The Decibel - How international students became big business for schools

Episode Date: September 8, 2023

In 2012, nine out of 10 students at Kitchener’s Conestoga College were domestic. Today, they have more international students than any institution across the country … almost as many as the University of Toronto and the University of British Columbia combined. This year, Canada is on track to bring in 900,000 international students.Globe postsecondary reporter Joe Friesen joins us to discuss how Canada’s international student population has grown so quickly, and why institutions have grown to depend on them – especially in Ontario.Questions? Comments? Ideas? Email us at [e-mail]

This year, Canada is on track to bring in 900,000 international students. A new report from Higher Education Strategy Associates shows that, in Ontario, international students from India alone are contributing more money to the college system than the provincial government does. But when international students are paying so much, what are they really getting out of their tuition fees? Joe Friesen is The Globe's post-secondary education reporter. Today, he'll break down how and why

Canada's international student population has grown so dramatically. I'm Mainika Raman-Wilms, and this is The Decibel from The Globe and Mail. Joe, it's great to have you back on the podcast. Thank you so much for having me. So the federal government has set a target of bringing in half a million permanent residents into Canada each year by 2025. And international students are a part of that for sure. So how exactly does the international student program and Canada bringing international students into the country, how does that fit into the bigger picture?

As far as Canada's long-term immigration goals, international students have long been seen as sort of the ideal candidates to enter Canada, get an education, and integrate into the labor force. The idea is that people who have the language skills and the Canadian credentials are sort of leaps and bounds ahead of those who would be coming to Canada fresh as immigrants. So, you know, you can see how someone who is familiar with the country, who has had a chance maybe also to get a bit of work experience after their studies, would be in an ideal situation to eventually become a permanent resident, to settle down, and become a contributor in the Canadian labor force. So I think that's sort of the idea behind the federal push for the immigration student program? It's almost kind of like a pipeline for talent, I've heard it said, right? Like you're bringing

people into study here, they're going to be essentially qualified then to move on into the workforce the way that other Canadians would be. That's the idea. And I think all the research they've done has shown that the three things I mentioned, language ability, a Canadian credential, and a little bit of work experience all go a long way to easing that transition. The really interesting thing here, of course, is that international student populations in Canada have really skyrocketed in the last decade, especially. I want to take Conestoga College as an example here. So this is in Kitchener near Toronto. In 2012, nine out of 10 students were domestic, were Canadian.

But today, this college has more international study permits than any other school in Canada, almost as many as the University of Toronto and the University of British Columbia combined. And those are like two of the biggest schools in the country, of course, right? So what is causing this kind of dramatic increase in the number of international students? Well, there's a few things going on. One, there's demand. Internationally, students see Canada as a great place to come and study. And I think they see long-term prospects to become permanent residents here, and that's really attractive. So you have a lot of people who would like to come to Canada. And on the other hand, there's the supply, and that's what is making

these seats available. So what's happened with provincial governments over the last 10 or 15 years is that they've sort of allowed post-secondary funding to stagnate. It hasn't been increasing very much in real terms. But the institutions have had bills that keep going up every year, and they've had to find a way to fill that gap. And international students have become essentially the main driver of that post-secondary funding. So universities and colleges are looking to these international student markets to provide some of the additional financial support that they need to keep operating at the level that domestic students would expect. So in the Ontario college system, I think it's about one third of all revenue now comes from international students. And I suspect it's actually even higher than that

today. And this, the difference here, of course, is because international students pay a lot more to go to school, right? What's the difference usually? Yeah, there's a big difference. International students pay tuition that can be anywhere from three to 10 times as much as domestic students. Wow. Okay. So if a domestic student at U of T is paying, I don't know, 5,000, 6,000 in tuition, that could be like 10,000, 50,000, 60,000 for an international student? Yeah, it could be depending on the program. So you can see how for the institution, there's a lot of additional funding available. Now, one caveat to add is that a domestic student, say, pays $8,000, but that's not necessarily the full amount that they bring into a university because there's also a provincial subsidy that comes on top of that. With international

students, there is no provincial subsidy. So the price of that seat is a little higher, but there's also a lot of extra in there. And that extra revenue is what the institutions are essentially collecting. Okay. So part of this is that it's actually, it sounds like it's good business for schools to have international students because they get more revenue, essentially. Yeah. In some ways, the governments have encouraged the schools to be entrepreneurial, and they have done that, and they've been successful, I think, beyond what people expected they would do in the last decade. And we're talking not just about universities here. We're also talking about colleges.

