Student debt in Canada is crushing – at least, that's what we're led to believe.
Soaring tuition fees and an iffy job market mean that many graduates will be paying off their student loans for years to come, we're told. Today's graduates say they're delaying major life milestones (marriage, house, family) in order to pay back their debts. As one news story put it: "With ever-increasing tuition fees … some students are starting to question whether a degree is an affordable option."
I'm not unsympathetic. My niece will graduate next spring with a five-figure loan and no prospect of a teaching job this side of Nunavut. But the notion that this generation is uniquely disadvantaged simply isn't true. The real problem isn't student debt. It's student expectation – the idea that a young person should be rewarded with a fulfilling, well-paying job and a middle-class lifestyle as soon as they hit the job market.
It doesn't work that way and never did, even for those irritating boomers.
I graduated debt-free, thanks to low tuition, scholarships, family help and my incredible waitressing skills. But it was a long time before I stopped living like a student. My first job paid $5,000 a year (the equivalent of about $28,000 today). I was hired to alphabetize the backlist catalogue for a publishing company. (This was well before the computer age, needless to say.) With my English lit MA and extensive knowledge of Jacobean theatre, I was seriously underemployed. But after six or seven jobs in six or seven years, I was finally able to move out of my rented attic and ditch my futon bed.
"Student debt appears crushing to a lot of people in the first two years after they graduate," says Alex Usher, who is president of Higher Education Strategy Associates and an expert in student financial aid. "But after two years, they're making pretty good money."
Mr. Usher is a mythbuster on the subject of student debt. Here are some facts: Student debt hasn't grown in the past few years – it's held steady. The average debt for students graduating from four-year programs who have borrowed money is around $25,000. And because of interest rates, the average payments on that debt – about $276 a month – are lower than ever.
But the real news is affordability. Contrary to popular belief, tuition fees aren't soaring. When you factor in tax credits and rebates, net tuition as a percentage of family income has increased by just 3 per cent (in real terms) over the past decade. Compared to the United States, where tuition really has gone through the roof, Canadians get an incredible deal. On top of that, there's no evidence that rising fees affect access. Ontario's tuition fees are higher than Quebec's, but Ontario has higher graduation rates – especially among people from lower-income backgrounds.
"It's not that I want to minimize the problems," Mr. Usher says, "but people who want to maximize the problems don't acknowledge how much [public] money is going into this."
It's true that the job market is far more competitive than it used to be. But the main reason is that there are lot more graduates than there used to be. When we talk about the boomers, maybe we should remember how few of them went to university. As for the income premium, it's still real. It's just smaller than it used to be.
In Canada, Mr. Usher notes, the fact that graduates might have to postpone buying stuff is taken as evidence that student loan debt is out of control. But in other cultures, it's taken as a given. In Asia, university graduates are expected to repay their student loans in four to six years. Many of them have to fork over a quarter to a third of their incomes and live at home. But no one thinks they're deprived. The attitude is: Pay it off fast and move on.
As for the privileged folks who allegedly came before them, the idea that people ever achieved secure and stable lives with ease is largely a myth. My grandparents weathered the Depression. My folks lived with them until having their third child. My dad had health problems in middle age and lost his business. That's life. Fortunately, I'm pretty sure that most of today's up-to-their-necks-in-debt graduates will be fine.