05/29/2013 06:59 pm ET Updated Jul 29, 2013

Canada: The Answer to College Debt?

Back in the day, Americans went to Canada to avoid the draft. Now they're going to avoid the shaft. Namely, the cost of college tuition in the United States, which recently passed $1 trillion. The average American student now carries $26,600 in IOU's and it shows no sign of abating. The impact to the economy is profound, of course. A generation in the hole affects all sectors of the economy; they are less likely to own homes, start businesses and have retirement savings. In 2011, we wrote a lengthy piece about the student debt crisis so we won't revisit the staggering stats. The new wrinkle however is that our exorbitant college tuition has led to a new trade deficit -- an exodus of American students heading to other countries where tuition is a fraction of what it is stateside. Chief among these locales is Canada. Over the past five years, we've seen 10,000 American students heading north, according to the Canadian Embassy in Washington, up 400% from 15 years ago.

It's not hard to see why when you look at the numbers: At McGill University in Montreal, six percent of students are American, and the ranks are growing. The cost of tuition is $14,561 a year. This is for an institution ranked just below Johns Hopkins and the University of Michigan in the latest QS World University Rankings. I take college rankings with a generous scoop of salt but they are a useful reminder that academic excellence is no longer the monopoly of the United States. The burgeoning global middle class has pulled higher ed up with it. At the University of British Columbia (placed even higher than McGill by the Times Higher Education ranking) annual tuition and living expenses at $34,000 don't even come close to the cost of tuition alone at a place like New York University or the University of Chicago. It's no wonder that the American student body at UBC has grown by a full third in the last five years. Added to this is the fact that Canada has progressive labor policies, allowing students to work off-campus after six months and for a period of three years after graduation (something the United States needs to think about as we reform immigration).

The impact to Canada of all this educational tourism has been great: the number of foreign students there topped 100,000 this year; in 2010 (the latest year we have numbers on) foreign students contributed about $8 billion and 86,000 jobs to the economy. The title of a report by the Advisory Panel on Canada's International Education Strategy says it all: "International Education, A Key Driver of Canada's Future Prosperity." "For far too long," the report opines, "Canadian institutions have been a well-kept secret, perhaps because we have been too modest."

If you're willing to cross an ocean, the options expand further: In England, Wales and Northern Ireland, undergrads only spend three years in school. Many allow you to use U.S. federal loans, although work permits are more difficult to obtain in the EU. The University of Manchester (ranked just below UCLA in the QS rankings) is about $17,900 per year. If you want go even further, Asia boast a host of world-class institutions where the medium of instruction is English. The University of Hong Kong (a notch below Berkeley) charges $17,000 in annual tuition. Plus, there's all the benefits of exploring an entirely new culture and economic region -- not incidental in our transnational world.