Life / Money

Graduates living with debt; delaying life milestones

(Special) - Getting a good post-secondary education is a noble and laudable goal in life, but with the cost of getting a four-year university degree potentially being as high as $100,000, many Canadians are living well past their graduation with debt they acquired years earlier as students.

Student debt isn't just a concern for recent graduates. A new poll by BDO Canada has found that two-thirds of Canadians under the age of 40 with a degree or diploma graduated with debt of just over $22,000 at the time but 62 per cent are still paying off that debt today and expect they will need another five years on average to become debt free.

The study found that only 38 per cent of graduates who finished school with student debts are debt free today. Thirty-three per cent owe up to $10,000, 11 per cent owe between $10,000 and $20,000, 14 per cent owe between $20,000 and $50,000 and three per cent owe more than $50,000.

"This is a big issue," says Doug Jones, president of BDO Canada Ltd. "We were surprised to see so many Canadians carrying student debt well into their 30s. A lot have shown regret and admit they should have been a lot more frugal."

The biggest student debt regret expressed by graduates was that they wished they had lived more frugally or had a budget while in school. They said they regretted not working more hours at a side job during school, adding to other debts like credit cards or car loans, not borrowing less than what was offered, not attending a less expensive school, not applying to a local college or university in order to live at home and not choosing a two-year diploma instead of a four-year degree. Twenty-one per cent said they wish they had chosen a degree or diploma that had better employment prospects.

"Unfortunately a lot of students get loans but then don't use them as they should for tuition, books and room and board," Jones says. "In the first year or two they use up the loans and then start taking on or adding to other debt."

The report showed that student debt actually looms heavily into the future, causing people to delay major life milestones that include not saving enough for emergencies or for retirement, delaying purchasing a home, not paying down debt fast enough, delaying having children and delaying working in their chosen field.

Nearly one-quarter of graduates have had to take a job outside of their chosen field to help pay off their debts, 20 per cent have used a repayment assistance plan from the government to help with their debt and 19 per cent have taken on another job in addition to working full time.

Former graduates had some sage advice for future generation students. Half of graduates said students should be willing to make financial sacrifices while in school and recommended that those planning to attend college or university start looking for part-time or summer jobs in high school. Thirty-nine per cent even suggested high school graduates spend a year or two after graduation working and saving for their post-secondary studies.

"The study really re-emphasizes the need for students to have a budget, distinguish between what they need and what they want, and to live within their means, because taking on too much debt can have consequences far down the road of life," Jones says.

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.

Copyright 2017 Talbot Boggs

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