Report: student debt 75 per cent more than class of 1990

Tuesday, April 7th, 2009

Cutting a credit card

Joyce Wang

REMEMBER WHEN I LET THAT ESCAPED LUNATIC IN THE HOUSE BECAUSE HE WAS DRESSED LIKE SANTA CLAUS? WELL YOU HAVE A GAMBLING PROBLEM! A Scotiabank Group report suggests on average, today's students leave school at least $20,000 in debt.

Philip Lee, 21, is a full-time business, management and organization studies student at Western. He’s also heavily involved in extracurricular activities and enjoys swimming and playing piano in his spare time.

In addition to his academic and extracurricular responsibilities, Lee works part-time nearly 20 hours per week during the school year and full-time during the summer.

“It’s important for me pay for school using summer wages and have spending money during the year,” Lee said.

Lee is part of a growing number of students juggling work and school. A 2005 report by Scotiabank Group revealed a record 46.8 per cent of full-time students aged 20 to 24 worked during the 2004 school year, whereas in 1976 26.6 per cent of full-time students had jobs.

Scotiabank estimates university tuition fees have increased by an annual rate of five per cent in the last decade, which is more than double the rate of inflation.

As tuition costs have risen, so has the average university student’s debt load. Scotiabank believes university graduates now leave school with an average debt of at least $20,000, which is 75 per cent more than the class of 1990’s outstanding debt.

Many of today’s students are willing to work to have a greater disposable income.

“I like having the extra money to go out with friends to dinners or movies,” Lee said.

Kathy Molesworth, a branch manager for Desjardins Credit Union, a company regularly dealing with financially struggling students, says unwise spending is the main reason students have money troubles.

“Some students often aren’t able to prioritize,” Molesworth says. “They often buy things that they don’t need, such as having three different phones, or eating out constantly.”

Molesworth says the problem is exacerbated by the ease with which students can obtain credit cards.

“Students often sign up for multiple cards without realizing they’re paying as high as 28 per cent interest on their balances,” Molesworth says.

However, Molesworth remains optimistic.

“The young people of this generation are very smart in so many ways,” she said. “They have a lot of resources available to them, such as the Internet, which they use to educate themselves. I’m confident that they will be financially stable.”

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