Ontario Needs a Million University Graduates. Changing Our Approach to International Students Can Help.

This report forecasts that Ontario will need 1,004,864 university graduates to fill skilled job openings in this decade alone. That number is striking, not just because it boils down to over 100,000 university graduates each year, but because the shortfall is concentrated in a few sectors. This merits reviewing and sharpening Canada’s strategy for international students, so as to better address labour market gaps.

What The Ontario Universities Report Says

The Council of Ontario Universities (COU) commissioned Stokes Economics to project how much demand Ontario employers would have for university-educated workers between 2026 and 2035. These projections are broken down by sector, and account for retirements, workforce exits, as well as new labour demands due to economic growth.

STEM occupations represent the single largest slice of projected demand. With 212,980 job openings forecast over the decade, STEM makes up at 21.2 percent of the total demand.

Business, Finance, and Administration roles come in second, accounting for 19.4 percent of total demand, or 195,316 graduates needed over the period. Education, Law, and Social and Community Services follow closely behind at 16.3 percent, representing another 163,377 positions.

Health-related occupations face the most urgent labour requirements. The sector is projected to require 148,999 additional university graduates over the next 10 years — 43.7 percent of the current health workforce. This shortfall comes at a time when the population is aging and patient demand is rising.

The remaining demand is spread across legislative and senior management (6.1 percent), art, culture, recreation and sport (2.4 percent), other management occupations (7.2 percent), and other occupations (12.6 percent).

How Ontario Plans to Bridge These Gaps

Despite the huge shortfall, the Council of Ontario Universities is optimistic about bridging these gaps.

The report notes that the proportion of Ontario’s population aged 25 to 64 holding a bachelor’s degree or higher has risen from 26 percent in 2006 to 36.8 percent in 2021. The number of Ontario high school students applying to Ontario universities, too, has increased by 17 percent since 2020.

Earlier this year, the Ontario government announced $1.7 billion in funding for 70,000 more post-secondary spaces in in-demand programs like healthcare, STEM, skilled trades, and education.

But these improvements alone aren’t enough to fill the gap. For decades now, the province has relied on international tuition revenues to subsidize the post-secondary education system. Plus, many international students enter the Canadian labour market, temporarily or permanently, after their studies.

However, the government has spent the last two years aggressively scaling back international student admissions. Study permit caps, tighter eligibility criteria, and record refusal rates have dramatically reduced new arrivals. This has led to a steep decline in tuition revenues that kept the education system running smoothly.

This approach is counterintuitive and worrying. The country needs university graduates but, at the same time, the government is telling international students, “We don’t want you.”

The International Student Problem Was Never About Numbers

Although the international student policy was blamed for everything from housing shortage to high unemployment, the problem was never about there being too many international students.

The real issue was that too many international students were enrolled in programs with weak labour market outcomes. The institutions admitting them were not preparing them for the kinds of careers the economy needs.

Despite this mismatch, the government and schools were actively recruiting international students abroad and promising them an easy path to permanent residence. This brought international students to the country in large numbers. But for the most part, these weren’t the students and future workers the economy needed.

At the time, policymakers thought this was a good idea. Every extra international student would contribute to the economy in some way, whether that was through tuition revenue, part-time work, renting housing, or buying goods and services.

This created a program that functioned as a parallel immigration stream with virtually no filtering for long-term economic contribution. Anyone who could get into one of the many “diploma mills” and afford the tuition could get a Post-Graduation Work Permit, and subsequently, a headstart toward PR.

In 2024, in the face of backlash and political pressure, the government changed course sharply. After several policy iterations, the current framework places a cap on the number of study permits to be issued each year but exempts master’s and PhD students from these caps. It also limits access to Post-Graduation Work Permits to students who’ve completed a university program or a college or non-university program in a field of study linked to labour shortage. There are other deterrents too, including restricting access to spousal open work permits to spouses of international students enrolled in master’s programs of 16 months or more, PhD programs, or professional degree programs.

All these efforts have one goal: lowering the number of international student arrivals, except those coming for university programs.

