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rob carrick

Whether they are studying arts or sciences, today's college and university students are majoring in debt.

While a postsecondary education can enhance an individual's career prospects and earning power, it leaves many young people saddled with hefty loans that can hurt their future financial well-being and exert a drag on the broad economy.

Late August is the time to depart from the previous 51 weeks of complete indifference and consider the fate of heavily indebted students. Here are five emerging realities to ponder:

1. Parents need to do better
Parents need to dig deeper to help their kids afford college or university. Only 14 per cent to 37 per cent of postsecondary students are able to dip into registered education savings plans set up by their parents to help pay for college or university. Even the students lucky enough to have an RESP typically have less than $5,000 sitting in a plan.

Try harder to save, parents. RESP contributions of $520 per year (just $10 per week) for 18 years would add up to a bit more than $15,000 if you include the federal grant money you get when putting money in an RESP and factor in a modest return of 3 per cent annually. There – you've just more or less covered the cost of your child's first year of university.

Parents also need to better educate themselves about the costs of a postsecondary degree while their kids are young. The more you understand how expensive it is, the less likely you are to believe your own experience in managing the cost of university is relevant. What's that you say? Today's kids are spoiled, self-absorbed and entitled? Bet your parents said the same about you.

2. The public school system is part of the problem
One of my boys graduated from high school in June and the other is entering Grade 10. So I can tell you from experience that schools aren't great at preparing students to make intelligent choices about taking on debt to get a postsecondary education.

Suggestions: Let's highlight the trades more. Let's play up the practical career training that colleges offer and let's explain just how little economic earning power you get with a general arts degree in comparison to the cost.

What are the schools actually doing in terms of guiding students to a productive career? A few years ago, my oldest son completed a form to help determine his best career path, and "religious leader" was among the top professions recommended (he's, um, not observant). The other boy, very smart in math, did a similar exercise and the top career suggestions included gunsmith and photographer.

3. There are serious economic implications
A mix of a weak economy, changing tastes and shifting demographics has been cited in the United States to explain a decline in home and car buying by twenty- and thirtysomethings. Student debt is likely to ensure this trend continues. You can't become a fully functioning player in the economy if a big piece of every paycheque goes toward student debts.

We need today's students to become tomorrow's big earners, and it's not just to support the housing market, keep the retail sector afloat and supply customers to the financial services industry. Someone's has to pay the taxes that fund social programs for the aging baby boom generation.

4. There are serious social implications
Looking forward to grandchildren while you're young enough to enjoy them? It might not happen if student debts delay your kids from getting married, buying a house, banking some money and otherwise settling into the child-rearing phase of life.

And there's the broader issue of generational compassion. A baby boom generation that shrugs off the difficulties today's young adults might not get the empathy it expects when it reaches old age.

5. The student debt problem is going to get worse, not better
Governments have no extra money to contribute to postsecondary education these days, and their budget deficits suggest funding will more likely fall than rise. Meanwhile, the unemployment rate for young adults is double the national rate and competition even for jobs paying the minimum wage is strong. Finding a job is one thing. The next hurdle is to get enough hours to generate a decent level of income.

There are ways to keep student debt under control – take a gap year to work between high school and university, or go to school part-time while also working. But it's a dead certainty that after the next 51 weeks of indifference, our student debt problem will look a little worse than it is now.

What can be done about student debt levels? Personal finance columnist Rob Carrick will answer readers' student debt questions live on Wednesday at noon (ET). Click here to join the discussion.