Higher education, student debt, and options

University and college campuses everywhere are bustling with new and returning students.  Canadian business writers have responded to this annual migration with a number of articles about student finances, such as: “Six ways to ease the cost of university”, “Why we should all care about student debt”, and “University is still the surest path to prosperity”.  Concern about student debt levels and access to higher education has also been a topic of discussion in U.S. presidential campaigning.  College and university tuition and associated costs have increased out of proportion with increases in inflation and income levels, and it’s become a cause of concern on several levels, including decreasing accessibility to higher education and the inability of new graduates to move forward in their lives because of their high debt load.

Having spent most of my career in university teaching, no one should be surprised that I consider higher education to be important for individual success and also key to the economic success and well-being of our society.  I won’t go into the arguments for why a good education is a critical step in fulfilling one’s potential; I think most people agree, at least on some level.  The main issue is that we now have many young people graduating from colleges and universities with far higher debt loads than used to be the case and, as well, they are graduating into a weak economy, meaning that their likelihood of paying off their debt in a timely fashion is greatly diminished.

Why is the debt load so much higher than it used to be?  Let’s take a look.  I’ll keep this analysis to Canadian universities, since I am more familiar with that scene and it’s more straightforward.  In the U.S. public universities used to be less expensive than in Canada, but as state governments have run out of money, that has changed.  And private universities in the U.S. are in a class by themselves as far as tuition is concerned!  In Canada, the average tuition per year for undergraduate programs is in the low $5000s.  This can be a bit higher in some places, while significantly lower in Quebec (where students protested for NO tuition) and Newfoundland.  If a student graduates in an in-demand area such as computer science (my own field), he or she can find a job without much difficulty and can expect to make $40-60,000 to start.  Forty-five years ago I paid $620/year tuition and graduated with a job that paid $6000/year.  So, in that field at least, proportionately nothing has changed.  In areas where new graduates find themselves underemployed, it is far more challenging.

Since governments seem increasingly unable to invest in their young people – aka their future – by providing anything like the level of funding it has done for decades, society – aka parents and students – needs to understand what their options are and plan accordingly.

Is university for you?  Now?  Other options?

First of all, many students don’t have a good understanding of what their options are when they graduate.  There is no doubt that the cost of university is increasingly difficult to justify if you don’t know why you’re there.  You don’t need to know what subject you want to pursue when you start university to reap life-changing rewards by attending, but you do need to be committed to – even excited about – 4 years of classroom learning, writing, thinking, independent study and hard work.  If you are university bound but aren’t sure what path you want to follow, there are career and academic counselling services available on every campus just waiting to be taken advantage of.

If some students feel constrained in high school because the learning environment there doesn’t work well for them, they should consider checking out applied programs at community colleges before they leave high school.  Applied community college programs are more hands-on, are shorter in duration and have very good employment records.  Right now there are students in universities who probably shouldn’t be there, at least not now, and the scary thing is that they are incurring debt for a “product” that they may not achieve, their diploma.  Sadly, it seems that guidance counsellors in high schools have to spend most of their time dealing with serious student problems instead of providing guidance in further education, training, and careers.  This leaves the onus on parents and students to get the answers they need on all post-high school options in advance.

Managing money to keep loans as low as possible

Another issue is that many university students – like non-students – are not good money managers.  Some of the debt load could be somewhat lower if students were given a crash course in budgeting and reality.  One thing that’s very different from 45 years ago is the convenience of credit.  It’s easier not to spend money when you can only spend what you actually have at that moment.  Perhaps it would help to remind students of small things like when they spend $5/day on coffees, they’re spending around $1500/year – in after-tax dollars – on nothing but coffee.  I won’t even attempt to extend that analysis to $$s spent on beer/year!  And many students have cars while they’re living on student loans.  I know that they often use them to get to part-time jobs, but I wonder if some students shouldn’t sit down and do the calculations on running a car versus using public transport.  In other words, we give our young people large sums of money with which to obtain a valuable education, but we don’t give them the tools to manage that money effectively, especially considering that they will be paying it back for a long time.  Universities have student service professionals to help students with their financial management, but I think we need to make that resource more visible.

Co-op programs

None of the several newspaper articles I’ve read in the past week has mentioned one powerful financial and learning opportunity for students: co-op programs (cooperative education).  Many degree and diploma programs have co-op programs, which augment classroom learning with meaningful work experience and income.  Our experience shows that co-op work terms provide strong learning experiences.  While gaining valuable work, experience students learn about what types of work they enjoy and what types they don’t; sometimes they’re surprised.  They learn what employers expect and how to become more professional in the workforce.  They come back to their study term more motivated; they have a better sense of what they want to get out of their studies.  They get known by potential employers – how good is that?  And, they have money in the bank.  In computer science programs, there are more co-op jobs available than we have students to fill them.  I realize that it is difficult to find co-op programs in every discipline, but there are many innovative work-study options available at most universities.  Students should be encouraged to visit their academic and career counsellors to explore all possibilities.

Getting it right

I continue to believe that our most important resource is our young people.  They are our future; an investment in their education is an investment in a strong future.  The fact that our governments are not able to invest in their education as fully as they have in the past is a huge concern.  We need a substantive public discussion on how we ensure that public education at all levels remains accessible to everyone according to their potential.  Meanwhile, it behooves students to ensure that they seek out all the advice and support they may need along the way, including academic advising, career counselling for work-study opportunities as well as career options, and money management workshops through student services.  Ensure that your student years are among the best of your lives!

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4 Responses to Higher education, student debt, and options

  1. Barbara Trenholm says:

    Great and timely blog, Jane. I’ve been cutting out all the articles on debt over the last month to send to my nephew, who just started university this fall. We’ve been having all the same discussions–such an important topic to understand. Also, the debt articles are great to use in my intro accounting class–lots of fodder for classroom discussion there.


    • Jane Fritz says:

      Thanks, Barb. One thing that bothers me about the articles on planning for university is the same thing that bothers me about articles on retirement planning: it’s all about upfront saving (RESPs, tax advice, etc.) and nothing about how to ensure you get the most out of your experience. Regardless, this is always a feel-good time of year, seeing all the hopeful students filling the classrooms!


  2. jane tims says:

    Hi. I know there are different opinions on this, but I think parents should help financially as much as possible. There are also very good programs to forgive part of student loan debt. And, in New Brunswick, we have a tax rebate if students stay in the province. I am sorry I am not returning this fall, but perhaps some day!!! Jane


    • Jane Fritz says:

      I completely agree with that approach. I grew up in NY, where even scholarship amounts were tied to your parents’ income, and parental financial help was considered part of what you did as a parent. But there are lots of kids in NB whose parents cannot help, regardless of parental policy one way or the other, and I hope we don’t reach the point where higher education is not restricted to those able to pay again. My grandparents struggled mightily to make sure their kids had a leg-up through education. Now it seems (and it’s hard to know how widespread it is because the newspapers talk in averages) that grads are carrying higher student debt for longer periods of time. BTW, I look forward to seeing what subject you take up next!


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