A Smarter International Student Selection Framework

If Ontario alone needs over a million university graduates and domestic capacity cannot fully meet that demand, the international student program needs to be reimagined as a talent pipeline, not just an enrolment tool for institutions or a revenue stream for provincial budgets.

The course correction IRCC has done over the past two years is a step in the right direction. But it isn’t enough.

Canada has an opportunity to be deliberate about which students we’re selecting, and which programs we’re directing them toward. We have the data to connect education programs to long-term economic outcomes. We have the data to identify long-term labour market requirements (including in the Ontario Universities study). What we need is policy that connects the dots.

The starting point should be to filter by field. Not all university programs carry the same labour market value, and the current system does not meaningfully distinguish between them. A student enrolled in a high-demand STEM or health sciences program at a research-intensive university has fundamentally different economic prospects than someone enrolled in an arts history program.

If the goal is to produce graduates who will fill the specific gaps (like the ones the Stokes report identifies), then study permit approvals should reflect program-level outcomes data. Programs with strong post-graduation employment rates, earnings above the provincial median, and clear alignment with shortage occupations should be prioritized.

Of course, program outcomes also vary by institution. A University of Toronto degree is likely worth more in the job market than one from Algoma University.

A points system for study permits would move economic selection earlier in the process. This way Canada can attract the best and brightest talent in occupations that are in-demand and more likely to boost per capita GDP. This could be based on factors like post-study employment rate, average entry-level wages for graduates, and long-term labour market demands and occupational median wage.

Points-based systems already exist for Express Entry and several Provincial Nominee Programs (PNPs). Applying the same logic to study permits is not a novel idea.

The idea is to be more selective about who gets in, and more transparent about what the path forward looks like depending on what they choose to study.

Universities Over Colleges

There are several reasons to encourage international students to pick Canadian universities over colleges.

First, universities typically offer degree programs (bachelor’s, master’s, and doctoral) while colleges tend to favour shorter diploma and certificate programs. This isn’t universal though, and some colleges do have degree programs.

Individuals with university degrees earn more. Census 2021 data showed that the median wage of a bachelor’s degree holder was $56,400, while a certificate or diploma holder below bachelor level (from a university or college) made a median wage of $43,200 — a 30 percent difference. This means an international student graduating from a university degree program stands to contribute more to the Canadian economy.

Second, there’s a significant difference between international student tuition fees charged by universities and colleges. In 2019, the Ontario government had estimated that the average university tuition fee ($9,000) for domestic students is nearly 2.6 times the average college tuition of $3,400. A Statistics Canada study estimated that in 2022-2023, international students in undergraduate degree programs paid 429 percent more than domestic students.

Canada’s post-secondary system relies on international tuition revenue to subsidize education for Canadians. Encouraging international students to enrol in universities will mean more tuition revenue and higher earning graduates.

Third, in most cases, the university admission process is also more competitive compared to colleges. Students need better GPAs and higher language proficiency to get into degree programs. This acts as an additional filter to ensure the high quality of international students coming to Canada.

The Study Permit to PR Transition

The Canadian Experience Class program is one of the main pathways that former students with post-graduation work experience use to get permanent residence in Canada. This program requires one year of Canadian experience in a skilled occupation (NOC 0, 1, 2, or 3). That criterion is too broad, and it does not meaningfully filter candidates with experience in fields that have long-term shortages or high-earning potential.

A former international student who graduates from a university program in a high-demand field, secures skilled employment in that occupation, and builds a career here is an ideal candidate for PR. On the other hand, someone who graduates from a university program with weak labour market alignment and works in an unrelated low-wage role isn’t going to add much long-term value to the economy.

Some of the proposed reforms to the Express Entry system and CRS scores may begin to address this. IRCC has proposed additional CRS points for candidates with job offers or work experience in high-wage occupations. If implemented, this would help better filter candidates at the PR stage.

However, by being deliberate about which international students come to Canada to begin with, and aligning admissions to wages or labour needs, Canada can create a sustainable pipeline of foreign talent and give them a reliable route to PR.