Alex Usher is president of Higher Education Strategy Associates. Jacqueline Lambert is manager, Data and Policy Research at Higher Education Strategy Associates. Jonathan Williams is a student at the Harvard Kennedy School of Government.
In Canada, we have two types of education. One is compulsory education – that is, our K-12 system – which is free to all, though some choose to pay for private education. The other is non-compulsory education, which includes early childhood education (ECE) and post-secondary education (PSE). Here, we employ a user-pay principle and charge fees to nearly everyone.
However, in both cases, we also find ways to allow less well-off parents to pay less, either through reduced child-care fees or lower expected parental contributions through student financial aid.
But what's interesting is how different are our approaches to costing and subsidizing these two types of education. Parents with children in PSE are – in most provinces and at most levels of income – asked to contribute significantly less to their children's tuition fees than parents with children in ECE are asked to pay for their child-care fees. The question is: why?
Our research, published today in a paper called "What We Ask of Parents: Unequal Expectations for Parental Contributions to Early-Childhood and Post-Secondary Education in Canada" shows that, on average, Canadian parents earning $60,000 are required to contribute $6,240, after all subsidies and tax deductions to keep an infant in an ECE spot.
At the same level of income, the required parental contribution towards a child's university fees is –$294 (that is, the parents receive more in tax credits than they are required to pay in contributions). At $100,000 of family income, those figures are $11,441 and $4,250. Or, to put it another way, parents with a child in PSE have to be making over $90,000 before they are asked to contribute as much as parents earning $40,000 with an infant in ECE.
This is perverse. Parents of children in ECE are usually at quite an early stage in their careers and have little in the way of cash reserves. They are often brand-new homeowners, or saving up to buy their first house or condo. And then we ask them to shell out thousands of dollars – often over 20 per cent of their disposable incomes – to look after their kids. In contrast, parents sending their kids to university are older, more financially stable, and have the luxury of nearly two decades to plan and save for this type of education.
Why do we prefer to subsidize the older and better-off over the younger and struggling? Part of it is classic generational politics. If anyone can be counted on to vote, it's the over-45s, so politicians looking to attract votes at election time naturally find ways to create subsidies that appeal to this constituency (the ongoing farce of the Ontario government providing grants to PSE students from "needy" families making $175,000 per year or more would be an example of this).
But part of it, too, is a lack of policy and co-ordination. ECE and PSE are always run by different ministries and each ministry develops policies around contribution rates without reference to the other.
Still, these are explanations rather than rationales. There is in truth no obvious justification for why Canadian governments ask more of younger, less affluent parents than we do of older, more affluent ones. But as issues of inter-generational equity become more prominent in Canadian political discourse thanks to groups like Generation Squeeze, it is worth reflecting upon whether there isn't a better way to distribute these subsidies over time.
If we were designing a system from scratch, it seems likely that most parents would prefer more subsidies (and hence have lower expected contributions) when younger and less affluent than when older and more affluent.
More equal contribution formulas – that is, taking some money from the PSE budget and transferring it to the Early Childhood Education budget – would achieve that. It is a policy worth debating.