Canadian Universities Grappling With Diverse Post-Pandemic Challenges

After demonstrating their resilience during the Coronavirus Disease (COVID-19) pandemic and weathering an extremely challenging period for the sector, some signs of strain are beginning to surface for Canadian universities as they navigate additional hurdles.

Key highlights include the following:

-- The current restrictive domestic tuition fee framework continues to be a source of financial pressure for most of our rated universities in Ontario, compounded by the overall inflationary operating environment.
-- The move to double tuition fees for out-of-province students attending English universities in Québec is set to have some impact on out-of-province student enrolments and lead to adverse financial implications for some universities in the province, although this is unlikely to be overly material in the longer term.
-- Following a year of visa processing backlogs, the recent geopolitical tensions between Canada and India continue to cloud the recovery of international student enrolments.

“Despite the challenging outlook, we expect universities with strong academic profiles to remain relatively more resilient, while those with weaker academic profiles are likely to yield to pressures sooner,” said Apurva Khandeparker, Assistant Vice President, Public Finance at DBRS Morningstar. “While most universities have flexibility to withstand these temporary financial pressures, if the challenges persist, they could lead to sustained pressure on operating results and potentially negative credit rating actions for some universities.”