Student debt adds to the enormous pressure already felt by university students. The average student who utilizes student loan services will graduate with a debt of $27,000. Add credit card debt, the cost of living, and a car into the equation and it can feel like some will never get out of debt.
One anonymous Red River student explained that they are panicked about the amount of student debt they had accumulated throughout their studies.
This student is certainly not alone. Articles in various newspapers recently show debt is a hot topic. According to Statistics Canada, average household debt has recently increased by 152 per cent as of June. This is a bleak outlook for graduates entering a sparse job market and looking for housing in a market with a lack of affordable housing.
Students, however, need not be disheartened. When asked about student debt regional coach of RBC Keith Holiday said, “By attending university you will be increasing your earning potential which will allow you to strengthen your overall long term financial situation. I would think of it as more of an investment in your future.”
Therefore, some debt can be good debt. Consensus seems to be that student debt falls under good debt.
“By having a form of credit while attending school, you are actually building your credit history. As long as you are always making your payments on time, this is a positive for you in the future as far as credit worthiness” said Holiday.
When asked about what options are available for those struggling with student debt, Holiday suggested utilizing a financial advisor, this way students received tailored advice that they are requiring, depending on their financial situation.
Even if you do not want to see a financial advisor or have not thought of it as an option, asking those with experience can also help you.
The key is to understanding your accounts. It is vital to be aware and fully understand your cash flow. You must regulate your profit and expenses in order to ensure that your highest interest debt is paid off first.
Consumer debt, which manifests in credit card and high interest debt, is generally the worst kind of debt. This high interest debt is usually consumer debt on high interest products. Lower interest rate products are less costly.
Watching expenditure is an obvious solution, despite being a difficult one in today’s consumer culture. This is made more difficult through student’s social lives which often include eating out, social activities, drinking and smoking. There is a bigger market for spending money than there ever was for previous generations, warranting a steady control of finances.
According to Jacques Marcil, a senior economist at TD Economists, the poor state of the economy has affected Canadian young adults the greatest.
In order to ensure financial security, set financial goals, just like everything else in life.
“One of the best things you can do for yourself once you are working is start saving for your short and long term goals. The longer you give yourself to save the less you will have to set aside every month,” said Holiday.
Most banks have help centres that are accessible for advice and financial planning. Students can contact their own financial institutions to inquire about resources available to them.
If you do not wish to go to a bank, Manitoba Student Aid is also an available option. You can apply for grants from them, or if you already have one from them, they even give advice on how to repay them. More information can be found on the Manitoba Student Aid website, www.gov.mb.ca/educate/sfa/pages/repaying.html.
There is help out there, and education gives you the skills and experience necessary to research the best options for you.