With his graduation cap and gown packed away and a university degree in hand, Nick Mullin thought discovering a work would be a cinch.
But months after graduating from the University of New Brunswick’s company administration program in Fredericton, the 25-year-old was still unemployed.
And then he got a letter from his federal government student loan provider: He owed more than $32,000 and the grace period was more than. It was time to pay up.
Although he found a job soon right after moving back to Moncton, his hometown, a substantial chunk of his entry-level paycheque goes toward student loan payments.
“I’m much questioning the value of my degree correct now,” Mullin mentioned. “I was taught since Day 1 that post-secondary education would land me a great job but it appears the talent pool is so saturated I wonder if my debt is worth it.”
As tuition costs and student debt increase across Canada, a new report by the Canadian Alliance of Student Associations discovered a shocking lack of financial aid literacy among students.
The statement shows many students are poorly informed concerning the federal government financial aid system and did not know fundamental details about repayment.
“Student loans in Canada are extremely complex and allocated to people with the least quantity of experience with consumer loans,” the statement states. “Despite a lack of a credit history or credit rating of their personal, they’re asked to make significant decisions and options about very complicated financial items.
“Counseling is rare and published info is opaque,” it states. “And students who opt for loans rarely possess a selection about performing so; taking them is usually a last resort when family contributions and work alone do not suffice.”
In his last year of high school, Mullin’s parents told him he may need to apply for a student loan to help finance his university tuition.
“It would be helpful if there was a prep course in Grade 12 that went more than how to navigate the student loans program,” Mullin mentioned. “At least then I would have been prepared for different scenarios and what to anticipate.”
Mullin mentioned his massive debt load – amortized over 15 years – is usually looming in the back of his mind.
“It will probably be a lengthy time before I can afford to buy a car or put a down payment on a home,” he mentioned. “It feels like it’s time for grown-up life but I cannot pay for it.”
Shannon McKinley, president of the UNB student union, mentioned more needs to become carried out to educate students concerning the resources obtainable to them and the costs and benefits of a post-secondary education.
“Students are just type of feeling their way via the dark without having an idea of what’s really obtainable to them,” she said. “The only way to resolve the situation across the board would be to have some sort of formal education in the high school degree so students have an idea of what is obtainable to them and also the costs prior to they reach university.”
While you will find relief applications obtainable for students graduating with high debt levels, McKinley mentioned students are largely unaware these applications exist and don’t know how to entry them.
“No matter how excellent the applications are, if students aren’t aware of them and do not know how you can entry them, there is no way they can be effective,” she said.
Craig Alexander, chief economist of TD Bank Financial Group, said students are exiting university today with substantially more debt than in the past.
“If they can’t land good jobs quickly, they can start running into financial pressures and they worry they’ll need to file for bankruptcy and ruin their credit rating,” he said.
“There should be more grants obtainable to low-income students simply because in the end from the day individuals do not have to become repaid,” he added. “We might be relying too much on student debt to provide the financing.”
Despite the increasing costs of a post-secondary training and rising student debt loads, Alexander mentioned it’s worth it.
“The reality is that 100 percent of job creation in the country is being driven by jobs that require a post-secondary education,” he mentioned. “If you look in the employment rate for people with a high school education or less, it is stagnating or declining.”
Also, Alexander said individuals are “overestimating how much university costs, underestimating how much their future income will be and aren’t fully conscious of all the Financial aid that’s available.”
A recent TD Economics statement found Canada’s post-secondary education system is expected to play a critical role in improving the country’s regular of living.
While the report, co-authored by Alexander, finds substantial resources allotted to post-secondary financial assistance, the funds are not well targeted by income.
With much of the money going to savings vehicles for example the Registered Education Savings Plan and tuition tax credits, the report found financial support ironically rises with earnings.
“The current program doesn’t make adequate distinctions between students’ financial situations,” the report stated. “Access to (post-secondary education) for under-represented groups of people can successfully be improved if the financial assistance provided is targeted toward individuals in greatest require.”
The statement also discovered a lack in financial knowledge. “Research suggests that many Canadians possess a misconstrued perception about how you can finance (post-secondary training),” the report stated. “Individuals from lower earnings families often overestimate the price of education and underestimate the return on investment, ultimately discouraging greater participation.”
“This is really a substantial issue simply because we truly do need the post-secondary education program to become able to deliver the skilled workforce that the economy needs,” Alexander said. “Ultimately it has a lot of societal implications. Should you choose not to go on to a post-secondary education, your labor marketplace outcomes are dramatically worse.”