In newspaper articles about higher education, there are a few commonly cited statistics I like to refer to as "greatest hits." Average undergraduate tuition, per-student government funding, employment rates of recent graduates, are all in this group. However, one of the greatest hits of all time – the Bohemian Rhapsody of higher education statistics if you will – is average student debt.
While it is an important issue, student debt might be one of the most misunderstood, poorly researched subjects in all of public policy. Some excellent work has been done in the past to help understand student debt in Canada, but the statistics are not updated regularly and are often misunderstood. As a result, despite being one of higher education's most commonly cited statistics, it is also the most likely to be inaccurate. I have seen "average student debt" figures as low as $14,000 and as high as $37,000.
So what is average student debt, really?
To answer this question accurately, it is important to know the answers to a few key questions.
Do we want to measure the average debt of all students, or just the students with debt?
This clarification makes a world of difference to average student debt figures. Most credible data shows that between half to two thirds of students carry some form of debt. However significant this is, there are still a large proportion of students in Canada who carry no debt at all. A measure of average student debt across all postsecondary students will be much lower than a measure of average student debt for those with debt. Current survey estimates place average student debt for those with debt at just under $25,000, while the average debt for all postsecondary students is approximately $14,000. Overall, about 6 in 10 students graduating in 2012 reported some form of debt.
Which types of debt should we take into account?
The reality is that students take debt from multiple sources to pay for postsecondary education. A credible measure of average student debt must take into account all sources of debt, as well as the proportion of students who carry each kind. To achieve this, one must know how many students carry public debt (government financial assistance program debt), how many carry private debt (encompassing lines of credit, credit cards and personal loans), and how much debt from each source is accrued. Additionally, students often report taking money from parents and family members with the expectation that they will pay it back some day, which really should be taken into account.
Most students who borrow do so with public loans. Over 43 per cent of students use public loans provided by government. Most estimates suggest that a sizable proportion of these students carry debt from only government sources. Approximately 17 per cent of students carry debt from private sources. It is less clear how many students have carried debt from only private sources in recent years, but estimates from Statistics Canada from 2005 placed this total at approximately 11 per cent. Finally, about 15 per cent of students took debt from public and private sources, according to the same study.
The hard truth is that measures of "average student debt" depend entirely on the answers to these two questions. As such, it is very easy for analysts, writers and interest groups to manipulate average student debt to suit convenient political narratives.
For instance, one could technically be correct by citing the average debt as $14,000. However, it would be dangerous to infer any conclusions on the potential financial impacts of debt from this number, since it includes the 40 per cent of students without any debt. In reality, students who are required to seek loans deal with much higher debt-loads.
Conversely, when one reads that average student debt is over $37,000, this is only true for the 15 per cent of students who carry both public and private debt. It is both inaccurate and misleading to claim that the majority of students carry debt close to this level. This group is an important and particularly financially vulnerable population of students, whose needs should be looked at closely, not obscured.
I have always believed that average student debt of those who have it is the best available figure for those who wish to understand the issue. Twenty-five thousand tells the story of the average student with debt; the story of 6 in 10 students. It accurately communicates the financial hardships that students who require student loans will face upon graduation, which are considerable. However, it does not exaggerate the size of this hardship, which only serves to inflame fear of debt and potentially non-participation in higher education.
Student debt is a subject sorely in need of clarity and further research. It certainly doesn't help that the data available on student debt isn't great. All the figures I've cited here are from a 2012 survey of undergraduate students. A complete measure of student debt, inclusive of postgraduate and college students has not been collected by Statistics Canada for over five years. At a time when increasing numbers of students are turning to financial assistance, I'm not sure how much longer Canada can afford to have such a disorganized conversation about student debt.
Chris Martin is the director of research for the Ontario Undergraduate Student Alliance.
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