Are Political Tensions Between Canada and India a Cause for Concern for Canadian Public Universities?

The Government of Canada's recent allegations that the Government of India may have been involved in the killing of a Canadian national have led to a deterioration in relations between the two governments. To the extent that travel and immigration policies negatively affect international student mobility for a prolonged period, we believe there could be financial repercussions for Canada's public universities.

Key highlights:

-- Based on 2022 data released by the Canadian Bureau for International Education, students from India, China, and France comprised approximately 21%, 19%, and 5% of total international enrolment in Canadian universities, respectively.

-- From 2018 to August 2023, study permit holders from India grew by 73% to around 40% of total permits in 2023.

-- Given precedence with Saudi Arabia and Canada in the past, there is a possibility that a potential escalation in tensions between India and Canada could prompt Indian students on government scholarships to be relocated to universities in other countries, including the U.S., the UK, Australia, and New Zealand.

-- In Ontario, a tuition freeze for in-province domestic students across most programs and constrained public funding reinforce the dependence on international tuition revenues.

-- A broadly challenging operating environment, the constrained funding and tuition fee framework in Ontario, and an uncertain outlook for international enrolments will weigh on credit profiles of most rated universities.

"Although there were no major policy interventions following this dispute, we believe that any material and prolonged drop in student mobility from one of Canada's largest source countries could ultimately affect credit ratings on some rated public universities," said Aditi Joshi, Vice President of Public Finance at DBRS Morningstar.