Debt weighing on both students, parents

Good grades aren’t the only thing on parents’ or students’ minds these days.

According to a TD Canada survey, 21% of post-secondary students are finding it hard to make ends meet and survive, 36% believe getting through their financial difficulties will be a challenge and 41% of students are spending more money than they save.

More disheartening still, students anticipate they will be in debt when they graduate; 69% of students predict they will graduate with some debt, while 17% say their debt will be in excess of $25,000.

Students don’t seem to have anyone to turn to either. Sixty percent of the survey respondents said their parents pay for a quarter or less of their expenses, compared to 10% who said their parents pay for 75% or more. If they borrow from their parents, 41% say they are expected to repay the loan, while 43% say they won’t have to.

Working during the summer, students only earn between $2,500 and $7,499 and half of those who responded will use that money to pay for education while 44% plan to rely on student loans or lines of credit. To fill in the gaps during the year many students have part-time jobs (36%), take out student loans (26%) or borrow from their parents (18%).

According to Carrie Russell, senior vice-president, TD Canada Trust, these results highlight the value of an RESP. The students would have gained from the Canada Education Savings Grant, while RESPs allow for tax-sheltered growth and can be used for tuition at universities, colleges, trade and technical schools.

“Our research revealed that only 27% of students can depend on RESPs to help fund the costs of their education, which reveals a significant lost opportunity,” says Russell. “Amassing enough money for post-secondary education can be a challenge, but it is much more economical to save ahead than to borrow at the last minute.

“That said, if students are heading to school in the near future and have not put away enough, they should pursue all potential avenues available, such as a part-time job, scholarships, bursaries and assistantships.”

(08/24/10)