Dalton McGuinty has announced that if re-elected he will introduce yet another subsidy for people who want a post-secondary education. This is a bad idea. Even if the province was not drowning in red and could actually afford the cost of this program, it would still be a bad idea. It either endangers the very worth of Ontario’s post secondary education system or it simply wastes money.
The core concept behind a post-secondary student subsidy is fundamentally flawed to begin with. The idea is that: we can observe that people with degrees make more money, thus if more people have a degree then more people will make more money. This reasoning completely ignores why people with degrees do have higher incomes.
At least part of the reason why people with degrees make more money is that they tend to be more motivated people. An individual that is willing to invest in himself/herself is likely the same sort of individual that will work hard and advance her/his career. At the same time the reason why such a person would go to university in the first place is because employers find value in a degree or a college diploma.
So there is a demand for workers with a post-secondary education, but like everything else there is not an unlimited demand. Government subsidies can increase the supply of educated workers but the demand is reliant on market forces, thus supply outpaces demand. Anyone who has taken grade 11 economics knows (no university required) that if supply is greater than demand then the value of the supply decreases. This means that all those people who got degrees won’t be making as much as the government thought.
There is an old adage that people only value what they pay for. This popular wisdom is supported by evidence when it comes to post-secondary education. A study published by the Federal Reserve Bank of New York shows that where there is a high subsidy for education students tend to be less motivated. If it isn’t a struggle for a student to afford school then they are more likely to take it less seriously.
This has an effect of furthering the devaluation of post-secondary education. Since students get the same degree or diploma regardless of grades, employers don’t know if they spent a few years learning to think critically or perfecting the art of beer pong. Some employers ask for transcripts but that it not always practical.
The end result is that Mr. McGuinty’s plan would likely strip Ontario’s post-secondary education of its value. This is, however, the worst case scenario.
The best case scenario is that it will turn out that pretty much everyone who is going to go to university or college are already going. Then there wouldn’t be a drastically increased supply to devalue degrees and diplomas. The only result is that government would have wasted yet another few million dollars.
Another scenario is that universities and colleges say thank you very much for the extra money and increase tuition by exactly the same as the subsidy (which would screw over the 1 in 6 that don’t qualify for the subsidy). The net result would be pretty much nil except that the government would have wasted even more of tax payer’s money.
So this program will either be a waste of money or destroy Ontario’s post-secondary education system. I’ll say it again, this is a bad idea.