This is from a larger publication, Alternative federal budget 2026-27: Bridge to independence
Introduction
Canada’s public colleges and universities are among the country’s most important economic and social drivers. Recent analysis found that post-secondary education institutions contributed approximately $61 billion to Canada’s GDP in 2025—more than sectors such as oil sands extraction, mining, or transportation manufacturing—and directly employed nearly 488,000 people across the country.1Ryan Romard, Canada’s Quiet Economic Driver: Universities and Colleges, Canadian Centre for Policy Alternatives, April 23, 2026, https://www.policyalternatives.ca/news-research/canadas-quiet-economic-driver-universities-and-colleges/.
Beyond their economic impact, public post-secondary education institutions are anchors in communities, large and small. They are essential—not only to economic growth, but to Canada’s social mobility, cultural life and democratic capacity.
Yet despite their importance, public funding for post-secondary education has failed to keep pace with rising costs, growing enrolment pressures and expanding institutional responsibilities. Institutions have increasingly relied on unregulated and exorbitant international student tuition to fill funding gaps, leaving the sector vulnerable when the federal government-imposed caps on international student permits. The result has been widespread financial instability across colleges and universities, contributing to over 14,000 layoffs since December 2025,2Statistics Canada, Table 14-10-0201-01: Employment by industry, monthly, seasonally adjusted and unadjusted, and trend-cycle, May 29, 2026. hiring freezes and hundreds of program cuts that reduce educational choice and weaken the quality and comprehensiveness of education available to students and communities.3CTV News, “Universities face ‘across the board’ cuts in wake of international student cap,” January 18, 2025, https://www.ctvnews.ca/canada/article/universities-face-across-the-board-cuts-in-wake-of-international-student-cap/. At the same time, affordability for domestic students continues to deteriorate as tuition, which has outpaced inflation for decades, again rises sharply, as high as 6.5 per cent for domestic students in the coming academic year.4University of Prince Edward Island, “UPEI Board of Governors approves balanced 2026-2027 operating budget,” April 9, 2026, https://www.upei.ca/communications/news/2026/04/upei-board-governors-approves-balanced-2026-2027-operating-budget.
The Alternative Federal Budget (AFB) sets out a comprehensive plan to improve affordability, quality and accessibility. This includes immediate financial stabilization, long-term funding reform, and targeted investments to support students, workers, and communities across Canada.
Overview
Canada’s post-secondary education system is at a turning point. Years of declining and uneven public funding have left colleges and universities increasingly dependent on private revenue sources, particularly international student tuition. Recent federal policy changes to the International Student Program have exposed the fragility of this model, triggering widespread layoffs, hiring freezes and program cuts across the country. These pressures are reducing educational choice, weakening program quality and undermining equitable access to public post-secondary education, particularly in smaller, rural and northern communities where institutions are central to local economic and social life.
Despite the importance of public post-secondary education as essential national knowledge infrastructure, Canada has lacked a long-term strategy to sustain and strengthen the sector. Historically, the federal government played a stronger role in post-secondary education through cost-sharing arrangements with provinces that helped expand access and institutional capacity. Yet, unlike other key sectors of primarily provincial responsibility—such as health care, housing and early learning and child care—there is no legislation, multilateral framework, coordinating body or national strategy to align investments, establish shared priorities or ensure accountability. This gap has allowed systemic challenges to deepen and has limited the effectiveness of federal spending.
Federal investments acknowledge some of these pressures, but they remain fragmented and insufficient to address the scale of the challenge. Budget 2024 commitments to increase federal research funding were welcomed across the sector, but much of the funding is being phased in gradually through 2030-31. Accelerating these investments is essential not only to support investigator-led research and talent retention, but also to ensure more institutions can contribute meaningfully to national objectives.
Similarly, while the new Build Communities Strong fund makes universities and colleges eligible for infrastructure funding, concerns remain about the limited scale of available funding, matching requirements and the emphasis on private-sector partnership models.5Joe Friesen, “Canadian universities are rushing to address critical shortage of student housing,” The Globe and Mail, August 28, 2025, https://www.theglobeandmail.com/canada/article-universities-student-housing-shortage/. Canada needs a renewed, dedicated post-secondary infrastructure stream focused on deferred maintenance, classroom expansion, research infrastructure and student housing. Such investments are necessary to expand training capacity, reduce overcrowding—a growing concern for students—and support federal priorities, such as Team Canada Strong, which aims for rapid apprenticeship growth.
Measures to support students have also fallen short of what is needed. The one-year extension of the maximum Canada Student Grant, at $4,200, is inadequate in amount and predictability.6Canadian Federation of Students and the Canadian Association of University Teachers, Grow the Grants, https://www.caut.ca/campaigns/grow-the-grants/ (accessed May 2026). Rising tuition, housing costs and food insecurity continue to limit access to post-secondary education, particularly for lower-income, Indigenous, rural and first-generation students. Without broader action to stabilize institutional funding and reduce reliance on tuition revenue, needed increases in student financial assistance risk being consumed by rising education costs, limiting their policy effectiveness in improving affordability.
