From undergrads to laid-off workers, to parents of children considering post-secondary education, many are looking to higher education for a brighter future. But is this economic crisis going to affect higher education itself?

The Educational Policy Institute Canada is coming out with a report next week on higher education and the recession, including the effect of falling markets on endowments. As for the federal budget's provisions for post-secondary education, read EPI's commentary here.

Alex Usher is the Director of Educational Policy Institute Canada (EPI Canada) and the Vice-President of Educational Policy Institute International. Mr. Usher has authored and managed many studies on student financial aid and quality measurement in post-secondary education. He also oversees EPI's management of the Measuring the Effectiveness of Student Aid Project for the Millennium Scholarship Foundation, the first major research project in Canada to link student aid data, administrative data, and survey data to investigate the long-term effects of student aid. Mr. Usher is a member of the National Advisory Committee on Postsecondary Education Statistics. Mr. Usher has a BA in history from McGill University in Montreal and an MA in political science from Carleton University in Ottawa.

He answers readers' questions, which may include: How well does this federal budget address issues in higher education? What kind of effect will this recession and falling endowments have on research projects and aging building maintenance on campus. Will the rising cost of tuition get worse?

When the discussion starts, your questions and Mr. Usher's answers will appear at the bottom of this page.

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GlobeCampus editor Christina Varga: Thank you for joining us today. You have a report about the recession and higher education coming out next week. Can you give us a few highlights from what you found?

Alex Usher: Hi, Christina. Thanks for inviting me here today.

The work I have been doing with my colleague Ryan Dunn at the Educational Policy Institute really focuses on what we can expect over the next three or four years. It's not pretty.

The fall in equities has really hurt institutional pension plans and endowments, which is both raising costs and reducing resources. Moreover, the days of automatic five-to-ten-per-cent increases in provincial grants — which is what we've been living for the last four years or so — are definitely over. We think institutions will be essentially flat-lined for the next year or two and then cut back the year or two after that as governments start to move their budgets back into balance.

But beyond that, there may be even nastier surprises in store. The first boomer turns 65 in just over 18 months; those that took early retirement are already enjoying their pensions. We are at the cusp of a major demographic shift whose implications for public finance are profound. If you think education has historically had a hard time competing for public dollars with health care, you ain't seen nothing yet.

As a result, it's entirely possible that we have hit "Peak Higher Ed"; that from here on, institutions face declining real revenues per student. That means that institutions will need to find ways to reduce their cost base, and quickly.

Eric Howe from Saskatoon Canada writes: I believe that University enrolments increased during the Great Depression. People had trouble getting a job, so they went back to school. The current economic situation is nothing like the Great Depression, but do you expect a similar enrolment increase?

Usher: Hi, Eric. Typically during recessions, we do see increases in post-secondary enrolment, but generally not at the university undergraduate level.

Typically, people who are making lemonade out of lemons and studying during a break in employment want relatively short programs so that they can use their training as the economy improves. That means we can expect more enrolments at community colleges and more enrolments in Master's degree programs. To the extent that enrolments increase at the undergraduate level it will be people stretching out a four-year degree a little bit because they'd prefer to study a bit more rather than face a hostile market, rather than a flood of new applicants.

P S from Toronto Canada writes: I'm not sure if you're aware of the huge problem affecting PhD graduates seeing employment in Canadian universities as professors. As a science PhD graduate looking for work, I see first-hand that there is an overabundance of PhD graduates produced by Canadian universities. PhD graduates trained for and expect to find employment in universities, but there is a huge discrepancy between PhD graduate numbers to full-time faculty job openings (I've heard it's as high as one faculty job for every 25 graduates).

This leads to contract work as teachers or postdoctoral fellows in the university system — these people are compensated little better than the poverty line ($30,000/year for a postdoc with no benefits, $14,000/year per course for teaching, with about $500 in health benefits), yet have spent 8 years in the postsecondary system. This is one of the main issues for contract faculty in the recent York University strike. The fact is, Canadian universities are underfunded for hiring full-time faculty and are hooked on cheap, contract labour.

My questions to you are: 1) Why do universities produce such an overabundance of PhD graduates if they know of the incredible odds at finding work as university faculty? I may know the answer: for cheap labour as researchers and teachers? 2) In the face of this recession, what will be the impact on faculty hiring in Canadian universities? The academic job market for PhDs is already terrible (in all fields, not just arts, as traditionally assumed) - I can't imagine it getting any worse. Thank you for your time.

