First aired on Calgary Eyeopener (26/03/12)
Education is expensive. Just ask your average Canadian post-secondary student these days. In the mid-1990s, fewer than half of young adults who graduated from a college or university program were in debt. Today, that number is closer to 60 per cent. The average amount of student debt is slightly more than $25,000.
This situation won't get better either. The inflation of tuition rates is outpacing regular inflation by a wide margin --
nearly double. Many students have little choice but to plunge deeper into debt by taking government loans, opening lines of credit at their bank or putting everything on credit cards.
It's tough out there, but there are ways students and their parents can cope. Rob Carrick, a finance columnist at the Globe and Mail and author of the new book How Not to Move Back in with Your Parents: The Young Person's Guide to Financial Empowerment
stopped by the Calgary Eyeopener to offer some advice.
Tip number one: take full advantage of Registered Education Savings Plans (RESPs). "Start when your kid is one, when they're just born, save for 18 years, gradually, steadily," Carrick said. "It doesn't have to be a ton of money, and you will have a chunk of money that your child can use to offset this massive debt they'd otherwise have. I have two boys myself, they're 14 and 17, and my wife and I have been saving in RESPs. We don't want our boys to be in hock for 10 years after they graduate, or at least not terribly in hock."
Another important tip is for students to keep their debts to the absolute minimum by focusing on the exact amount needed for tuition, books and living expenses. Credit cards, which are extremely easy to get (and to abuse), are to be avoided until the student gets a job and is able to pay them off.
"They can suck you in like nobody's business."