Recession Studies

Universities are losing donations and gaining graduate school applications, but what does it mean for you?

In a recession
Image supplied by: Photo illustration by Tyler Ball
In a recession

The school year has hardly begun, but graduating students are already thinking about their post-graduate ambitions. When they sweep off Grant Hall’s stage this spring, diplomas in hand, the class of 2010 will be met with the harshest economic climate since the early 1990s.

Last February, the Educational Policy Institute (EPI) of Canada released a report on higher education entitled “On the Brink: How the Recession of 2009 Will Affect Higher Education.”

According to the report, universities are facing a decrease in revenue and what the EPI calls “a need to strategically reallocate resources.” Suggesting that funding for graduate programs across the country is likely to take a serious hit, the report predicts hiring freezes at universities as well as a reduction in graduate scholarships and endowments and cuts to government funding starting in 2011, all of which may affect those looking to pursue post-graduate education.

Graeme Sutherland, ArtSci ’10, hopes to pursue a Masters in history. He said he’s concerned about financing a second degree.

“I’m really relying on getting extra funding from schools to keep going, since paying my own way will seriously limit my scope of choice,” he said, adding that he hopes to eventually pursue a PhD.

Although the financial crisis is in the process of petering off, the EPI’s report says its effects will likely have long-term consequences for the state of post-graduate education in Canada.

The Office of Advancement reported a more than 50 per cent decline in money raised over the last fiscal year from May 2008 to May 2009.

Traditionally, a crippled job market means more people pursue higher education in hopes of riding out the recession. That trend isn’t limited to Masters degrees, but applies to all short-term programs, including post-graduate college programs.

Although graduate students can expect larger class sizes, the fact that more people are applying to graduate programs doesn’t necessarily mean the resources exist to fund many extra spots.

The EPI said many Canadian universities are facing “a host of higher costs in terms of pensions, salaries, [and] covering lost endowment income,” in addition to the cost incurred by meeting this higher demand.

The report also said faculty and staff who have seen a sharp decrease in their pensions will be less likely to retire, so faculties will have to pay for older, more expensive staff, eliminating job opportunities for younger academics.

All this is enough to keep students like Sutherland up at night.

Arthur Sweetman, a professor cross-appointed in the economics department and the School of Policy Studies, said although the EPI’s report addresses nationwide issues, the recession has had a unique effect on Ontario universities.

“There are three things happening in Ontario,” he said. “One is the recession, two is that the baby-boom double cohort, that extra-large student pool, is at the graduate school age now… [and] the other thing is that the provincial government has started trying to expand graduate involvement in Ontario. All these things are happening simultaneously.”

Sweetman referred to the Reaching Higher Program, a multi-year investment in post-secondary education introduced by the McGuinty government in 2005. According to the Ministry of Finance’s website, the initiative proposed to “substantially expand graduate education … through new investments of $220 million annually by 2009-2010,” and over the past five years has provided funding to Ontario universities to develop graduate programs, including medical and nursing education and college and apprenticeship programs.

Sweetman cautioned that government initiatives aren’t a guaranteed solution.

“The government funding formula is not sensitive to the business cycle,” he said.

Sweetman said sources of graduate funding can include tuition, endowment and donations and research assistantship money.

“The biggest thing is that the government transfers to the university a certain amount of money for each full time equivalent student … None of those sources of funds move in the business cycle,” he said. “The provincial government is expanding the number of spots, it’s just luck that they’re expanding it during the recession … Every school in Ontario has been expanding graduate education in the last five years.”

For students looking to pursue graduate education in Ontario, Sweetman had reassuring words.

“My sense is that things are not dramatically more competitive,” he said. “There are more people applying [but] there are more positions, [although] there’s not infinite give and take.”

As students reach graduate school age, their baby-boomer parents are growing older. EPI’s report said the resulting health-care costs may affect government spending in the future.

Sweetman said assuming the aging baby-boomer population’s health care needs might derail government funding for education in the near future is jumping the gun.

“That’s not affected things in the short-term but that’s a long-term concern. … The leading age of the baby boom is still not quite 65. It will be another five to 10 years before they hit the health care system [and it will] happen slowly over time,” he said.

One of the biggest sources of stress for aspiring graduate students may be the American media, which in recent months has been predicting trouble for those looking to finance higher education.

Sweetman said many American universities are privately funded and thus significantly more dependent on endowments than publicly funded Canadian schools.

“Getting scholarship money in the U.S. is much much harder,” Sweetman said. “A lot of people read what’s happening in the U.S. and think it’s the same in Canada but our systems are completely different. It doesn’t work to assume that the same patterns that are happening in the U.S. are happening in Canada.”

Sweetman said endowment dollars are important in Canada, but not nearly as crucial as at an institution like Harvard University, where endowments have taken a huge hit. Harvard’s endowment—the largest in the United States—lost about 22 per cent of its value, or $8 billion, in the last fiscal year.

Jane Good, manager of Career Education and Counseling at Queens Career Services, said planning for the future—financially or otherwise—can be confusing for those embarking on post-graduation journeys.

“Every year we see people who … want go on to further education [but are] not sure how [they’re] going to pay for it, and that could be from a naiveté surrounding money management and what it costs to go to school, or fear prompted by a lot of what’s going on in the world today around money,” she said.

Good said sorting through mixed messages surrounding the state of the economy and its effects can be a daunting task.

“Students hear all kinds of information from all kinds of sources, and it could be from the media, from profs, from their peers, from family, and the job of the student is to filter all of that and make sense of it for them,” she said.

Good said each student’s individual circumstance is different and that many students fail to look at how much graduate studies will cost them.

Good said it’s critical that students evaluate their financial position.

“If students are facing a huge debt load after an undergraduate degree, I can see where they would be worried about piling on more debt if they’re not sure about the return on investment,” she said.

Good said research is essential to calming students’ anxiety about further education and how to finance it, adding that she recommends students talk to people in their field of interest to ensure further education is a worthwhile investment, as well as investigating professional associations that may have grants or scholarships.

Good also encourages students to look at all their options, which may include taking a year off, pursuing part-time or online studies or looking at alternatives like post-graduate college programs.

“There’s more than one way to get where you want to go,” she said.

Sweetman said in spite of some of the recession’s possible effects now might just be the right time to attend graduate school.

“If you’re starting graduate school now you’re going to be coming out when the economy turns around again,” he said. “What you care about is what the economy is like when you exit, so it’s a good time to stay in school from a student’s perspective.”

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