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Signa Daum Shanks poses at at the College of Law library at the University of Saskatchewan in Saskatoon on Friday, February 11, 2011. Daum Shanks is an assistant professor at the College of Law at the University of Saskatchewan and also a PhD student in history at the University of Western Ontario and wondering how to prioritize debts while being a student and working at the same time.David Stobbe for the Globe and MailDAVID STOBBE/The Globe and Mail

When a bus driver stopped to offer Signa Daum Shanks a free ride on a recent -27 C morning in Saskatoon she couldn't have been more grateful. With thousands of dollars in student loans to start repaying in a few months, she's looking for any way to save money.

For more than 20 years, Ms. Daum Shanks has scrimped and saved her way through a BA, an MA, a law degree, a masters of law and a nearly completed PhD. She has taken two years off between each degree to work and chip away at her debt.

Now 41, the assistant professor at the University of Saskatchewan's College of Law can't help wondering when she'll be able to start living like a professional, buy a car and get serious about retirement savings. She's making a good salary, but with $67,000 in student debt, plus condo payments, her other goals will have to wait.

"I just sort of feel a bit frozen about what to do," she says, adding that if she'd known when she started her education how difficult it would be to make ends meet, she might have thought twice.

It's a predicament that many students face, says Zach Dayler, national director of the Canadian Alliance of Student Associations in Ottawa. While post-secondary education is crucial to landing a good job, the cost of borrowing to pay for it can be staggering. And it's not something students fully realize until their debts come due.

"You don't really, truly understand what you're getting into until you graduate and start paying it back," says Mr. Dayler, 26, who did an MA in urban planning at Dalhousie University and has $40,000 in student debt. "I just graduated in May, and let me tell you, it's a little bit of a wakeup call."

Last week, the Task Force on Financial Literacy made 30 recommendations for strengthening Canadians' money-management skills, including a call for mandatory financial education for students who qualify for the Canada Student Loans Program.

Don Stewart, chairman of the task force, says it's important to use "teachable" moments, such as heading off to college, to educate students about financial planning. Too often, he says, students don't know how to budget their spending to make their loan money last.

"Handing out money without some form of education and understanding is a bad idea," Mr. Stewart says. "Anything that can be done to make people understand better what it is they're getting into will be a plus."

An estimated 4.3 million students have received almost $32-billion in loans since the national student loan program was created in 1964.

A national survey conducted by CASA shows that most students don't understand the financial side of government loans. Only 31 per cent of those polled knew that to qualify for a student loan, they might be subject to a credit check, and just 23 per cent realized that interest on the loans begins to accrue immediately upon graduation. The interest on student debt can range between prime plus 1 per cent for a line of credit to prime plus 5 per cent for a loan.

"We're giving a good chunk of money to sometimes some of the least financially experienced individuals out there," Mr. Dayler says. "So we have to make sure that they're protected and understand that student loans and loans in general are a serious financial risk and commitment."

According to Statistics Canada, the cost of a year's tuition for the average undergraduate student rose from $4,400 in 2006 to $5,138 in 2010. When you factor in other costs, such as rent, transportation and books, a single year of post-secondary education will cost students between $10,000 and $15,000, according to a 2007 study commissioned by the Canada Millennium Scholarship Foundation. According to the study, 59 per cent of undergraduate students graduate with debt, averaging $24,000 each.

Matt Harding, 28, a lawyer at McCarthy Tétrault LLP in Toronto, says it's too easy for students to lose control of their spending when they're on their own. He has spent the first year of his career paying down the $80,000 he racked up on two student lines of credit, plus $30,000 in credit-card debt, while earning his law degree at the University of British Columbia.

"I didn't really feel like I needed to live like a student, and was kind of reckless and ended up needing a second line of credit," says Mr. Harding, who used some of the "free money" to travel. "By the end, I was so poor."

It's crucial that parents and teachers get students thinking about the costs of education well before it's time to take out a loan, and to show them how to budget, says Perry Quinton, vice-president of marketing for the non-profit Investor Education Fund.

"You have to start thinking about it: and not just students, but their parents. It has got to be thought about years ahead of time so that you're actually putting in the planning to figure out how you're going to pay for this," Ms. Quinton says.

The beginning of high school is a good time to get a plan in place because students are sitting down with their parents and guidance counsellors to pick out the courses that will set them on their future career paths, she says.

"There's an opportunity to sit down and say, 'By the way, it costs money, and how are you going to pay for it?' "


1. Get educated

Before you borrow, find out how the loan process works. Learn about types of debt, what interest rates you'll pay and how long it'll take to pay off. Get your information from a reputable source such as, the government's website about saving, budgeting and borrowing for post-secondary education.

2. Start saving early

The more you save through part-time work, the less you'll need to borrow, and the earlier you start to earn interest on that money, the faster it will grow. A Registered Education Savings Plan allows savings to grow tax-free and may also qualify for free government money through the Canada Education Savings Grant and the Canada Learning Bond. Also, students who have Registered Retirement Savings Plans can make tax-free withdrawals under the Lifelong Learning Plan. They usually must be repaid within 10 years.

3. Apply for free money

Grants, bursaries and scholarships are tax-exempt and never need to be paid back. Search for government grants at Find other sources of money at

4. Get relief

The federal government and most provinces offer repayment assistance programs for those having trouble paying off their government student loans. Information is available at

5. Get cash back

At tax time, you're entitled to a 15-per-cent tax credit on the interest you pay on your government student loans. You can also make an education claim of $400 per month, plus a non-refundable textbook tax credit of $65 for each month you're enrolled in full-time studies.