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Lisa Howey-Louter owed $40,000 when she graduated from Ryerson University with a degree in early childhood education in 2007. Eight years later, at 33 years old, she still owes $32,000 in combined provincial and federal student loans.

After working for two years, and making the $400 monthly payments on her loan, she went back to school. Two years into her studies she became pregnant with her first child. Left with no maternity benefits and no income, Ms. Howey-Louter applied for an extension on the interest-free payment period. "It took a little bit of stress off," she says. Still, that $32,000 is a huge weight on her shoulders.

While Ms. Howey-Louter's debt is much higher than the Canadian average of $26,000, her situation is not rare. In fact, students are increasingly looking to loans to finance their education. A survey by the Bank of Montreal showed an 8-per-cent drop in the number of students borrowing from their family between 2012 and 2013, and a 6-per-cent increase in reliance on loans.

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Not every student is graduating with crippling, life-altering debt; half of graduates are completely debt-free. These students are paying for school with a combination of scholarships, summer job income and support from their parents, including registered education savings plans.

So why has it become so hard for the other half to pay for university?

"Tuition rates have gone up a lot faster than salaries have gone up," says Rob Carrick, author of How Not to Move Back in With Your Parents: The Young Person's Guide to Financial Empowerment. (Mr. Carrick is also a financial columnist for The Globe and Mail.) "I went to university in the early to mid-'80s when you could earn your tuition in one summer of work."

In 2005, average yearly tuition in Canada was $4,200. Today, average yearly tuition has increased by more than 40 per cent to $6,000.

The average minimum wage in Canada is $10.85, meaning to earn just enough for average tuition in the two months between high school and university a student would have to work 70 hours a week, and that's before taxes and payroll deductions.

When tuition, student fees, housing, food and textbooks are added up, a student starting university this year will need $75,000 for a four-year degree, according to Statistics Canada.

But it's hard to save for school if you can't even find a job. This May, 13.2 per cent of Canadians between 15 and 24 years old who were actively looking for work went unemployed. In 2005, that number was only 10.8 per cent.

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"I think a lot of parents are probably working on the idea that you can earn your own way through university because they did it. But the economics aren't the same as back then," Mr. Carrick says.

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University finance tips

ASSISTANCE PROGRAMS

The best borrowing option is provincial and federal loans. You won't be required to pay a cent and your loans won't incur any interest until six months after you graduate. If you find yourself in financial difficulty like Ms. Howey-Louter, you will have access to assistance programs.

But here's the catch. Not everyone qualifies for the maximum government loan. The average student loan granted by Canada Student Loans in 2013 was $5,400 and that same year in British Columbia, for example, the average disbursement was $3,400. This means the average student in B.C. was approved for less than half of the estimated cost of one year of university.

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The amount you qualify for varies depending on the province, your parents' income, your income and even whether you own a car.

BRIDGE THE FINANCIAL GAP

That's where the banks come in. These days most banks offer a student line of credit, which can give you something to fall back on in case of an emergency or if you need to supplement your government loans.

Unlike a loan, which comes in a lump sum upfront, you pay interest only on the portion of the line of credit that you actually use, and you can pay off the principal at any time.

Another advantage of this type of loan is that you get to shop around. It is advisable to sit down with more than one lender to discuss the specific needs and circumstances of the borrower. In general, these products have competitive interest rates lower than a government loan; however, borrowers must pay the interest each month while they are still studying.

Missing payments can have a serious impact on your credit score and ability to borrow money to finance purchases in the future.

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BORROWING SHOULD BE THE LAST RESORT

Despite these borrowing options, your best bet is to manage your spending. Melissa Jarman, director of student banking at the Royal Bank of Canada, suggests you make a detailed budget the summer before starting classes in the fall.

Too often students wait until they are already studying before they realize they don't have enough to cover their bills, she says. "You don't need that added stress on top of studying."

Ms. Howey-Louter wishes she had help managing her loan, which came in a lump sum of $10,000.

"I have nothing to show for it," she says, regretting that she blew the cash on material goods. "Now I'm paying for it and that's my life."

More stories from the Canadian University Report

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