Lindsay Handren

For post-secondary students, September is arguably the most appropriate month to mark the start of a “new year”. In addition to cooler weather and the return of pumpkin spice lattes, September leads students to new cities, new programs, and new challenges, in both their academic and personal lives. Yet, increasingly so, September also brings one other thing: a price tag.

Unlike some of our European counterparts, higher education in Canada has always come at a cost. Students are charged tuition fees. Those fees, combined with operating grants provided by provincial governments, make up the main sources of revenue for universities and colleges. Student debt, too, has been a reality in Canada as far back as anyone can remember: the federal government has provided assistance through its Canada Student Loan Program since 1964, as have provincial governments through their respective loan programs. For an average student, the split of federal and provincial assistance typically falls at about 60/40.

A recently compiled student debt map laid out some alarming numbers: in 2010, the average debt for students with debt at the end of a four-year undergraduate degree was $22,300. The corresponding average tuition was $20,552.

Gripe to your parents about student debt, and you’re likely to get a combination of “it’s an investment in your future” and “I made that investment, and I turned out fine” in return. For them, it is very likely that neither of these statements is false. The catch: you’re not your parents. If you happen to be a millennial like myself, you’re part of an entirely different generation, growing up in an entirely different Canada. We face a rapidly aging population, an unsustainable social safety net, a serious infrastructure gap, and yet another apparent recession.

But perhaps what is most different for millenials is the composition of Canada’s job market vis-à-vis its labour force. Built for and around the baby boomer generation, the market is only slowly adapting to modern-day skill sets, and many of the jobs that today’s post-secondary students study for will not pay the bills. Precarious, part-time, and contract employment is increasingly the name of the game. Shifts in the economy have only made graduates’ situation worse: typically the hardest hit by economic upheaval, youth face higher rates of unemployment than the average Canadian (with youth unemployment recently reaching a high of 21.8% in New Brunswick). On top of that, the sheer size of the labour force is a problem, as many baby boomers are delaying retirement and tend to have the upper hand in the battle for employment because of their accrued experience.

A mere glimpse into the realities facing Canadian youth today makes it is easy to see why many have dubbed the millenials “Generation Screwed”. The question, then, is this: is it still worth it to pay that post-secondary price tag?

The answer, it would appear, is two-fold. Post-secondary education is still considered to be an investment. Studies have shown us time and time again that the long-term labour market premiums associated with completing a bachelor’s degree or a college certificate far exceed those of merely completing a high school diploma (averaging $585,000 and $214,000 respectively over a 20-year period, in one example). The most recent National Household Survey also found that educated Canadians were more likely to be well off, with nearly a quarter of those surveyed who had a university degree falling in the top 10% of income-earners.

Whether or not graduates will “turn out fine”, however, is a different story altogether. Consider the average student debt and tuition levels highlighted earlier in this post. Now, consider that these numbers have risen above inflation since 2010 and will undoubtedly continue to do so, and that they apply only at the completion of an undergraduate degree. This is an issue, as six in ten Canadian high school students already have their sights set on a second degree.

High levels of student debt – the result of a combination of factors including tuition levels, the availability of grants and bursaries, and the cost of living – have serious social and economic consequences. As the average debt level rises, low- to middle-income youth will be more likely to forgo the risk of enrolling in post-secondary education, or to not complete their degree (which makes them more likely to default on a loan). But there is a bigger, scarier picture: student debt acts as a macroeconomic drag on the Canadian economy. Facing budget pressures, the provinces have been gradually shifting away from the public funding of universities and colleges, leaving students to finance more and more of their education through debt. Unfortunately, the resulting debt levels slow our economic growth: for example, the more debt a graduate has, the less likely he or she is to purchase a home or car. Spending is effectively constrained. This is particularly true in an age of youth employment defined by precarious, part-time, and contract positions.

Without a doubt, rising student debt is an issue that warrants more attention. An estimated 5.5 million millenials will be eligible to vote on October 19, and yet the issue has been largely left out of the ongoing federal election campaign. However, this particular post was inspired by recently unveiled government documents that highlight the need for “more aggressive” collection targets for federal student loans. Apparently, Employment and Social Development Canada is writing off too much of our post-secondary graduates’ debt, and the Repayment Assistance Plan is working “too well”. I would argue that it is working precisely as it was designed to – helping our graduates get back on stable economic footing.

Whatever your opinion on the matter, the bottom-line is this: student debt levels are high and rising across all income classes, and this debt is burdening the Canadian economy. If the federal and provincial governments want to relieve this burden, they must be willing to invest in our post-secondary students and graduates; that is, invest in our millenials. Keeping a close eye on Newfoundland, where the provincial government has recently eliminated its provincial student loans and replaced them with needs-based, non-repayable grants to ensure that students are graduating with less debt – and can therefore make meaningful economic contributions soon after graduation rather than later – would be a good place to start. Taking a hard look at programs and policies enacted in the Nordic countries would be another smart idea. Whatever the case, our governments need to act fast. We’re not “screwed” just yet.

Lindsay Handren graduated from the University of Toronto’s School of Public Policy and Governance in 2015. She previously graduated with a B.A. (Honours) in Political Science and History from the University of Prince Edward Island. Her interests lie in social and economic policy. Lindsay is currently employed as the Executive Director of the New Brunswick Student Alliance, the largest student organization in New Brunswick.