So kind of a whole broad range of post-secondary institutions. So universities, private colleges, and also public colleges, which is kind of a lot of different distinctions here. Joe, can you just kind of break down what are the differences here in terms of when it comes to the importance with international students? So universities were the first group to really get into this market. And we all, you know, have a fairly clear picture of the universities in Canada, you know, Universities Canada, the organization that represents them has about 100 members. And then there are publicly funded colleges.

In Ontario, there are 24 of those, Conestoga, one of them. Some of the others would be Seneca, Humber, and then one in sort of most of the major cities in the province and some in the smaller centers also. And then there are private career colleges. And those are the ones that you might see doing more very focused job training. And you'd see them advertising on the TTC or many different places. And they are offering programs that lead to certificates, but not necessarily diplomas or degrees like a university would. So those are the three kind of big actors in the sector. And the public colleges also will sometimes partner with a private provider. And so those students are kind of getting a public college degree at a private educational institution.

And that's become a big part of the international student story because the growth in those kinds of partnerships has been pretty dramatic. In some of the colleges where you see big numbers of students, it's because they have that kind of partnership. Yeah, because I think we often think about universities when we think about international students, but people are actually coming to do different degrees at colleges as well. And so it's worth it for people to come over and to come and do that? Yeah, one of the surprising things to me anyway was around 2016 or so, the migration pattern started to shift and the number of people going to colleges really started to increase quickly. And the colleges,

which are mainly two-year programs, also sort of job-focused, started attracting large numbers of students. And the value proposition is that the programs are a little shorter for the international student. The training is very focused on job training, which many of them are interested in, and they can get into the workforce more quickly. And the tuition is significantly lower than at universities. And they offer the same level of opportunity for long-term prospects of becoming a permanent resident in Canada. And for this group that's heading to the colleges, my impression is that permanent residency is one of the main attractions that's drawing them to Canada. So there's kind of policy changes that were happening, it sounds like, around 2010, and then mid-2010s that kind of kick-started, in a way, this new trend.

Yeah, so around 2010 is when universities and colleges were sort of encouraged to tap into this international market. And then there was a policy change in the middle of that decade that made it easier for students to apply for a study permit in Canada because one of the big hurdles that they have to overcome is to just get the piece of paper that allows them to enter Canada. And this program, which is now called Student Direct Stream, basically called for the student to be able to provide enough money to pay for their first year tuition, to have a GIC worth about $10,000 at a Canadian bank. And if they could provide those things and were coming from a certain group of countries, then they were getting their visas processed more quickly. And that really contributed, I think, to a rapid rise in the numbers just because the Canadian immigration system could process the applications quickly enough to facilitate it.

Yeah. And you mentioned that a lot of people coming here for school see this as the first step to permanent residency. I guess, could you lay out the path to permanent residency from school? Is it fairly simple or is it still pretty complicated? Yeah. So the stats show that about 60% of people on surveys will say that coming to Canada for permanent residency is their main goal. And the stats also show that about 30% make it through. The path would be you go to school, you finish your degree or diploma, and then you apply for a postgraduate work permit.

And the postgraduate work permit allows you to get a job in Canada and some experience, and then you would apply through one of a number of streams. So that's the path that many of these students and graduates are now following. And we've been talking about this in kind of abstract terms, Joe, but I know you've actually been speaking to students here, international students at public colleges like Conestoga College. So maybe can you just tell me a little bit about some of the students that you met there? So one group of students that I met, they talked about how important it was for them to be able to find work in Canada because there's significant financial pressure on them. These four are from India. Their families all helped them to raise the money to come to Canada.

