Report recommends ending tuition freeze as Algonquin College flags financial sustainability

Ontario is being advised to lift its tuition freeze at the province’s post-secondary institutions, while Algonquin College faces high risks to its financial sustainability.

In 2019 the Ontario government introduced a 10-per-cent tuition cut and froze fees at that level. That has forced post-secondary institutions to increase their dependence on international student tuition that are much higher than domestic fees.

The government-commissioned report released on Nov. 15 by an external expert panel said ending the tuition freeze would help post-secondary institutions.

“Data shared with the panel confirm that colleges and universities have come to rely more and more on international student tuition fees to the point where the revenue from this source is fundamental to the sector’s financial sustainability,” the report said.

Collectively, Ontario’s colleges received 68 per cent of their tuition fees from international students, according to the Ontario Auditor General’s annual report in 2021.

Algonquin College is a part of that trend.

This academic year, the domestic enrolment was down 5.3 per cent from the projected number outlined in the Approved Annual Budget target, while international increased 13.4 per cent.

The shift has increased the college’s overall revenue almost five times, from the planned $4 million to $19.9 million. This is due to the premium fees — the $5,740 per semester that all international students pay in addition to their tuition fees.

International students are filling the “seats left empty by the shortfall experienced in domestic enrolments,” according to Board of Governors meeting materials of Oct. 23.

However, not being able to “manage its financial resources to ensure ongoing operations” is considered a “high” risk to the college’s financial sustainability, according to the document.

Risk to financial sustainability is described as both the most impactful and likely among the five that were listed in the document.

The college plans to recruit an “optimal mix of international students to domestic” as one of the key mitigation plans, the document said.

However, on Aug. 21, federal Housing Minister Sean Fraser announced that the federal government is considering limiting the yearly intake of international students as a measure to ease the housing crisis.

In the past two decades, the intake of international students in Canada has been continuously rising and reached 621,600 foreign students in 2021. The number is forecasted to double by 2027. Currently, there are 807,260 valid study permit holders living in Canada.

So the potential federal cap is an additional threat to the college’s financial sustainability, according to the Board of Governors document.

It says the possible impacts of the financial sustainability risk include:

• Deterioration of buildings and facilities beyond acceptable levels
• Employee layoffs and incentivized retirements
• Increased Governmental oversight
• Deterioration of college’s reputation amongst stakeholders
• Failure to achieve Key Objectives
• Capacity constraints
• Inability to invest in initiatives of significance
• Capital investments stifled