Usher: Thanks for this question PS. First of all, graduate admissions departments don't work on the assumption that everyone who enters a PhD is headed for the academic market. Some professors may operate on that assumption — I think more so in the humanities than elsewhere — but institutions don't. So they don't really take the state of the academic job market into account very much. They are much more likely to be trying to meet student demand for doctorates rather than institutional demand.

Second of all, even if they did try to take it into account, it's difficult for them to predict the market 5-7 years out (which is how long most PhDs take. In the early part of this decade, institutions we were coming off a wave of retirements and we were seeing significant re-investments in PSE by provincial governments — as a result there was a lot of hiring. Now, the situation has changed completely.

I'm afraid I don't have good news for you for the near future. For any hiring to occur, there have to be retirements. The equities crash means that professors on the brink of retirement have seen their savings crumble — they are much more likely now to stay put for a year or two rather than leaving. So expect the number of openings to decrease. And even then, I think the economics of higher education for the foreseeable future are going to push institutions towards even more contract faculty. If public dollars are unavailable and governments want to shelter the middle class from tuition rises, the only option universities will have is to reduce their cost base. And with staff costs eating up 70 cents on every dollar, it's pretty clear how they will be achieving this.

Marvin60 4q from Canada writes: Aside from specific professions — medicine, law and the like — is university relevant any more? Does a degree in, say, renaissance literature, parapsychology or women's studies have any value at all in a hyper-competitive world? I say this as someone with a Master's degree that had one helluva time getting a decent-paying job, where friends of mine who went the college route and learned plumbing, electrical and carpentry are doing far, far better financially and have little, or no, student debt.

Usher: Hi Marvin. It's certainly true that in some parts of the country, recent trades graduates have done very well the last few years — arguably much better than university graduates. But while trades jobs can be lucrative, they also tend to be less steady than ones that require university education. If you look at job losses in the last few months, people in the trades have been taking it in the neck. Cancelled construction projects in Alberta, for instance, mean serious drops in employment prospects for a whole host of trades. So, yes, trades can be rewarding, but the risk of unemployment is much higher, too.

I don't think any Canadian university has degrees in parapsychology, but if your point is about the humanities and social sciences generally I think the answer is that yes, universities are still relevant. But there may be a feeling that perhaps the bachelor's degree is not as much of a ticket to success any more. This, in large part, is driving the increasing demand for graduate degrees.

Peter from Winnipeg Canada writes: My sister lives and Montreal, and her husband recently left her for his co-worker, leaving her to care for their young child. He is less than reliable with the alimony payments. Is my sister better off to go back to school to upgrade her skills (and take on debt), or in this economy, is she better off to stick with the known and keep her low-paying job and irregular alimony payments?

Usher: Peter, without knowing more about your sister's skills, competencies, interests and financial situation, it would be irresponsible of me to offer any advice. Sorry.

Bill C from Amherst United States writes: Do you believe that the recession will impact also the private and prep secondary schools who charge a significant amount for tuition and fees?

Usher: Without a doubt. But it won't affect them all equally; those with larger endowments and those with better endowment managers are likely to weather the storm better than those that did not. The more the institution is reliant on yearly tuition revenue to pay the bills, the more exposed they will be.

That said, people are usually prepared to sacrifice an awful lot to ensure their kids get the best education possible. The recession would have to get very, very bad before reputable prep schools started to run out of clients.

Robin Ardminish from Regina Canada writes: Galbraith in his book A Short History of Financial Euphoria, published in 1990 (but reads as if it were written yesterday), states that "there can be few fields of human endeavour in which history counts for so little as in the world of finance." His analysis of financial disasters should have been required reading for all our present day financial gurus who got us into this mess. There is a disturbing trend in our universities to downplay the role of history in order that we can concentrate on the bleeding edge of new ideas and developing theories. Would you agree that we need to place more emphasis on understanding our past so that we can better prepare to deal with the future?

Usher:Hi Robin. I'm not an expert on the subject, but my impression is that professors of management like to teach using examples from the present day. So, you're right, there was a whole generation of students who went through their studies with no real understanding of what a financial crash looked like. However, the present generation of students — that is, the managers of the near future — won't need a historical education to know about this problem: they're learning and talking about it every day in their classrooms.