But the amount that they had borrowed would cover their first terms tuition or their first programs tuition. And so they needed to raise a substantial amount, about $15,000, to pay for the tuition of their next program. And their hope would be to find work in Canada to do that. And so these students were struggling with the burden that that placed on them because they were doing all kinds of jobs, the kinds of jobs that Canadians often don't want to do, deliveries, dishwashing. And this is on the side of their schooling then, essentially. And this is all in addition to their schooling. So, you know, what they described was a fairly

spartan, fairly difficult life. Can you elaborate a little bit more on that? Like, I know you went to actually visit where they were living. What was that like? They had a one-bedroom apartment, about 625 square feet. And what struck me is the moment you enter the door, you can see someone's bed is right there in the hallway because they're living four people in this fairly small space. The way that rents have risen in Canada, not many international students are able or willing to pay

the kind of rent that they're charging for one-bedroom apartments. So whether it was in Kitchener or also when I met some students in Brampton, I noticed that everybody seemed to have rent of about four or $500 each. It was like a number that seemed to work for everybody, but they were living with conditions that were much more crowded, I think, than the units were intended to be. So four to a one bedroom, for example, or 12 or 14 people sharing a house or eight people in a basement. It all worked out to be, you know, four or $500 each, which they could afford. We'll be right back.

All right, we touched on this a little bit, Joe, but this is such a central question to this discussion. Like, how did Canadian post-secondary institutions, how did they become so dependent on international student fees? Well, I think the main reason is that it's an area that allowed them to keep growing as institutions. If they had remained in their old ways of relying entirely on provincial government funding and domestic tuition, these institutions would have had to have shrunk by now. And any institution doesn't want to do that. So if they're going to run big universities or run big colleges, the additional revenue that these international students bring in make it possible. You mentioned before that public funding isn't keeping up either. So this is a part of it too, that universities and colleges don't really have the option, I guess, to depend on that?

Yeah, that seems to be the case. The level of funding from provincial governments to post-secondary institutions has basically stayed about the same over the last 10 to 15 years. There were variations in there from province to province. Some have cut over the last 10 to 15 years. There were variations in there from province to province. Some have cut and then allowed it to rise again. Some have held higher than others. We're in Ontario today and Ontario, particularly in its college system, has by far the lowest level of provincial support per full-time student basis. And the federal government now, of course, is talking about putting a cap on international student permits issued each year. What exactly are they talking about doing, Joe?

And what's the thinking behind this cap? So this was something that Housing Minister Sean Fraser raised at the cabinet retreat in Charlottetown a couple of weeks ago. On the international student program in particular, I think we need to do some serious thinking here. And I made similar comments before. The reality is we've got temporary immigration programs that were never designed to see such explosive growth in such a short period of time for the benefit of the audience. Our temporary programs, whether it's for temporary workers, international students or tourists,

are driven by demand. There's not a set number every year the same way that we have for permanent residents. And it was the first time publicly that the government had said it was considering a cap. And that caused quite a reaction among institutions. Universities and colleges were taken aback. They used words like, you know, they were troubled by it or concerned. And the next day, the current immigration minister, Mark Miller, said it was just one thing under consideration. And so it's not clear which way the government is going to go. It has two reviews underway looking at this program, one done by Global Affairs, the other by Immigration, Refugees and Citizenship. And there clearly is some concern about the speed with which this

program has grown and the impact it's having, especially on housing. I think that's where a lot of people have focused their attention. So a cap is a very difficult thing to introduce. Some provinces have already said that this is not an area that they would welcome a federal intervention. So we'll see how that goes. And have provincial governments responded to this potential idea yet? So the one we heard from most clearly was Quebec. And Quebec said that absolutely not.

It was not going to countenance a federal government intrusion into who gets educated in the province of Quebec because they see that as their right to decide who gets admitted. And under the current rules, if a student is admitted and is not considered a security risk, there really is no limit to the number of students that can enter Canada. So there's nothing that should be standing in the way of them getting a study permit to enter the country. Yeah. If the government were to do this, it sounds like it's not something that's clearly laid out yet. But I guess I am really wondering about the impacts on these schools, because it sounds like this is certainly a revenue stream for a lot of them.

What would the impact be on schools if they had to, you know, drastically limit the number of international students they could accept? I think the schools that we know today would not look the way they look today. They would have to be smaller. You'd have fewer faculty. New programs that have been created in the last little while might have to be scaled back. Class sizes might have to increase. There would be more constraints on the amount of money they could spend on faculty, on labs, facilities, programs. It would hit every part of every institution in the country.

