and Dad.” But the bad news is that they’re also less likely to be depending on
their own savings and more dependent on borrowed money to pay for
A new BMO survey suggests that 44% of students this year were relying on
parental support for school, down from 52% in 2012. Instead, 55% are depending
on loans, as compared to 49% last year.
Janet Peddigrew, a vice-president at BMO, said she was surprised by the
statistics, and said young adults are more knowledgeable about their options,
more independent and more comfortable with debt.
“Culturally, it has become more acceptable [to have debt].”
Students expect to graduate with $26,297 in debt and anticipate paying it off
in 6.4 years. Those in B.C. expect the most debt ($34,886) and are the most
stressed about their finances while Atlantic Canadians predict the longest
pay-off period (7.6 years).
“In terms of the cost of school, it’s so much more than it was for our
parents,” said Meghan Larkin, a 27-year-old photographer from Newmarket, Ont.,
who graduated in 2006 with about $20,000 in student debt. She’s paid off about
half of the loan. Her younger sister moved to Nunavut to work on paying off her
own student debt.
“I was lucky that my parents were able to help a little bit. They paid a
third of what I did. But I was more than happy to pay for my own school because
it was something that I’m pretty passionate about. It’s almost a point of pride
According to the Canada Student Loan Program, loans are typically
scheduled to be repaid over a 9.5-year period but borrowers can choose to pay
more quickly or to extend the payment to up to 14.5 years.
No wonder finances are the No. 1 stressor for post-secondary students (28%),
followed by academic success (24%) and finding a job after graduating (24%).
Fifty-eight per cent of students were relying on their own savings this year
versus 62% last year. But studies have shown that members of Generation Y find
it challenging to save.
Thirty-eight per cent of undergraduate students wish they had stuck to
a budget during school and 43% wish they had curbed discretionary spending, says
research released by TD Canada Trust.
“The cost of secondary education is high to begin with and what students have
to be mindful of is they have a budget when they go to school. There is a lot of
temptation whether it be on social temptations or gadgets,” said Raymond Chun, a
senior vice-president at TD Canada Trust. “What you’ll find is that a lot of
students leave university with more debt than they anticipated.”
TD found that the average cost of pursuing a four-year undergraduate career
in Canada for those living away from home is $84,000.
While students are learning how to manage their finances, their parents are
also feeling the pressure of many competing priorities. So that good news story
may not be what it seems: perhaps the “Bank of Mom and Dad” is busy trying to
save for retirement, take care of the grandparents and pay off the mortgage.
(More than half of Canadian homeowners expect to carry a mortgage into their
retirement, said a 2012 BMO study).
Trying to save earlier is important for both students and parents, Ms.
“I started saving when my kids were born with $25 every two weeks and
gradually increased that over the years,” she said. Both of her children are
attending university in the fall.
If you’re in school, she recommends that you take advantage of your student
status and look for promotions and discounts. Make a budget and track your
spending. “If they’re not really thinking, [loans are] almost like free money
and it can run out quickly.”
Six months after you graduate or leave school, you have to start repaying
your Canada Student Loan. This gives you some time to find a job. When you have
money, chuck as much of it as you can at your loan as soon as possible —
payments made during those first six months will go to paying off your loan
“What you’ll find is a student will have various loans from various sources.
Typically, you want to consolidate all of that, once you do get out and start
some type of debt repayment plan,” says Al Nagy, a certified financial planner
and regional director at Investors Group.