Heather Reynolds from Kitchener Canada writes: Good afternoon. With the reality of job loss and cutbacks, increases in enrolment in universities and colleges will present many challenges for post-secondary educational settings. How do you propose universities (et al) deal with this issue along with their own financial losses in the market. Dip into their endowment funds? Lay off part-time workers? Increase job responsibilities of tenured staff. Refuse (or even decrease) admission? Thank you, Heather Reynolds

Usher: Heather, these are exactly the questions that university managers and Boards of Governors are going to be wrestling with over the next few weeks.

Cutting costs will not be universities' first instinct. Before they go near that option, they will be doing a full-court press on provincial governments to either increase their operating grants or let them raise tuition fees. There will be a lot of high-stakes discussions like this in the ten provincial capitals over the next six weeks or so. Provincial governments will not have a lot of spare cash to give them, but most provincial governments have also bought into the notion that tuition freezes are middle-class vote winners, so they'll be loath to give the universities too much on that side. I suspect the word from many provinces will therefore be: there's no new money, so muddle through as best you can with very small tuition increases.

It's anyone's guess how each university will manage in these constrained circumstances.

There are remarkably few senior university administrators that really remember the mid-1990s when everyone was facing major budget cuts, so I'm not sure how well everyone will handle it. Some institutions may try to borrow money to cover what they think will be a temporary shortfall. Temporary hiring freezes are a definite possibility at some institutions, a measure that also means an increased use of casual staff. Deferring maintenance is a well-worn solution because the consequences take so long to be felt. Money for travel and conferences is also an easy target. Reductions in library hours, library acquisitions and the availability of student services are also very likely, as are delays in implementing major IT purchases.

The bigger problems come when people realize this isn't a one- or two-year blip but more likely a problem lasting five years or perhaps longer. That means making hard choices about productivity and specialization within institutions. The problem is that hard decisions don't come easily to universities: collegiality, for better or for worse, tends to try to preserve the status quo. But it's not clear that the status quo is really an option.

Sean J from Saskatoon Canada writes: Do you have an opinion of the recent rush to provide incentives to apprentices — enroll, complete, tools, etc? However, since apprentices are half student, half employee does it not stand to reason that part of the equation that appears to be missing from this is additional incentives for employers?

Usher: Hi Sean. Thanks for your question.

I'm not sure I'd characterize it as a "rush". There has certainly been a desire at the federal level since the Harper government took office to find ways to get money in the hands of apprentices. Ostensibly, this is to encourage people to take up or complete their apprenticeships - though I'm somewhat doubtful that the amounts of money being given to apprentices for this purpose is actually sufficiently large to be affecting apprentices' behaviour all that much.

I think you've hit the nail on the head about the current approach to apprenticeship subsidies being unbalanced. In expansionary times, the main cause of non-completion for apprentices is that they have already secured good jobs in their industry and feel they do not require extra training. In that kind of situation, giving a $2,000 completion bonus - as was proposed in last Tuesday's budget - may make some sense.

But this, as we all know, isn't an expansionary period. Apprentices are being laid off at a rather rapid rate and if they can't secure new jobs with employers committed to the apprenticeship process, they are likely to be non-completers, too. If you were looking for an efficient subsidy at this point in the economic cycle, it would be one that rewarded employers for keeping their apprentices employed through to completion. The Dutch do this, and it's been fairly successful at keeping skilled labour in the trades flowing through to the labour market at a steady rate and avoiding the kind of pro-cyclical boom and bust approach to apprenticeship that Canada, unfortunately, is stuck with.

Varga: Unfortunately, we've run out of time. Thanks very much for your thoughts, Alex. And thanks to readers for your questions and comments.

Thanks for asking me to do this, Christina. I think higher education is going to be going through some interesting times over the next few years. The strike at York University, I think, has given us a peek at some of the issues that are going to be confronting everyone. If the cost structure changes, that probably means more casual staff - or at least staff who are designated as "teaching-only" and not having research responsibilities. We have to have a fair means of compensating people in these positions, and that won't be easy with cutbacks looming. Tuition rises are certainly a possible solution given how little they have increased this decade, but those bring their own problems as well. As president Shoukri said recently, the root causes of the York strike are system-wide. And these pressures will only grow stronger over the next two years.