It's one of the biggest roadblocks to earning a university degree: affording the thousands, and sometimes tens of thousands, of dollars in tuition and other expenses.
For many students, going to university will mark the first time they are handling their own finances, and studies indicate it's one of the most stressful aspects of getting a postsecondary education.
For instance, 27 per cent of 1,018 Canadian postsecondary students polled in a Bank of Montreal online survey cited paying for school as their biggest worry, ahead of finding a job (22 per cent) and getting good marks (20 per cent). Fifty-eight per cent in the study released in August of 2012 expected to graduate with more than $20,000 in debt, with 21 per cent anticipating owing more than $40,000.
In the United States, a study of 1,802 parents and 800 undergraduate students released in July by loan company Sallie Mae says that since the recent recession, more college-bound students have eliminated certain schools and programs from their application lists based on cost.
Munib Sajjad, president of the University of Toronto Students' Union, says that's the case in Canada as well.
"University is getting very unaffordable, and it's getting worse and worse every year," says Sajjad, who is in his final year taking a double major in political science and history at Canada's largest university. He has about $36,000 in Ontario Student Assistance Program (OSAP) loans alone.
As head of the student union, he does earn an annual salary of $28,000 for putting in a 60-hour work week, but he still expects to graduate in 2014 in a deep financial hole. Still, he doesn't regret working toward that degree.
"The opportunities I found while at university are really incomparable to the amount I have to pay.… But the debt really does scare many [potential university students] off.
"Some students may say they shouldn't go for it – so they go into private training colleges, which are cheaper. It's an unfortunate reality that students are being put into this choice about where to go and what to take."
Postsecondary school loan debt is also an issue for Canadian taxpayers. In March, the federal government said it plans to write off $173-million in unpaid student loans in the coming fiscal year, which would bring its three-year writeoff total to $716-million.
But university and financial experts say students can get a grasp on their education costs by answering these questions:
CAN I AFFORD UNIVERSITY?
The best way for students to determine whether they have the resources to attend university is to put together a plan and a detailed budget.
"You want to focus on your studies and not your bank account," says Mike Henry, Bank of Nova Scotia's senior vice-president of retail payments, deposits and lending. "A budget will tell you how much money is coming in, from a part-time job, paid internship, scholarships and bursaries, loans, compared to how much is going out." Students can use free online and mobile app tools including student budget calculators to get their heads around how much money is going to come in, go out and what everything is going to cost, he says. "Once you know that, you can begin to make some informed decisions."
Here are some national figures
• According to Statistics Canada, overall tuition in all university undergraduate programs in the 2012-13 school year averaged $5,581, up from $4,747 in 2008-09. In an arts and humanities program, for instance, tuition ranged from a low of $2,550 at Memorial University of Newfoundland to highs of $7,095 at Mount Allison University in New Brunswick and $7,475 at Royal Roads University in British Columbia.
• Other annual university costs include administrative, athletic and other fees, student union dues, books and sundry costs (possibly $600 or more) and campus or off-campus housing (upward of $5,000).
• For 2013-14, a quick survey of what full-time students who live at home can expect to pay include: at the University of British Columbia, the arts program costs $4,794 in tuition, $889 in student fees and $2,000 in books and supplies; at Ottawa's Carleton University, tuition and ancillary fees cost anywhere from $6,613 to $9,780; at the University of Prince Edward Island, the faculty of arts program tuition is
$6,374 and students face at least $500 in fitness centre access, student union and other fees.
HOW SHOULD I PAY FOR SCHOOL?
Here are the main options
RESPs: Perhaps the most prominent postsecondary education savings vehicle recommended to parents is the Registered Education Savings Plan (RESP). "When I was a new parent, my income wasn't as great and I had a car loan and a mortgage when we had our first child," says Janet Peddigrew, vice-president for mid-Western Ontario, Bank of Montreal, who has two children attending university. "But someone said to me, even if you only have $25 every two weeks from your pay to put into an RESP… that would give you $20,000 by the time your child goes to school."
RESPs are tax-sheltered, and the federal government kicks in some money – under the basic Canada Education Savings Grant (CESG), Ottawa contributes 20 per cent on every dollar of the first $2,500 you save in an RESP every year, up to $500 annually and $7,200 lifetime. Depending on income, a family can receive an extra 10 or 20 per cent on every dollar of the first $500 saved in an RESP, as well as other financial help. However, if a student doesn't attend postsecondary school, RESP money is returned to the parents minus any interest and government incentives, and students have to claim cashed-in RESPs as income, something that could result in them paying taxes if they are earning work income.
Loans: The 2012 BMO survey found nearly half of the students in the poll relied on loans, Peddigrew says. The federal and provincial governments all offer loans, and you usually don't have to start paying them back until six months after graduation (although interest starts accruing right after you leave school). Banks also offer special student lines of credit where only the interest, lower than a loan would generally be, would be paid monthly until well after a student graduates. Another advantage of a line of credit is you "use only the funds you need when you need them," potentially shaving interest charges, Henry says. Responsible borrowing can also help build good credit that will serve students well after graduation.
Work and work-study programs: Students increasingly find that they have to hold jobs, making it more important to practise time management, so that grades are kept up and burnout is avoided, Sajjad says. School work-study programs – part-time employment on campus offered to students in financial need – are one option. While students in work-study programs can develop career-related skills and experience, they are generally required to maintain their course loads.
Financial awards: Look for scholarships, grants and bursaries offered through community organizations, unions, companies, cultural groups and businesses. Universities offer entrance scholarships and honorariums for outstanding scholars, and school and government websites have links to awards available.