Explainer: Do university mergers save money? Experts assess proposed STU-UNB merger

On Feb. 25, Nauman Farooqi, president and vice-chancellor at St. Thomas University, sent a mass email confirming that Premier Susan Holt had no intention to close or merge STU. Despite this, students are still speculating about the university's long-term future. (Credit: UNB Communications)

As the New Brunswick government considers structural changes to post-secondary education, students at St. Thomas University (STU) are asking what a potential merger with the University of New Brunswick (UNB) would actually mean.

Higher-education experts say mergers are complex, rare and unlikely to solve short-term financial problems.

Maïca Poirier Murphy, manager of strategy and governance at Higher Education Strategy Associates, said governments often consider mergers during periods of financial strain, but they come with major upfront costs.

“That is a huge risk because in the short term, at the very least, it does not save any money,” Murphy said. 

She added that governments looking for immediate savings “are not going to find that in any kind of reasonable time frame … within the first kind of decade or so.”

In a 2024 analysis that Higher Education Strategy Associates conducted, consultant Alex Usher wrote that mergers often require expensive changes, including integrating IT systems and balancing salaries, which typically rise to match the higher-paid institution. 

He concluded that “mergers have costs and most of them aren’t worth paying” and that they are “for the most part a side-show” when governments are trying to reduce spending. 

When mergers work and when they don’t

Murphy said mergers tend to work best when institutions offer complementary programs, rather than overlapping ones.

She pointed to examples such as Dalhousie University, which absorbed specialized schools that expanded its academic offerings.

“That’s one of the reasons why mergers of institutions make a little bit more sense than when there is a significant overlap in programming,” she said.

Usher’s research echoes that conclusion, noting mergers are most effective when campuses are close together and offer different programs. Otherwise, combining institutions can consume “an enormous amount of management time and energy” without producing meaningful savings. 

Because STU and UNB already share services and offer similar programs, experts conclude that financial benefits from a merger could be limited.

What it could mean for students

Murphy said students currently enrolled are usually able to complete their degrees even if institutions merge.

“Students who are in a certain program are offered the opportunity to complete the program that they started,” she said.

However, mergers can still change the educational landscape.

Murphy warned there is a risk of “decreasing the variety of types of education that are available to students,” especially when smaller institutions with distinct missions are absorbed.

Institutional identity is another concern. In some mergers, universities fully combine under a new name, while others maintain separate campuses and identities but share administration and services.

Financial pressure and alternatives

Financial strain across Canada’s university sector has intensified in recent years, partly due to funding challenges and limits on international student enrollment.

Murphy said universities and governments are now exploring different ways to stabilize finances.

Alternatives include partnerships with industry, continuing-education programs for working professionals and international collaborations.

Murphy emphasized that students and faculty should play a central role in any restructuring decisions.

“Their absence would be akin to having an airplane flying without a pilot,” she said.

While discussions about post-secondary education funding in New Brunswick are ongoing, professionals say mergers are long, complicated processes and unlikely to offer a quick fix for budget pressures.