Canada's postsecondary institutions are grappling with severe financial pressures, exacerbated by recent federal policies on international students. Immigration Minister Lena Metlege Diab recently directed struggling universities and colleges to turn to their provincial governments for support, highlighting a longstanding tension in the nation's funding model for higher education.
This directive comes amid widespread budget shortfalls, with institutions like Memorial University of Newfoundland implementing drastic measures to stay afloat. The decline in international student numbers, following federal caps on study permits, has stripped away a critical revenue stream that many schools relied on heavily. At the same time, provincial operating grants have lagged behind rising costs, creating what many leaders call a 'broken' funding model.
Minister Diab's Statement Sparks Debate
Lena Metlege Diab, Canada's Immigration Minister, made her comments during a Halifax Chamber of Commerce luncheon on January 30, 2026. Responding to questions about university finances, she stated, 'With respect to financial (support) and so on, I would direct them to contact the provinces.' She emphasized the federal government's focus on immigration stability, noting that post-pandemic surges strained housing and healthcare systems.
Diab defended the study permit caps, which reduced international students from over 1 million in early 2024 to about 700,000 by November 2025. The government plans to issue around 408,000 permits in 2026, with exemptions for master's and PhD students to support research and economic growth. 'We are on a path to stability and predictability,' she assured, while acknowledging fraud issues among recruiters and non-attending students.
This shift places the onus on provinces, which constitutionally oversee postsecondary education operating funds. Critics argue it ignores the federal role in creating the revenue drop through immigration policy.
Memorial University: A Case Study in Crisis
Memorial University (MUN) exemplifies the challenges, announcing plans to sell key assets including its Harlow Campus in the UK, Signal Hill Campus, Johnson Geo Centre, and Ingstad Building. These sales aim to save over $3 million annually in operating costs and address $20 million in deferred maintenance.
MUN faces a $20.85 million budget gap for 2025-26, despite a balanced $468.6 million operating budget (excluding medicine). Key factors include a $1.1 million drop in general provincial grants, inflationary pressures on energy and IT, and declining enrollment. The provincial tuition offset grant—$68.4 million annually since the early 2000s to keep tuition low—is phasing out over six years at $13.68 million per year, paused only for 2025-26.
International student declines, hit by federal visa restrictions, compound tuition revenue losses. MUN has implemented hiring freezes on tenure-track positions, restructured portfolios, and invested in recruitment tech. Students and faculty express dismay: MUNSU president noted the 'drastic change' to student life, while residents at Signal Hill face relocation amid St. John's housing woes.
- Signal Hill closure by April 2027, affecting graduate housing.
- Grenfell Campus targeting $1.9 million cuts via efficiencies.
- No program eliminations yet, but viability reviews underway.
Since 2013, provincial funding to MUN (excl. med school) has dropped 46%, per advocacy campaigns like #FundMUN.
International Students: From Lifeline to Liability
International students have been a financial bulwark for Canadian postsecondary institutions, often comprising 20-50% of revenue due to higher tuition fees—up to three times domestic rates. In Atlantic Canada, losses from caps equate to 11.4% enrollment drops and billions in economic impact.
Federal caps—35% cut in 2024, further reductions—led to 60% fewer new arrivals Jan-Oct 2025 vs. prior year. Approval rates fell to 48%, worse than COVID impacts for some. Institutions like UBC, SFU in BC report steep declines, layoffs, and hiring freezes.
Read the full CBC report on Minister Diab's remarks.
While feds argue for sustainability, universities warn of program closures and reduced research capacity.
Photo by Mathieu Stern on Unsplash
Provincial Funding: Chronic Underinvestment
Provinces provide core operating grants, but per-student funding has eroded. National averages down 29% since 2008-09 nominally, 17% inflation-adjusted. Newfoundland saw 20% drops in NS recently.
Domestic operating income per student is 9% below 2007 peaks. Provinces like Quebec and BC increased grants recently, but others lag.
Explore postsecondary opportunities in Canada amid these shifts.Ontario: The Epicenter of the Crisis
Ontario holds the unwanted title of lowest-funded per student at 55% of national average. A decade of tuition freezes post-2019 cuts, stagnant grants, and intl declines project $1.3B university deficits, $1.5B college by 2027-28.
Algonquin College CEO Claude Brulé declared the model 'broken,' seeking $1.6B provincial investment. Plans to suspend 30-40 programs highlight risks to workforce training.
- Universities request $1.2B more annually, rising to $1.6B by 2028-29.
- Colleges face $5,200+ structural gap per student.
- Intl revenue loss: $300M+ for Ontario unis in 2024-25 alone.
Human Impacts: Students, Faculty, and Communities
Budget pressures mean larger classes, fewer offerings, facility decay. At MUN, Signal Hill residents like Ting Ting Chen mourn community loss amid housing shortages. Faculty face job insecurity; BC unis lay off staff.
Research minimally hit short-term, but long-term threats loom. Students question value, enrollment dips. Yet, affordability persists—MUN remains Atlantic's cheapest.Rate your professors and share experiences.
Stakeholder Views and Tensions
Universities Canada notes inadequate provincial grants predate caps. Provinces blame intl overreliance; feds point to constitutional roles. Algonquin, Colleges Ontario urge fixes.
MUNFA worries over a 'smaller Memorial' without strategy. Provinces like NL froze tuition, cut grants. Balanced views call for multi-level reform.MUN Budget FAQs.
Photo by Markus Winkler on Unsplash
Pathways to Solutions
Experts advocate diversified revenue: philanthropy, industry partnerships, efficiency tech. Activity-based budgeting at MUN shows promise. Provinces could boost grants; feds ease caps selectively.
- Increase per-student funding to national benchmarks.
- Targeted intl recruitment for high-value programs.
- Tuition flexibility with protections.
- Deferred maintenance investments ($70M NL example).
Ontario unis push 2026 budget action. Long-term: national PSE strategy.Career advice for higher ed professionals.
Outlook and Opportunities
2026 brings stability promises, but risks persist. PhD exemptions aid research. Institutions adapt via smaller, focused models. For academics, higher ed jobs in Canada remain vital—search university positions, including Canadian listings.
Explore faculty roles, admin jobs, or post a job. Amid challenges, resilient careers await on AcademicJobs.com.
