Lack of price variation: What Gives?
The first thing that strikes me is the lack of variation in private US university pricing. The most selective and “highest ranked” schools in the US, whatever that means, cost almost the same as less selective institutions. All private schools seem to charge around $50-55,000 USD in tuition, and another $15-20,000 in living expenses.
Thus, Harvard costs $52,000 USD in undergraduate tuition and fees while Fordham costs slightly more, at $54,730 USD. In 2021, Harvard posted an ungodly 3.43% acceptance rate, compared to roughly 43% at Fordham. How does that make sense in economic “supply and demand” terms? Or, is there some kind of tacit collusion going on, on an absolutely massive scale?
Canada and the US compared, macro-economics-wise
The second thing I don’t get is the unbelievable price difference in US and Canadian undergraduate education. Per capita incomes are about 31% higher in the US – $63,000 USD (adjusted for Purchasing Power Parity in 2020) versus $48,000 in Canada. So, on average, the US is almost one third wealthier. However, wealth in the US is highly concentrated, and while the same is true in Canada, it’s on a different scale. The GINI coefficient (which measures economic inequality) for the US in 2021 was 24% higher in the US – 41 compared to 33 for Canada. (The GINI scale goes from 0-100, with 0 being “perfectly equal.”)
The US is thus roughly 30% wealthier on average than Canada, but is also 24% more unequal.
The Cost of Undergraduate Education in Canada and the US
When you compare the price of private US and public Canadian universities, the figures are off the chart. Tuition and fees at Stanford, which I attended in the late 1980s, are now $55,473 per year, while room and board is $17,860. Stanford estimates the total cost for one year, with “personal expenses” and other items factored in, at roughly $79,000 USD per annum, or an incredible $316,000 over four years. (In 1989, I paid roughly $33,000 in today’s USD for tuition, room and board).
Costs at McGill, one of Canada’s leading universities, for an undergraduate degree in Arts and Sciences are about $5,000 CAD in tuition/fees for a Quebec resident, $11,000 CAD for a non-Quebec Canadian like my daughter, and $30,000 CAD for an international student. In US dollars, those figures come to roughly $4,000 USD, $8,700 and $24,000. The most expensive housing and meal program at McGill (the Royal Victoria College housing complex) costs $17,200 CAD, or about $13,600 USD.
Total cost of a four-year undergraduate degree at McGill – again, one of the top schools in Canada – is roughly $148,000 USD for an international student, compared to $316,000 at Stanford, a whopping 113% difference (316-148/148*100). Based only on income differences, the US should be about 30% more expensive, not 113%.
For a Canadian non-Quebec student, moreover, the difference is $203,200 over four years. Assuming a modest 5% annual return, that $203,200 USD would become $331,000 USD at the end of ten years.
- The prices I am quoting for the US are “sticker” prices: Lots ofd students pay less than sticker due to merit or financial-based aid.
- To a certain extent, this is an apples-to-oranges comparison, as there are no private higher education institutions in Canada. Public universities in the US are somewhat cheaper, especially for in-state student.
I taught at McGill from 2001-2006 as a tenure track and then tenured professor of sociology. There is no question in my mind that as a faculty member, and as a PhD student in the social sciences, the experience at a top US university is better than at McGill. More money, more resources of other kinds, better training, more time for research, more exposure to the latest thinking and techniques.
At the undergraduate level, however, I found the McGill students to be substantially superior to anyone I taught at my previous job in the US (Johns Hopkins University) or at my later job at the University of Minnesota. Simply no comparison. The best Canadians (and excellent internationals) go to McGill, and I was pushed harder as a teacher than I have ever been pushed since. The students were awesome. My colleagues were great teachers, and the educational experience at McGill was fantastic.
There are of course plenty of other excellent Canadian universities, just like Harvard, Stanford and Fordham are but a drop in the US higher ed bucket. Other schools on my daughter’s list include the University of Toronto, University of British Columbia, Simon Fraser University, and York University. If she didn’t want to be right in the middle of a major city, she could have also considered Queen’s University (about two hours outside of Ottawa), McMaster University (in the Toronto suburbs) and Dalhousie University (Nova Scotia), among others. Carleton, where I once taught in Ottawa, is also a good school, as is the nearby University of Ottawa. And there are more.
My daughter doesn’t want to stay in Minnesota, so she’s applying to schools all over the US and Canada. She’s a straight A student, a hard worker, and an amazing person. She worked at a local supermarket all through COVID, paying for her car and other personal expenses, and she is saving for a post-high school trip and her first year of college. I hope she gets in to whatever university she wants to attend, and I will support whatever decision she makes.
The US undergraduate system has spiraled out of financial control, however. Paying an extra $200,000 for a basic undergraduate education just doesn’t make any sense, especially when the quality in Canadian schools is just as good as, or better, than average US schools. I can see paying a whole lot more for what is supposed to be a fantastic school like Princeton, but for a more average (but still crazy expensive) school like Fordham or American University? I just don’t get it.
In a world such as ours, with so much inequality and so many crazy expenses, why burn that much cash – even if you have it, much less if you have to borrow it – when something of equal or better value is available at a fraction of the price just north of the border?
What’s true for prescription drugs is also true for undergraduate education. Go North, young person, go North. Come back South for graduate education, if you must.