“The annual budget process is about making… strategic choices,” Vice-President, Operations and Real Estate Partnerships Scott Mabury told the Planning and Budget Committee on February 12. 

On April 3, the Governing Council will decide whether to pass U of T’s proposed 2025–2026 budget of $3.62 billion. If approved, international undergraduate students in the Faculty of Arts & Science will face a three per cent tuition increase, some master’s programs will see tuition hikes as high as 7.5 per cent, and PhD students will receive guaranteed $40,000 in base funding. 

U of T will allocate $405 million in financial aid, $5.7 million to invest more in securing research grants, and provide approximately $2.3 billion in compensation to faculty and staff. 

“Revenue growth is slowing, there’s pressure on expenses, and there’s lots of geopolitical uncertainty,” Vice-President & Provost Trevor Young told the Business Board on March 12. However, the university continues to forecast a “strong” financial position, projecting a 3.8 per cent net income increase from 2023–2024. 

Two-thirds from students’ pockets

Under the proposed budget, 66 per cent of U of T’s revenue — totaling $2.4 billion — will come from tuition and fees. Another 20 per cent will come from grants for general operations provided by the province, which increased funding by $27 million.

The 2024–2025 academic year marks the first time that U of T has enrolled more than 100,000 students. This coming year, the university plans to enroll 92,415 full-time equivalents, representing the number of full-time course loads. 

Entering the seventh year of the Ontario government’s freeze on domestic in-province tuition the university’s revenue from domestic tuition will remain similar to what it received in 2018–2019,  not accounting for inflation. 

42 per cent of the university’s total revenue in 2024–2025 will come from international students, who make up 29.7 per cent of all students. Among the Faculty of Arts & Science undergraduates, international tuition will increase by three per cent, while non-Ontario domestic tuition will increase by five per cent. 

This past school year, U of T enrolled 16 per cent fewer new international students than planned; this was a smaller decline than many other Canadian universities, some of which saw drops of 30–40 per cent. 

Mabury attributed the decline in international enrolments to tighter federal immigration policies and geopolitical tensions. In September 2023, the Canadian government announced an investigation into links between the Indian government and Sikh leader Hardeep Singh Nijjar’s death in Canada, triggering a prolonged dramatic dispute. In 2024–2025, the university enrolled 9.62 per cent fewer international students from India. 

Young told the board that some geopolitical dynamics present opportunities for the university. Applications from US students for 2025–2026 increased by 16 per cent. The weakening Canadian dollar — which fell 0.5 per cent against the US dollar between January 20 and March 14 — makes Canada a more attractive destination for international students.

Over the next five years, the administration aims to increase graduate enrolment by 9.5 per cent. On November 12, 2024, U of T announced that it would guarantee $40,000 in annual base funding for all PhD and Doctor of Juridical Science (SJD) students for their first four or five years — a decision Young expects will help attract more graduate students.

Although he applauded the new funding guarantee, University of Toronto Graduate Students’ Union (UTGSU) President Amir Moghadam told The Varsity that “wins” for PhD and SJD students should not come at the expense of master’s students, some of whom will face tuition hikes of up to 7.5 per cent this year. 

Citing “decades of underfunding” from the provincial government, Moghadam said “universities are scrambling to make ends meet,” leading them to raise tuition. In response, the UTGSU has advocated for increased provincial and federal support. He pointed to the tri-council agencies’ 2024 decision to raise doctoral student awards to $40,000 — a change he credited to advocacy from graduate student unions across the country.

“Tuition fee increases are the short-term answer to the perfect storm that the decision makers — university and government — have created,” he said.

Spending: Salaries, research, and “efficiency”

In 2025–2026, U of T projects $3.62 billion in expenditures, with $2.38 billion allocated to faculty, librarians, and staff compensation, including pension contributions. The university plans to hire 15 new faculty — far fewer than the 40 to 50 hired in each of the past few years.