The federal government should work with provinces and territories to establish a renewed cost-sharing framework tied to accountability measures that incentivize sustained public investment and protect educational quality and access. This should include immediate stabilization funding to prevent further layoffs and program closures, accelerated research investments, a permanent increase to Canada Student Grants, and a dedicated federal infrastructure program for public post-secondary institutions. Establishing a federal post-secondary education secretariat could also help coordinate long-term planning, improve accountability and align federal investments with shared national objectives. Together, these measures would help restore stability, strengthen research and innovation capacity, improve affordability and ensure Canada’s public post-secondary education system can continue to support inclusive economic and social development for decades to come.
Actions
1. Stabilize and strengthen Canada’s research ecosystem
The AFB will invest $1.3 billion to accelerate the outstanding 2024 federal budget tri-council funding commitments that are currently being phased in through 2030-31, bringing critical research investments forward to address immediate pressures facing institutions and researchers.7Government of Canada, Budget 2024: Fairness for Every Generation, Department of Finance Canada, April 26, 2024, https://budget.canada.ca/2024/home-accueil-en.html. This accelerated investment is necessary to strengthen investigator-led fundamental research, improve declining grant success rates, support domestic talent retention and ensure Canada’s research ecosystem can absorb and sustain new federal initiatives, such as the 2025 budget Impact Canada Research Chairs program.8Government of Canada, Budget 2025: Canada Strong, Department of Finance Canada, November 4, 2025, https://budget.canada.ca/2025/home-accueil-en.html. The AFB will also work toward long-term growth in federal research funding, with the goal of restoring stable and predictable support for discovery research across all disciplines.
2. Improve student financial aid and affordability
The AFB will increase the maximum Canada Student Grant to $8,000 and make it permanent to provide predictable, long-term support for students and families. Eligibility thresholds will be expanded to improve access for middle- and lower-income households. These measures are necessary to address rising tuition, housing and living costs that continue to limit access to post-secondary education, particularly for lower-income, rural and first-generation students. Increased student aid must also be paired with stronger public investment in institutions to reduce reliance on tuition increases and prevent affordability gains from being offset by rising education costs.
3. Expand Indigenous access to post-secondary education
The AFB will double funding for the Post-Secondary Student Support Program and the University and College Entrance Preparation Program to help close longstanding educational attainment gaps for First Nations, Inuit and Métis students. These investments will improve access to post-secondary education and training, reduce financial barriers and support Indigenous learners across Canada.
4. Dedicate and expand federal infrastructure investments in post-secondary education
The AFB will establish a dedicated post-secondary education infrastructure program focused on deferred maintenance, classroom expansion and public and non-market student purpose-built housing. While universities and colleges are eligible under the federal Build Communities Strong fund, concerns remain about the limited scale of funding, matching requirements and emphasis on private-sector partnership models. A dedicated public infrastructure stream is needed to modernize aging campuses, reduce overcrowding, expand training capacity and support federal priorities related to apprenticeship training, for example. The AFB will prioritize public and non-market approaches to student housing and eliminate requirements for public-private partnerships in post-secondary education infrastructure projects.
5. Establish a national framework for post-secondary education
The AFB will work with provinces and territories to develop a coordinated national framework for post-secondary education grounded in the principle that all people in Canada should have access to fully public high-quality and comprehensive public education and training. It will include accountability mechanisms tied to federal funding to encourage sustained provincial investment and improve transparency in how public funds are used to increase affordability and the integrity of the academic job, essential to maintain quality.
6. Change escalator on CST to include minimum GDP growth
As an interim measure while a broader national post-secondary framework is negotiated with provinces and territories, the AFB will also reform the Canada Social Transfer by introducing a nominal GDP-linked escalator with a three per cent funding floor, like the Canada Health Transfer, to help stabilize federal support and prevent further erosion of public post-secondary funding.
7. Establish a federal post-secondary education and research secretariat
The AFB will establish a federal secretariat for post-secondary education and research to improve coordination across federal departments and support implementation of a national post-secondary strategy. The secretariat will coordinate policy and programs across Innovation, Science and Economic Development Canada, Employment and Social Development Canada, Global Affairs Canada, Immigration, Refugees and Citizenship Canada, Canadian Heritage, Statistics Canada, Indigenous Services Canada and more. It will also serve as a central point of engagement for institutions, researchers, students and provinces, improve data collection and policy coherence, and support long-term planning for Canada’s post-secondary and research ecosystem.
8. Improve post-secondary data collection, transparency and workforce planning
The AFB will invest in improved national data collection and reporting to support evidence-based policy-making, accountability and long-term planning. This will include standardized national data on college tuition levels, student housing availability and affordability, apprenticeship participation and disaggregated data on the science and research workforce and student populations. Improved coordination and reporting will help governments, institutions and communities better identify emerging pressures, address regional workforce needs and evaluate the effectiveness of public investments in post-secondary education and training.
