Students worry about finances tomorrow, build debt today
Canadian college and university students are well aware of their growing debt due to tuition loans, but most choose not to worry about it until they graduate, says a new study by Royal Bank of Canada.
One-third (33 per cent) of first-year post-secondary students (37 per cent of females and 27 per cent of males) expect to have significant debt on graduation day, and are deferring worrying about it until then (38 per cent), according to the 2011 RBC Student Savings and Spending Poll. Females (44 per cent) are more likely to be concerned than males (30 per cent).
This concern by students is well-founded. According to a January 2010 Statistics Canada report, the class of 2005 graduated with student loan debts averaging $18,800, up from $15,200 a decade earlier. In addition, the proportion of post-secondary graduates who owed $25,000 or more on their student loans jumped to 27 per cent in 2005, from 17 per cent in 1995.
“Many post-secondary students are living on their own for the first time, juggling school and living expenses – all of which can be very stressful,” said Kavita Joshi, RBC director of student banking. “It’s not surprising that students tend to keep their worries about loans and expenses on the backburner. A budget can certainly help you stay on top of your debts and alleviate your financial stress.”
The RBC poll also found that 34 per cent of students say that, thanks to online and mobile budgeting tools, they are spending less cash than they used to (36 per cent of females and 30 per cent of males). Still, having enough money for school is a worry for many students (54 per cent) – and females (61 per cent) are more likely to worry about their finances than males (48 per cent). However, only 20 per cent plan and stick to a monthly budget.
“Online financial management tools are a great resource to help you keep track of how much you are spending and where you are spending it,” Joshi said. “When you have your finances under control, it’s much easier to focus on what you want to achieve in school and after graduation.”
Joshi offered three budgeting tips to help students avoid graduating with huge debts:
- Prepare a budget and stick to it. A budget will help you live within your means and avoid unnecessary debt upon graduation. To help alleviate financial stress, set a maximum budget and financial parameters for yourself.
- Take control. Identify all of your expenses and assess how much you’re actually spending.
- Look for alternative financial options. Explore all financial options available, especially those that do not need to be repaid, such as grants, bursaries and scholarships. Then consider government loans and student bank loans.
Category: Education
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