At this point, the University of Toronto, the largest university in the country, a research powerhouse globally ranked in the top 20 in many rankings, 43% of its revenue comes from international student tuition. Wow. Any kind of hit to that would have an impact in some parts of the universities for sure. Yeah. And I would imagine at a smaller school, it might even be more of a difference too, because you're working with less money and less revenue to start with. Yeah. You take some of the smaller Ontario colleges, you know, a Lampton College, I think, which is more than 80% international students at this point, a cap on the number of students that they have.

It would certainly impact their plans for growth. Joe, this conversation, it's making me remember the situation with Laurentian. This is also a school in Ontario that declared insolvency a few years ago. And I believe this was also related to something about international students. Can you remind me, what was this about again? Yeah, well, the Laurentian story is something that we covered extensively. And it was a really fascinating moment, because it was the first Canadian publicly funded institution to get into the financial difficulties, you know, this serious that put it on the brink of, you know, potentially being put out of operation. But one of the triggering factors, and there were many, but one of the things that sort of prompted the crisis at Laurentian was when the Saudi government decided to pull its students back from Canada. So the Saudi Arabia was

funding several thousand students in Canada, paying international fees at a number of different schools. And Laurentian was one of the ones where they had a reasonably high concentration. And when those students went back to Saudi Arabia, it was an immediate loss of a few million in revenue for Laurentian, which it could not easily make up. And so for a school of Laurentian size, one little diplomatic incident between Saudi Arabia and Canada basically pushed it maybe a little more quickly towards its financial crisis than it was otherwise expecting. And it's not inconceivable that any kind of move to limit or restrict or reduce the number of international students could have an effect like that in some other institution that maybe is heavily reliant on international fees for its financial

health. Just before we wrap up here, Joe, I guess I just want to bring it back to the students that you talked to and the students who are experiencing all of this, because international students pay, as we said, tens of thousands of dollars a year in tuition. A lot of students have to leave their home and their family and friends to come here to study, to go to school. I mean, what responsibility do institutions like post-secondary institutions have for these students? Well, the post-secondary institution has a responsibility to provide a good education. It has a responsibility to make sure these students are looked after and have the supports they need. That's really crucial. It has a responsibility to help them sort of launch successfully into the

world. So to help them not just with when they arrive with finding a place to live, which as we've known, many of them can struggle to do, but also to give them the counseling on where to look for a job, how to pursue a career, how to present themselves in the job market. But when you have a change as rapid and large as this, I think it's to be expected that there are growing pains. And we're hearing more and more about those growing pains in part because the program is getting bigger and bigger. And so, you know, we hear about students having struggles with housing, and we're hearing about Canadians from all walks of life having issues with this affordability crisis, whether it's housing or food or all kinds of different things. So what we're seeing with international students is both specific to their case and it's also symptomatic of some larger issues in our society that are going to take, you know, bigger, more thought out solutions, I think, than institutions can sort of solve on their own.

In the meantime, though, of course, the students are the ones that are often living in cramped conditions and working a job as they're going to school and living away from their family and friends. So, I mean, it sounds like it could be a really difficult situation for a lot of these kids. Yeah, I think for a lot of them, the ones that I spoke to kept mentioning this word pressure. There's a pressure to succeed, to do well in school. There's the financial pressure of how much their parents have borrowed to get them here. And then there's the pressure of not messing it up, essentially. You know, they're really worried that something might go wrong, that they might not get permanent residency, they might not find the job, They might not have the money to get through what they're going through. And speaking to them, what struck me was how they weren't living the

typical college experience. There was not much fun that these guys were experiencing. They weren't going to the library and they weren't meeting students in study groups. It was all online. And it just seemed a tough existence that they were going through that was very focused on an end goal. And that end goal was sort of the steps required to get permanent residency in Canada. Joe, thank you so much for taking the time to speak with me today. You're welcome. Thanks for having me. That's it for today. I'm Mainika Raman-Wells. Our producers are Madeline White, Cheryl Sutherland, and Rachel Levy-McLaughlin.

David Crosby edits the show. Adrian Chung is our senior producer. And Angela Pachenza is our executive editor. Thanks so much for listening, and I'll talk to you next week.