Student Debt Article

Posted: May 22, 2012 in Uncategorized
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Nova Scotia students struggle with large debt loads

May 22, 2012 – 4:10am By BRETT BUNDALE Business Reporter
 Outstanding loans, bleak job prospects force graduates to put life goals on hold
In this file photo, a first-year university student  checks out the bulletin board at the financial services office at his university after picking up his bursary check in Ottawa. (TOM HANSON / CP)

In this file photo, a first-year university student checks out the bulletin board at the financial services office at his university after picking up his bursary check in Ottawa. (TOM HANSON / CP)

North Sydney native Lori graduated last May with $60,000 in student loans.

After seven years of university, including an undergraduate from St. Thomas University in Fredericton and a master’s from the Atlantic School of Theology in Halifax, she was lucky to find full-time work in her field.

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But her partner, who racked up roughly $30,000 in student loans, wasn’t so fortunate.

“It’s been extremely tough,” said Lori, 29, a United Church minister who declined to give her last name. “He’s been working part-time in a kitchen just to make ends meet.”

Together the couple owes a stunning $90,000, an amount that will climb to about $130,000 once they finish paying back their loans with interest.

The crushing student-loan debt has forced them to put off buying a house or having children.

“It’s really hard to put your life on hold for 14 years while you pay back student loans. But we can’t get approval for a mortgage, and I just don’t think it would be responsible to start a family any time soon.”

They aren’t alone.

Student-loan debt is on the rise across Canada, with more than $20 billion in student loans now outstanding.

Nova Scotia graduates are saddled with an average debt of $35,000 — one of the highest in the country — and are delaying major life decisions while they struggle to pay off student loans.

While a university degree is still a good investment, graduates are entering a bleak labour market where finding a job can be tough.

The provincial unemployment rate for young people hovers around 20 per cent, significantly more than the national average of about 14 per cent.

Jacques Marcil, a senior economist with TD Economics, called the combination of joblessness among young people, mounting student-loan debt and rising interest rates a “perfect storm.”

“Students are facing higher unemployment following this recession than previous recessions. It’s taking longer for employment among youth and recent graduates to bounce back.

“The real risk is that these graduates could be vulnerable to rising interest rates. If rates rise and employment opportunities remain low, it could be a perfect storm.” Part of the problem is a mismatch between job openings and the skill sets of graduates, Marcil said.

“A large proportion of students graduate in areas that don’t always lead to a profession or specific employment.”

There is also a regional mismatch, with some provinces posting strong job growth and labour shortages, while others have chronically high unemployment, he said.

The situation could trigger an exodus of graduates to other provinces with brighter job prospects.

Debbie Warkentin graduated from Dalhousie University in Halifax last spring with about $38,000 in student-loan debt.

With her diploma in hand, the 24-year-old scoured help-wanted ads and handed out hundreds of resumes.

She settled on part-time jobs managing a coffee shop and scooping ice cream. But despite two paycheques and tips, it
wasn’t enough to start repaying her student loans.

“I decided to move to Ottawa because there are more job
opportunities here,” said Warkentin, now working as a personal trainer.

NSCAD University graduate Natasha Krzyzewski is also considering packing her bags.

Krzyzewski is staying afloat by working two jobs and reapplying every six months for repayment assistance, a program that comes up with a reasonable payment plan based on income.

“Without that, I don’t think I would be able to cover all my costs,” she said. “I’ve sent out literally hundreds of resumes and it’s just been really hard to find anything.”

Although the 23-year-old Ontario native said she would like to stay in Nova Scotia, she is considering moving away to get a better job and pay off her loans.

“There are things I would like to do in life and a time frame for these things to happen, but I feel like everything is on hold because of student loans.”

Gabe Hoogers, the Nova Scotia representative for the Canadian Federation of Students, said skyrocketing student debt is curbing the ability of graduates to contribute to the economy.

“People are starting out their lives burdened with a huge amount of debt. They want to start families, buy a home and start saving for the future, but all of that is being put off.”

While there are programs that assist graduates struggling under mountains of debt, he said one of the biggest issues is interest.

“We are effectively telling students if you can’t pay for your tuition up front, you will pay more per course in the end than someone who is better off.”

Hoogers, a University of King’s College student, said reports that trumpet the advantages of post-secondary education despite rising costs are flawed.

“They tend to exaggerate how much people will make overall because of their university degree and underestimate the true cost with interest.”

However, a report by TD Economics said despite increasing debt levels and labour market weakness among young people, post-secondary education remains the single best investment one can make.

The report found that while the upfront costs and stress can be a major burden, the benefits that accrue over the lifetime of a university graduate outweigh those costs.

Meanwhile, a study by the Maritime Provinces Higher Education Commission found most graduates said the investment in their education was worthwhile.

Five years after graduation, eight-in-10 graduates said their university education was worth the time invested and seven-in-10 said it was worth the financial investment, according to the report Five Years On: A Survey of the Class of 2003.

Nova Scotia students face some of the highest tuition fees in the country, an issue that has prompted many students in Quebec to go on strike, Hoogers said.

“What’s going on in Quebec is important to the situation in Nova Scotia. Over the last two years, we’ve had days of action advocating for lower tuition fees and people have come out in the thousands.

“We do face a crisis in our education system. I fear the amount of debt students are taking on is unsustainable.”

(bbundale@herald.ca)

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