Our youngest son decided that he wanted to earn some money. Like a true entrepreneur, he started his own business: He sold golf balls at a public beach near our cottage. "Dad, this business is amazing! I sold 55 golf balls, and I made $53. The kid next door still owes me two dollars."

What he didn't remember was that he owes me $80 for the two rounds of golf that allowed us to find the 55 golf balls. So I explained to him the concept of debt. At the end of the day, I told him that he doesn't have to pay me back the $80 until he graduates from university – about 12 years from now. By that time, I'm sure I will have forgotten about the money. Time will tell whether he forgets, too.

The truth is, over one half of students will graduate from postsecondary school with debt – primarily from financing their education. A recent poll conducted by Leger for CIBC reveals that 51 per cent of postsecondary students today have borrowed, or will borrow, to help pay for school. No wonder. About three quarters of students won't earn enough money in their part-time work to fully pay for school.

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The last National Graduates Survey conducted by Statistics Canada was almost 10 years ago (2005). At that time, the graduating class of 2005 had an average debt load of $18,800 (which was up from $15,200 a decade earlier), and the proportion of borrowers who graduated with debt of $25,000 or more had increased to 27 per cent (up from 17 per cent 10 years earlier). According to the recent Leger poll, 40 per cent of students today expect to graduate with debt of at least $25,000. So the trend is clear: Students are borrowing more to cover the increasing costs of postsecondary education.

As an aside, student debt can really impact finances after graduation. A past Survey of Financial Security conducted by Statscan showed that student borrowers had a significantly lower probability of having savings and investments than non-borrowers, and that borrowers with postsecondary education were less likely to own their homes. Finally, postsecondary graduates with student loans had, on average, lower assets and correspondingly lower net worth than those who did not have student loans.

Don't get me wrong – student debt can be worthwhile if it allows a student to create higher earning capacity. But the debt needs to be managed. Here's some advice for students who want to borrow prudently for an education (some of these ideas come courtesy of Consolidated Credit Counseling Services of Canada):

Rule of 10s. Follow this rule when borrowing for education: For every $10,000 in student debt, you should be able to earn $10,000 over a base of $10,000 annually to be able to pay off that debt in 10 years. For example, if you graduate with $30,000 of debt, you should be able to earn $30,000 over a base of $10,000, for a total of $40,000 annually in order to pay off that debt over 10 years.

Soften the blow. Although you may not earn enough in the summer to fully pay for a year of education, those earnings can make a big difference. You should save as much as possible, and consider working part-time during the school year to help cover education costs. But balance your work hours; it's tough to work more than 15 hours a week while in school and still excel academically.

Create a budget. You should use loan proceeds wisely. Identifying needs and wants will help, and vow to spend student loans only on needs. Don't spend your loans on a trip to Mexico.

Live lean. Most students in their late teens and early 20s don't have other mouths to feed, so take advantage of this time in life. Live frugally. If you can get by without a car, do it. You'll live with monthly bills most of your life, so avoid them now if you can.

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Apply for bursaries and scholarships. Getting free money beats borrowing any day. Start the search for bursaries and scholarships a year ahead of the time you'll need the money. Check out these websites: ScholarshipsCanada, StudentAwards, CanLearn, and Service Canada.

Pay it back. After graduation, be sure to reduce your debt as quickly as possible. Start with any credit-card debt (since there is rarely relief for interest on credit-card debt), then follow that by paying down your student loans (you're generally entitled to a tax credit for student-loan interest). Make more than the minimum payment monthly if you can.

Tim Cestnick is president of WaterStreet Family Offices, and author of several tax and personal finance books.