération étudiante collegial du Québec (FECQ) and one of the leaders of the Maple Spring protests. He is now the PQ candidate for the Laval-des-Rapides riding, and believes this cut in tax credits will be beneficial to students.

“Since financial aid for students constitutes a more effective tool than a non-refundable tax credit when we are trying to facilitate access to education, I believe that this measure will be beneficial for the students who need it most,” Bureau-Blouin said.

Concordia President Alan Shepard believes that this cut is a good change if it means more students will have access to loans and bursaries.

“It’s an interesting public policy decision because, I’m not in the government, but what I assume they are trying to do is … [funnel] additional support to students of more modest means, that’s the ambition. I’m an advocate for people of modest means having an opportunity to go to university,” Shepard said.

This cut will not change the fact that Quebec universities are underfunded.

“Whether or not you agree with the hike or other types of funding, the problem is that our universities are underfunded. We, as students, know that,” Cameron Ahmad, a Concordia student and president of the Young Liberals of Canada in Quebec, said. “The equipment we have, the resources we have, they’re good, but they’re not as good as they could or should be.”

Philippe Ghayad, an economics professor at Dawson College, believes that, economically, the original tuition fee hike plan made more sense.

“The Liberal plan makes more sense to me. It is more progressive than the PQ  plan…Low tuition rates are like subsidizing the rich since they can afford to pay more. Adjusting tuition rates with tax credits, loans and bursaries gives an incentive to low-income earners to continue their studies,” Ghayad said.

Ahmad believes that the province’s youth needs to speak up.

“If we look at the facts, if we look at the consequences it has had on people, it’s a tuition increase regardless. I think, just as young people, we need to speak up against this, and we need to make sure that people are aware,” Ahmad said. “This is the most blatant type of hypocrisy in politics right now, and they shouldn’t be allowed to get away with this. We, as young people, should remind the population that when a politician says something, we should hold them to account for it. And we shouldn’t let them get away with trying to slip us a fast one.”

Although students have not taken to the streets, many Quebec university rectors have protested in their own way. Fifteen Quebec university rectors, led by Guy Breton, president of l’Université de Montréal, took out full-page ads on March 17 in both The Gazette and La Presse, demanding that the next elected government increase university funding to the Canadian average by 2020.

According to Statistics Canada and the Canadian Association of University Business Officers (CAUBO), student funding for universities, per student, is currently $10,844 in Quebec. In the rest of Canada, the average is $15,798.

Shepard was one of the rectors who signed the ad. The idea behind it was to bring attention to the funding gap.

“What the rectors want, and what they’re worried about, is how to lead a university network across Quebec that is as competitive as it can be with other institutions outside of Quebec,” Shepard said. “We want, not surprisingly, the best kinds of education we can offer students. When the students arrive here, we want them to have equal opportunity with people in the rest of Canada…and it is difficult to deliver on all of those initiatives, all those ambitions, if the per student funding is substantially lower.”

After last year’s education summit, the government promised that they would reinvest $1.7 billion into universities over the next seven years. A portion of the money would help universities cover increasing costs. For the other portion, the schools would work with the government in order to decide where the money would be invested. The money would go mostly towards academic and student services; not administration.

According to Bureau-Blouin, this money will come from the expansion of economic activity and the control of provincial expenses.

Concordia had been communicating with the government about the funding they would receive, and about what programs would be invested in. All negotiations were put on hold when the general provincial election was called.

“Without that reinvestment … we won’t have the money necessary to become competitive on the North American market and internationally. We’re going to struggle at maintaining our reputation and maintaining the quality of education in Quebec because our competitors will go deeper and deeper compared to us,” said Concordia University’s controller, Daniel Therrien.

As controller, Therrien works with financial services and controls expenditures.

The PQ is the only party to have promised to reinvest this money into education. If they do not win the election, it is unknown whether the new government will pick up where the PQ left off, or invest the money elsewhere.

“A new government coming in could change the direction completely,” Therrien said.

During this academic year, tuition rates were indexed at a rate of 2.6 per cent. It was recently decided that the indexation rate would decrease to a rate of 2.2 per starting in the fall.

Although this will mean a little more money for universities, it will not solve their funding issues. It will essentially mean that they will now be able to afford to keep up with most of their current expenses, something that, when tuition fees were frozen, they could not do, as their costs technically increased every year.

Although the cost of living is currently increasing at a rate of 2.2 per cent, many expenses at Concordia, like salaries, library e-journals, and scientific equipment, increase at much higher rates.

“If the cost of goods, services and labour goes up by at least 2 per cent and the tuition is indexed by 2 per cent you haven’t done anything to fundamentally close the gap with the rest of Canada. You’re maintaining status quo. As a general rule of thumb, inflation in universities has been running across Canada 4 to 5 per cent per year, depending on what jurisdiction you’re in. So lets say that inflation is 4 per cent and you have 2 per cent, you’re already losing ground,” Shepard said.

“Our internal costs, when you look at security, you look at gas, our fixed costs, they grew at about that rate. However, the biggest component of the costs of university is salary…on average [salaries increase at a rate of] 3.2 per cent [per year],” Therrien said. He explained that, since the university is unionized, salaries are based on a 12-step scale of collective agreements. Every step on the scale means a higher salary increase every year, the minimum being a 2 per cent increase.

According to Therrien, the school’s income will increase by around $2 million because of the new indexation plan, but this will not allow the school to improve their services.

“It’s not even enough to cover our increase in costs…if we don’t grow our student population, I won’t even be able to make my costs, and I’m not even talking about reinvesting. So the tuition indexation is only bringing us a certain portion of the money we need to maintain the operation,”  Therrien said.

Therrien also explained that increasing the amount of students at the school is not as easy as it seems, as the school needs to maintain its reputation, and can only support so many students without affecting the quality of the education being offered.

“Any money helps the university, that’s for sure. But the indexing is only giving me an opportunity to maintain what were doing. There is no growth with that, there is no reinvestment,” Therrien said.

According to Ghayad, indexing tuition fees makes sense, since, with the inflation rate, costs go up for universities every year. It is also logical to index tuition fees because salaries follow the inflation rate.

He believes that not indexing tuition fees could cause “a large gap between revenue and expenditures for the universities. Deficits need to be paid off by someone in society sooner or later.”

“If it were not indexed, sooner or later tuition rates would increase as they did in the past, like in the early 1990s, and it was a large jump in tuition. I think a transparent and expected increase of about 2 per cent annually, which is the inflation rate more or less, would be better than the possible outcomes mentioned. I think that the tax credit is going to hurt more students overall than the indexation plan,” Ghayad said.

One of the main reason Pauline Marois was voted in as premier back in 2012 was because one of her electoral promises was not to raise tuition fees.And yet, in more ways than one, the cost of superior education has increased. Ahmad believes that this whole situation will have a negative impact on how the province’s youth perceives politics.

“I think that, with this, what the PQ has managed to do is to make a lot of young people cynical about politics, because they’ve gone back on a lot of their election promises in a very short period of time,” Ahmad said. “How can young people be inspired by politics or believe in their politicians when they’re going back on their promises?”

Two years after the Maple Spring, a compromise between students, universities, and the government has not yet been reached. The results of the next provincial election will, no matter who is elected, impact the face of superior education. Only time will tell whether these changes will be positive or negative, and how the population will react.

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