Differential versus equal student subsidies in post-secondary education: A current Canadian dispute

This paper examines a current proposal that students in higher education should have equal subsidies. The proposal has recently been made on grounds of efficiency and is therefore linked with the justification of subsidies because of public benefits (externalities) from education. The argument is that since we are ignorant of the differential strengths of public benefits from each educational program, it is a safe rule to subsidize each at an equal rate. This equality argument is further supported in this paper with the observation that marginal public benefits diminish with increasing educational duration. This efficiency argument is clearly distinguishable from that of equity or equality of opportunity.The strength of the argument is next tested against the objections to it that are now being made by the Ontario Commission on Post-Secondary Education. Evidence of the degree of present inequality in subsidization in Ontario is fully surveyed. It is shown that the Commission is reluctant to reduce the inequality because this will mean charging full fees for the last stages of professional training. The Commission fears that this would result eventually in the raising of professional fees to the public.This article finally produces an economic model that shows that the Commission's fears are groundless. The case for switching the subsidies in favour of the earlier years of education is indeed stronger than appears at first sight because of the monopolistic tendencies of the professions concerned.