Some of Ontario's universities may have to reconsider their plans to expand master's and PhD programs as the province tries to encourage the sector to focus on training students who graduate with skills that are in demand.

Over the next few months, the Liberal government will begin negotiations with the province's universities that will ultimately lead to a higher portion of funds being linked to each institution's outcomes, such as graduation or employment rates.

As part of those talks, the government will hold discussions on how and where it provides grants for graduate-level programs. In an earlier round of agreements, the province had agreed to support a certain number of spots at each university. Universities that have not yet attracted enough students to meet those targets will have to explain how they plan to fill the spots or face losing them to programs that are running at capacity, sources said.

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But there is concern that reallocating money to schools that are offering popular degrees could limit other universities' plans for more gradual growth.

"The last thing I want to do is stop us in our tracks," said Charlotte Yates, the provost and vice-president of Guelph University.

Guelph is running about 10 per cent short of its enrolment targets for graduate students, according to its agreement with the province and the school's budget documents.

While it has seen high demand for its master's level programs, Dr. Yates said, interest in doctoral degrees has been "up and down." The school is investing millions of dollars in scholarships to attract top graduate students, including scholarships targeted specifically to aboriginal students.

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"As we focus less on growth, I focus more on enriching the student experience," she said.

Financing of graduate education is an expensive public investment. For each MA student that a university accepts, it receives approximately $12,000, roughly double the amount of funding for most undergraduate students. For a PhD student, a university can bank three to five times the money the province provides for someone enrolled in a bachelor's degree in the humanities.

As more people have sought ever-higher levels of education in order to compete in the labour market, there has been pressure on the government to increase public funding. Since 2004, the province has poured more than half a billion dollars into graduate education. Almost 20,000 more people have enrolled in master's or PhD programs as a result.

But the next decade will not see the same levels of growth. The Ministry of Advanced Education and Skills Development (MAESD) announced in December that it will fund increases in undergraduate and graduate enrolment only within tightly defined boundaries. And the government has also indicated that it wants universities and colleges to train students to have skills and competencies rather than focusing on credentials.

It's a movement that is happening in other provinces as well. British Columbia has linked a quarter of its money for postsecondary education to training in fields that are demanded by employers.

Many of the graduate programs that have proved most popular at Ontario universities are short, professional master's degrees that promise students they will be equipped with marketable skills in exchange for a hefty personal investment.

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For example, the University of Windsor's master of medical biotechnology costs $25,000. At the University of Western Ontario, the master of financial economics rings in at $30,000.

"Students are looking for a leg up compared to the number of people who have graduated with BAs," said Brenda Brouwer, vice-provost and dean of graduate studies at Queen's University.

Queen's, Dr. Brouwer said, has introduced what it calls laddered programs, in which students can take a diploma over several months and then, if they decide on a master's degree, transfer the credits from the diploma.

"We have to be responsive to the kinds of jobs that are available," she said.

The Ministry of Advanced Education was not able to provide comment by deadline.