How Canada's Laurentian University became a victim of a failing business model (and why other universities will follow)

The Sudbury, Ont., school has filed for court protection from its creditors – an unprecedented decision brought about by long-standing financial forces and a recent government squeeze

Located in Northern Ontario, far from the province’s decision-making centres and big-name institutions of higher learning, Laurentian University does not typically get much attention from folks in the snobby south. But the Sudbury-based institution’s move to file for court protection from its creditors on Monday – the first time a publicly funded Canadian university has declared itself insolvent – has suddenly made it top of mind at Queen’s Park.

While many of the problems at Laurentian appear to be of its own making, the university is also a casualty of the business model that has increasingly come to dominate Canada’s postsecondary institutions in recent years. Faced with stagnant government operating grants and inadequate domestic tuition fees, universities and colleges have become reliant on attracting foreign students to survive.

Depending on the program, tuition fees for international students run upward of five times the rate paid by in-province students. Provincial governments have largely looked the other way as universities restructure their course offerings to cater to foreign “customers” and maximize revenues, increasingly at the expense of less-popular disciplines. Foreign students accounted for 15 per cent of total enrolments in 2018-19, double the proportion in 2009. In math and computer science, for instance, foreign students accounted for fully a third of the student body.

For a few institutions, such as the University of Toronto, this brave new world of university funding has been a bonanza. U of T now collects more in tuition fees from international students than it receives in annual operating grants from the Ontario government. But for smaller players with less global name recognition, the new math of Canadian university funding has been a disaster, leaving them especially vulnerable to sudden shifts in foreign demand.

At Laurentian, the withdrawal of more than 150 Saudi students after a 2017 chill in relations between Ottawa and Riyadh resulted in a one-quarter drop in foreign enrolments almost overnight. After that, the university set a goal of attracting 1,000 foreign students within five years, but it struggled to meet the target – even before the pandemic hit.

The result is that Laurentian, which bills itself as a fully bilingual institution, has found itself increasingly squeezed after Premier Doug Ford’s government imposed a 10-per-cent tuition cut for in-province students in 2019. Unable to make up the shortfall by attracting enough foreign students, the university began implementing cost cuts to stay afloat. Last year, it froze hiring and suspended admissions to 17 programs, including several catering to francophone students.

The university had seen ancillary revenues collapse with the pandemic, as the move to online teaching left student residences nearly empty and campus businesses closed. But while the pandemic certainly exacerbated Laurentian’s woes, it is not the cause of a financial crisis that had been unfolding well before COVID-19 struck. The new model of Canadian university funding has [ … ]

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carrothead
4 months ago

Once again this shows how poor business sense academics had. If they had to make it out in the ‘real world’, they would all fail miserably.

time lapse
4 months ago

If colleges and universities would fill their administrative offices with unnecessary junk (like the office of diversity and inclusion) that provide zero value for college students’ educations, they wouldn’t need to fund themselves with expensive tuitions from foreign students. Monies from US students and state governments would probably suffice.

cup of joe
4 months ago

This is standard procedure for most institutions for higher learning. They over-charge foreign students in order to fund their colleges. When the foreign students are gone, through COVID lockdowns or scholarship funding drying up in their home countries, the whole university collapses, too. Poor business models!

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