Canadian universities face up to $3.4 billion dollars in losses due to COVID-19, report finds

Canadian universities could be facing losses ranging between $377 Million to $3.4 Billion dollars, new research from Statistics Canada has found. The report comes as Statistics Canada attempts to grasp the impact of COVID-19 on post-secondary institutions, particularly as institutions struggle to retain international students due to border restrictions.

The impact of the pandemic on Canadian universities was assessed by examining five possible scenarios. The two determining factors affecting the outcome were changes in international and domestic student enrolments. Additionally, the study takes into account a $450 billion dollar investment by the federal government, known as the Canada Research Continuity Emergency Fund.

Study permits fell by over 58% in 2020

The losses primarily stem from a loss of international student tuition, which accounts for 40% of all tuition fees at Canadian universities and generated $4 million in 2017/2018. Due to the pandemic, Statistics Canada reports that student permits fell by 58% in 2020, compared to 2019. One third of current student permits will no longer be valid as of January 2021.

“Projection scenarios, built on trends in student permit holders, show that Canadian universities could possibly lose between $377 million (or 0.8% of projected revenues) and $3.4 billion (or 7.5% of projected revenues) in 2020/2021, depending on the size of the reduction in international student enrolments and the subsequent loss in tuition fees (unadjusted for inflation),” the report says.

Canadian universities are also facing losses domestically. In a recent Labour Force survey, 20% of youth between the ages of 17 and 24, who could return to school, admitted that they would not be returning to post-secondary school this September.

Universities remain dependent on government sources, which account for three quarters of post-secondary revenue. The study also highlighted growing reliance on tuition over the past decade. Reliance on tuition has grown substantially due to international students, “who pay substantially higher tuition than domestic students and account for an increasing share of post-secondary students in Canada” the report says.

6 out of every 10 dollars spent on university staff and teaching salaries and benefits

The report cites that some universities are preparing to reduce operating expenditures. Most operating costs derive from staff expenses, which include salaries, wages and benefits.

Most notably, Laurentian University announced that it would be suspending 17 programs that had low enrolment. This decision was faced with backlash by the university’s Faculty Association, who tabled a motion to re-instate the programs. Their motion ultimately failed and the programs are still slated to be suspended.

The University of Ottawa, Manitoba universities, University of Alberta and McGill University have also announced plans to reduce operating costs.

Several universities are also pooling their resources in hopes that staff expenditures remain financially stable throughout the pandemic. The University Pension Plan of Ontario is an example of this, which currently serves “pension plan members [of which are enrolled in a defined benefit plan] and retirees of Queen’s University, University of Guelph and University of Toronto.”

The UPPO was established prior to the pandemic and replaced the Queen’s Pension Plan as of January 2020. As more universities join, the pension plan hopes to see the same success that has been seen by the Ontario Teachers Pension Plan, which is currently one of the worlds largest institutional investors.