New Year, New Loans
Thursday, January 12, 20120 Comments
The first week of the semester is always a time that rushes by in a whirlwind of activity and stress. At the forefront of most students’ minds is finding classrooms, purchasing textbooks and settling under a new work load. Coming back to school from the comfort of home and the holidays becomes harder for me every year, because the more time I spend away from my family, the more I appreciate what a large part of my life they truly are.
However, the beginning of a new year and a new semester gives me and everyone else a chance to start fresh. The sense I get from my peers is one of anxious optimism; hope for 2012 and the resolutions that have been made.
For many, the most looming task to accomplish this week is picking up his or her OSAP. According to Statistics Canada, 57% of the Canadian undergraduate population utilizes some form of student loans to finance their education, at least in part. Data gathered from the 2005 survey states that the average student debt upon graduation is $18,800. Many undergraduate students are now faced with upwards of $25, 000 in debt. Furthermore, students in Ontario are faced with the highest tuition fees in all of Canada. (http://educationisaright.ca)
Why is it that so many Canadian students require loans to fund their studies? In a study published in 2010 by Statistics Canada, a decline in funding from the government is partially to blame. In 1989, 72% of total revenues for colleges and universities were funded by the government. By 2009, this number had fallen to 55%. In this same time period, average tuition fees increased more than twofold.
It is difficult for students who are embarking on their postsecondary venture to foresee the potential pitfalls of graduating 4+ years later with over $10,000 in debt. According to the aforementioned study, postsecondary graduates aged 20 to 45 are less likely to own their homes if they have accrued student debt during their education. As well, it is less likely that those with student loans will have money available to put towards savings and other investments. Finally, Canadians between the ages of 20 and 29 who graduate with student debts have an overall average net worth of $17,500, whereas non-borrowers average out at $61,900.
Thus arises a dilemma for students who do not have any way other than student loans to finance their education. Postsecondary graduates have higher salaries on average, but is it worth it to have loans that will remain with them for many years down the road? Will these loans prove to be more of a hindrance in the future than a blessing for the present?
Debt seems to be a norm in our society, and can be had in a way that will not become crippling if managed correctly. It is not necessarily a life sentence for those who spend the time educating themselves on the benefits, risks, and long term outcomes of taking out a student loan.
57% of the Canadian undergraduate population is thinking about their student debts this week, and I’d like to know your opinion on the issue. Do you have student loans? How do you feel about your debt and the future?