The university has budgeted $405 million for student aid, including $90 million for international scholarship programs. On average, U of T provides 69 per cent more financial support than other Ontario universities. 

According to Mabury, the university also plans to invest in improving “operational efficiency,” or its ability to optimize its use of resources. On March 12, it launched a new travel and expense claim system to make it easier to reimburse employees’ expenses, with this being expected to cost approximately $900,000 per year but save eight million dollars to $10 million per year. Additionally, U of T will consolidate various separate human resource processes into a centralized system.

U of T plans to invest $4.6 billion into 27 capital projects over the next five years. Mabury told the board that the university rents 832,000 square feet of space in downtown Toronto at a cost of just under $50 million a year. Future projects at UTSC include a new commerce building, an Indigenous House Project and a performance and arts building. 

Each year, U of T allocates funds to specific priorities. For 2025–2026, the university plans to distribute $21.8 million across three areas: doctoral funding and scholarships, support for researchers applying for grants, and new agreements with the federated colleges:  St. Michael’s College, Victoria College, and Trinity College.

Young told the board that U of T’s funding from Canada’s tri-council agencies is “slipping” compared to other universities like the University of British Columbia and the University of Calgary. To encourage more grant applications, the budget includes $5.7 million to establish teams that will help researchers apply more successfully for domestic and international grants and support the direct costs of research.

Moghadam told The Varsity that investing in the grant process is “really important.” More grant funding attracts talented graduate students, who in turn, bring in more funding as their talent attracts more money, creating a positive feedback loop. Additionally, increased funding helps students and faculty produce “higher quality research in a shorter amount of time.” 

However, Moghadam worries that these investments, along with the new $40,000 base funding commitment, may come with expectations that the already overworked graduate students should put in more hours. He said that the UTGSU has raised this concern in meetings with the administration. 

“There haven’t been any answers so far,” he said.

When The Varsity asked the university about these issues, a spokesperson from the university directed us to U of T’s draft budget report for 2025–2026.

Risks of inflation and student enrolment

Members of the Business Board raised concerns about U of T’s reliance on international student tuition, which, in Mabury’s words, “filled the funding gap not fillable from any other source.” 

Mabury assured the board that the university had enough provincial attestation letters to enroll the number of international students it desired, which are letters provided by the province to international students to confirm they have a spot to study in the province. However, U of T will be $54 million under budget if it doesn’t increase international student intake in 2025–2026.

Mabury said that U of T’s lack of student housing also poses a risk, as one way to ensure international students enroll is by providing them with housing. He highlighted that the university is in the process of constructing 1,250 new housing units across the three campuses and plans to add up to 5,000 more beds in UTSG student housing over the next decade. 

In the 2018–2019 school year, 65 per cent of U of T’s international undergraduates were from China. For 2024–2025, U of T registered more than 40 new international students from 16 countries, and no single country now contributes more than half of the university’s international students. “We believe that diversifies or mitigates risk,” Mabury said. 

Young told the board that the recently appointed Associate Vice-President and Vice-Provost, International Student Experience Mariana Mota Prado, has focused on recruiting students from Latin America who may feel hesitant to enroll in the US. The university also aims to increase domestic student enrolments, including by offering micro-credentials, or rapid training programs provided to upskill students with the necessary abilities for employers. 

“I don’t think any division is not thinking carefully about this,” Young said. 

Cooling inflation in recent years helped U of T negotiate lower wage increases. However, economists have expressed concerns that inflation could rise due to the US–Canada trade war. The Consumer Price Index — which measures the cost of a standardized basket of goods used to calculate inflation — rose 2.6 per cent from February 2024 to 2025, up from the 1.9 per cent inflation rate in January. 

The university expects higher inflation on utilities, software, and construction, which will increase its expenses. “I’m most worried on the capital side,” Mabury told the board. He said that the rest of U of T’s spending, including on food and compensation, has “relatively low exposure” to tariffs.

“We are well placed to tackle the challenges ahead,” Young told the board.