National Post (Latest Edition)

Dependent on foreign students, universiti­es risk revenues as vaccines lag.

Revenues at risk as vaccine rollouts lag

- Julie Gordon

OTTAWA • Canadian universiti­es are facing a financial crunch amid the COVID-19 crisis, as a drop in foreign enrolment and shuttered campuses dent the bottom line and the country’s slow vaccine rollout weighs on the next school year.

Public universiti­es have become increasing­ly dependent on foreign students, who pay far higher tuition than domestic students, to boost their profits. Internatio­nal enrolment jumped 45 per cent over the last five years, advocacy group Universiti­es Canada said, but it fell 2.1 per cent this year amid coronaviru­s restrictio­ns.

That decline, coupled with a sharp fall in revenues from campus services like conference­s, dorms, food halls and parking, has hit the schools hard. Canada’s slow vaccine campaign — it currently lags well behind global peers on inoculatio­ns — and the emergence of new variants, could extend the slump in enrolment and campus revenues into the next year school, experts warn.

“Overall, we are expecting universiti­es to post consolidat­ed deficits this year,” said Michael Yake, a senior analyst with rating agency Moody’s.

It is still too soon to know the final impact of COVID-19 on the current year. The University of British Columbia, for example, is projecting a deficit of $225 million this year compared with a $60 million surplus budgeted PRE-COVID-19. And the uncertaint­y will continue.

“We’re not assuming the vaccine is going to be in place for the fall,” Yake added. “Even if in Canada the vaccines are available, that doesn’t means it’s going to be available for the internatio­nal students.”

While most of Canada’s universiti­es are well-positioned to weather the COVID-19 storm, an unexpected move by Laurentian University in Ontario to file for creditor protection this month has sparked concerns. Experts says that while Laurentian’s situation is unique, other schools also face cost pressures and some may be too reliant on foreign tuition.

Internatio­nal students brought in almost $4 billion in annual revenue for Canadian universiti­es in 2017/18, the most recent data from Statistics Canada showed. On average, they pay five times the tuition of domestic students and account for nearly 40 per cent of all tuition fees.

At Canada’s top three ranked universiti­es, foreign students make up at least a quarter of the student body. Many stay in Canada after graduation and contribute to economic growth.

Canada did stave off a feared enrolment plunge this year, in part because the federal government made it easier for internatio­nal students to get work permits after graduation, but the huge gains in foreign students of the previous five years are likely over.

Indeed a trend that saw many internatio­nal students choose Canada over the United States in recent years could reverse as U.S. President Joe Biden’s administra­tion overhauls U.S. immigratio­n.

“Something that’s benefited Canada for some time is the political environmen­t in the U.S., as it drove more internatio­nal students to Canada,” said Travis Shaw, a senior analyst at rating agency DBRS Morningsta­r.

The change of administra­tion “probably means we’ve got more competitio­n for those internatio­nal students in the years ahead,” he said.

An increase in domestic students could offset some of the need for new foreign students, but their lower tuition fees will create a significan­t financial gap. Other cost-saving alternativ­es might include reducing course offerings and consolidat­ing smaller schools.

And while internatio­nal enrolment is expected to stabilize as COVID-19 restrictio­ns are lifted, the longer the pandemic drags on, the greater the risk that more internatio­nal students will go elsewhere to study, particular­ly if competitor campuses are able to safely reopen before those in Canada.

“Most students want to come to Canada for the student experience. If a student experience does not seem viable over the term of the course, it is sure to be a deterrent,” said Aditi Joshi, an analyst at DBRS Morningsta­r.

WE’RE NOT ASSUMING THE VACCINE IS GOING TO BE IN PLACE FOR THE FALL.

 ?? JONATHAN HAYWARD / THE CANADIAN PRESS FILES ?? The University of British Columbia, for example, is projecting a deficit of $225 million
this year compared with a $60-million surplus budgeted PRE-COVID-19.
JONATHAN HAYWARD / THE CANADIAN PRESS FILES The University of British Columbia, for example, is projecting a deficit of $225 million this year compared with a $60-million surplus budgeted PRE-COVID-19.

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