Silly me.
When I started the student loan help-site, Debt 101, back in 1999, I thought it wouldn’t be needed long. The way grants were cut and tuition fees kept climbing, I figured that couldn’t last. Why would people put up with it?
So I started Debt 101 as a stopgap. Maybe it would help some of the students I met who felt overwhelmed by debt instead of thrilled to be graduating. As for students starting out, maybe I could help them cut costs until tuition fees dropped back down. Why should anyone with dreams and talent be shut out of higher education?
As a finance writer, I had a different reason for my optimism. From a macro-economic perspective, there was no objection to a level playing field for all Canadians. Fiscally speaking, it made ‘dollars and sense’ to remove the education access barriers that Canada was putting into place.
So I started that ‘temporary’ help-site in 1999 thinking that Canada’s soaring student debt would soon inspire our government to adopt the free or low-cost tuition policies model of Western Europe. Or at least add more grants and slash student loan interest rates.
But that didn’t happen. Nearly 13 years later, Canada is following a debt-driven US model. It’s a costly model in every sense of the word, one in which parents are cashing in their retirement savings to educate their children.
Thankfully, Canada lags behind the US in costs, but we are still following a bad example. This model of higher education financing has only survived on students’ and parents’ access to easy credit. And that is not sustainable.
Canadians are long overdue to face these facts:
- We cannot get by in the 21st century on trees and oil sands. We are in a global knowledge economy. Canada needs an increasingly educated workforce to keep up.
- Higher education is the ‘gas’ in a knowledge economy. It drives up our GDP, with spin-off economic and social benefits for all citizens.
- The ‘user-pay’ mantra , like other 1980s-era holdovers, just backfires when the ‘user’ is contributing a n economic good. By discouraging that good, the ‘user-pay’ policy shrinks the economy.
- Even if education didn’t grow our GDP directly (and it does), the higher taxes paid by grads on their higher average earnings , repay that government investment with interest.
- In the 21st century, a high school certificate is not the basis for a career. Thanks to “education inflation,” jobs that once went to high school grads now require a BA. Jobs once given to undergrads now require a Master’s or a PhD.
- The reason industrialized nations made high school free in the last century – and even compulsory until Grade 9 – was because workers without that level of education could not pull their weight . They could not earn enough to support and educate the next generation. Yet – now that we are in a knowledge economy – Canada forces students to go deeply into debt to finance the modern equivalent of “high school”.
- None of this is sustainable. We are building a house of cards by forcing people into heavy debt to enable governments and educational institutions to keep driving education costs several times faster than inflation.
Our educational institutions may not hear this kind of thinking until demand for their programs is gutted. And governments may not hear it until young Canadians vote automatically, like senior citizens.
And they also need to be more visible, like the students of Quebec in their recent mass protest over rising fees. Education is nearly off the media radar. I mean, raise your hand if you have ever heard in recent public debate that our economy needs an educated workforce.
What a concept! I only hear that our economy needs tax cuts. And I say we need to stop burning furniture to warm up the house. All of which tells me the need for Debt 101 (grown now into Student Finance 101) won’t fade away soon as I’d imagined. So I am turning into something of a missionary when it comes to student debt.
If you can finance your education through scholarships + work+ family, fine. But if you can’t, don’t assume you have no choice but to pile on the government loans and private loans and credit card debt. Get serious about cutting your costs.
And by getting serious, I don’t mean the usual stuff you hear, like get a cheaper student chequing account. I mean, think-outside-the-box serious. The election is over, so vote for affordable education with your choices.
Stay at home the first 2 years and attend your local community college before you transfer to take your 1/2-price degree from Big U. Get your education in a cheaper province. Or get it in a cheaper country (just check the transfer credits first). Or seriously think about the trades. When was the last time you met a plumber working as a barista because he couldn’t find work in his field and he had to pay off student loans?
Tough times call for tough action. After nearly 13 years of watching Generation Debt left to flounder on its own, I’m busy stuffing every student debt-avoiding trick and tactic I’ve learned into a book that will launch next summer to help Canadian students make the big changes they need survive these “foolish years” of higher education policy.
In the meantime, I urge all students who read this blog to think outside the box about how and why they’re getting their education. And think about how much they’ll owe if they stick with the path they’re on.
As one last tip, here are 3 links to help you take control.
In fairness to our federal government, it has programs under the Financial Consumer Agency (FCAC) that help Canadian students save by improving their financial literacy. Start with The Moneybelt.
Debt Reduction and Money-Saving Tips from Memorial University of Newfoundland. Good for Memorial U. Many of their tips will help students no matter where they live: http://www.mun.ca/student/careerexploration/ccd/stayafloat/reducedebt/index.php
Finally, while ‘Debt 101’ is mostly about finances, from calculators to student aid rules, we know that financial stress is also emotionally hard on students: Help When You’re In School
Jeannine Mitchell, Founder
Student Finance 101
Jeannine Mitchell is an award-winning finance writer and a former associate editor with Financial Post Moneywise magazine. Her work is widely published and her non-profit website — Student Finance 101 at www.debt101.ca has been featured in publications ranging from campus and online newspapers to the National Post.