Student Debt Sucks!

Perhaps you’re currently attending high school or you’re a recent grad trying to decide whether or not you can afford college or university. Or maybe you’re enrolled at a Canadian post-secondary institution or have even finished up your undergrad. Whatever the case may be, I’m pretty sure we all agree that post-secondary education is very costly and simply put, student debt sucks. They mean that a part of our hard-earned cash that could have been spent on fun stuff like clothes and a car or necessities like rent and food, will instead go into paying off debt and possibly interest too. Gross. Just the word debt makes my stomach sink.

Ah well, such is the life of a student. According to Statistics Canada’s most recent Census, about one third of grads with bachelor’s degrees owed an average of $16,200 in government loans 2 years after graduating and 15% owed an average of $31,600 (1). That’s a lot of debt to pay off! I just noticed that so far in the Cross Canada Dialogues (CCD) survey, more than two-thirds of you guys (or 433 of you) bring in under $10,000 a year. It’s no wonder that many of us are considering the dollars and cents involved in attending a post-secondary institution. One respondent from the CCD survey wrote that “I’m debating whether to go back to school. Since I am not guaranteed a job afterwards...I worry about paying back the loan.” –Debt Debater. So far in our survey, about 72% (or 533) of you guys said that you’re having financial struggles and more than half of you indicated that you’re worried about finishing either high school or college. Wow, it sounds like a lot of us students are really feeling the pinch these days!

So how does borrowing money affect our futures? One respondent said that “There is a huge amount of debt for university students such as myself, which keeps us from saving money for the future. Because we are taking lower paying jobs (especially during the recession) it becomes harder to pay off debt.” – Feeling the Pinch.

What if you really can’t afford to pay off a loan? Well, it’s pretty tricky to simply duck out of debt, despite the Bankruptcy and Insolvency Act that offers wiping the slate clean after 5 to 7 years - that is if you can prove you’ve tried your best to repay your loan and are so strapped for cash that you honestly can’t pay it off. But for the majority of us struggling to pay back what we owe, it gets even more complicated. Something we often forget is that students start paying interest on borrowed money immediately after graduating!

Here’s what you guys had to say about paying for post-secondary school during the recession in the CCD survey:
“My greatest personal concern regarding the recession is whether or not I will be able to finish school due to tuition costs. Without making enough money at a part time job, I am unable to put aside money for university tuition and to pay off potential student loans. My fear is that I will have to drop out of my courses because I cannot afford school.” –Working To Stay Afloat

“It’s been difficult trying to get a student loan, and to afford going to college.” –Fund-less

“The greatest challenge during the recession has more been on my parents and their financial requirement to pay for my education. Feeling guilty for this burden, my thoughts have changed since the recession. My plans have changed as I too will be carrying that weight, working a full-time job and also having to take out a loan simply to pay the costs of one year, despite the scholarships I have been awarded for my hard-work and volunteer commitments.” –Held Accountable

“It’s been really hard for me to get motivated to finish my education. Post secondary education is already too expensive for me to afford and I believe the recession will hold me back from obtaining student loans or a line of credit from the bank because everyone will be applying.” –Longing for a Loan

The good news is that we have a pretty good financial aid program in Canada, which includes loan reductions, loan forgiveness and interest relief in addition to grants, bursaries and scholarships.

Unfortunately, Canadian student debt has passed the $13 billion mark. Ouch. And this tally only includes the amount owed to the federal government (provincial government, family and bank loans are not even part of this number). Yup, that’s a whole lot of borrowed cash (2). Clearly, post-secondary education is simply unaffordable to many Canadian youth, particularly during these unstable economic times. So what can the government do to help students? Here’s what some of you guys had to say about the topic in the CCD survey:

“There is an entire generation going into the workforce with substantial debt problems. How will this generation be able to buy houses, have families or start businesses if they are paying high interest rates on their student loans?” –Interested in Interest Rates

“During the recession, I don’t think the government should make it easier for people to get loans. If you make it easier, young people are going to become more in debt. This will not help the economy over all.”
–Credit Cringing

What do you think? Are loans the answer to helping students pay for post-secondary school? What realistic and feasible solutions would you suggest to the Canadian government to help students pay for their education? How has the recession impacted you, in terms of tuition costs and your access to post-secondary school?

[This blog reflects opinions of Canadian youth expressed in the Cross Canada Dialogues survey and is funded by the Counselling Foundation of Canada. For more information on Johnny MacDonald, you can see his profile here.]

Resources
(1) http://www.thestar.com/comment/columnists/article/642879
(2) www.cfs-fcee.ca/html/english/home/index.ph