The numbers are in. Student debt is on the rise.
A recent study by Statistics Canada revealed more post-secondary graduates are walking away with debt, and not only that the amount of the debt is at an all time high.
The study, which focused on Canada’s post-secondary graduating class of 2005, showed 57 per cent of students are relying on student loans to help fund their educations, up nearly 10 per cent from a decade earlier. And the financial horror-story doesn’t stop there. Students who had borrowed more than $25,000 had risen from 17 per cent to 27 per cent from 1995 to 2005.
The study said those with student loans were less likely to have savings, investments or own their own home than those without. A chilling fact, considering student debt takes years to payoff.
Despite these numbers, and the effects debt can have on one’s future, at a recent Board of Governors meeting an unanimous decision was reached to raise residence and meal plan fees for the 2011-12 academic year, as Simon Rice reported in Rez fee to rise in near future (page 3).
Humber’s vice-president, John Mason, explained residence fees increase along with the cost of living, so about two per cent a year, and will continue to do so.
In his State of the Union Address, U.S. President Barack Obama, said “No one should go broke because they chose to go to college.” He proposed a plan to help get student debt down to a manageable level which included increased tax credits and Pell Grants and a system to help make paying back debt less of nightmare. Borrowers will be required to pay 10 per cent of their income towards student loans and all debt will be forgiven after 20 years, or 10 years for those who work in public service, down from 15 per cent for 25 years. He also said, post-secondary institutions must be held accountable and take responsibility to help solve this problem.
The college should be working with the students to help lower the burden of debt, not raising residence fees.
While increased tuition fees are much to blame for the higher debt load, sometimes a little extra in your pocket can make a big difference. As students enter the work force for the first time, their main concern should be about finding a rewarding a career, not about the seemingly endless amounts of money they owe.
For a better chance of getting their financial lives on track, students need to be given a break.
A task, like most, that is easier said than done.