They call it investing in your future. In a sense, when you pay thousands of dollars of tuition and fees each year to attend institutes of higher learning, you are investing in your future. For many students though, it’s also an investment into a life-long debt.
Tuition costs keep going up, there’s no denying that. In Canada, the cost of a university degree has tripled in the last 15 years and is still rising faster than inflation.
Students often don’t realize the financial ball and chain they’ll acquire when applying for that magical-seeming student loan. When that first payment arrives, you may think that all your money problems are over, but that’s pretty far from the truth. Eventually the cash will run out and you will be expected to pay it back, with interest.
Few students are really educated about what they’re getting into. According to a Statistics Canada National Graduates Survey, about half the college and university students who graduated in 2000 owed money for their schooling. About 45 per cent of bachelor degree grads had government debts from student loans. The average amount owed was $19,500.
About one in five students paid off their debt within two years. As for the rest only about a quarter of their loans were paid off, on average.
The amount owed has only been going up. According to Statistics Canada, students in 2000 owed about 30 per cent more for government loans than students in 1995, and 76 per cent more than 1990 students.
The government has done little to help students to pay for their education, decreasing the number of grants offered and increasing the number of loans. When Paul Martin was finance minister in 1998, he created the Debt Reduction in Repayment Program to assist overwhelmed students by decreasing the amount they owed. But because the eligibility criteria were so specific, it helped about 500 students per year rather than the predicted 12,000.
A long-term commitment to monthly payments can be daunting. Basically each month for years to come, you’ll kiss goodbye a hefty sum, without seeing anything in return. When you’ve got a large debt, other purchases like a car, house or any kind of investment, must be put on hold. It can be emotionally taxing in later years if you’re trying to build some kind of financial stability.
Sadly, for many students loans are the only option to deal with the ever-increasing expense of getting an education. Students need to learn how to manage their finances and better prepare themselves for a possible future of debt. The sooner students educate themselves about their options in accepting loans and later, paying them off, the sooner they’ll be able to kiss their financial burdens goodbye.
For more information on student debt, visit:
National Student Loan Service Center resources:
http://www.canlearn.ca/nslsc/tools/nlindex.cfm?langnslsc=en
Education Cost Calculator:http://srv650.hrdc-drhc.gc.ca/cslp-pcpe/cl/28/fp-pf/ecc.jsp
Budget Estimator:
http://srv650.hrdc-drhc.gc.ca/cslp-pcpe/cl/28/fp-pf/be.jsp
Online Budget Planner:
http://srv650.hrdc-drhc.gc.ca/cslp-pcpe/cl/28/fp-pf/obp.jsp
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