Financial Problems Among Ipts Students
The financial impact of student loans
May Luong
1990s when the average tuition fees jumped by 10% two years in a row. While the rate of tuition increase subsequently fell back to single digits, between 1989/1990 and 2008/2009 tuition fees more than doubled in constant dollars (Chart A). 1 The rise in tuition fees in most provinces brought increased attention to levels of student borrowing and associated debt loads. One study found that between 1982 and 1995, the proportion of bachelor’s graduates with student loan debt rose from 45% to 47% for men and from 39% to 44% for women. Average loan amounts at graduation for those with a bachelor’s degree also rose during this period by 121% for men and 145% for women (Finnie 2002). The rise in average tuition fees is the result of a substantial shift in the funding of postsecondary education (PSE), a change requiring students to pay proportionally more while governments pay proportionally less (Schwartz and Finnie 2002). Between 1989 and 2009, average tuition fees as a percentage of total revenues for universities and colleges more than doubled, rising from 10% to 21% while funding from government fell from 72% to 55%.2 Although the cost of postsecondary education has increased for students, most individuals interested in pursuing studies are able to do so,3 whether through personal savings, parental contributions or government-sponsored student loans (see Canada Student Loans Program). For those not eligible for governmentsponsored programs, loans through private institutions are also available. It is widely accepted that borrowing for postsecondary education is a long-term financial investment. Individuals spend time and money on their education to increase the chances of obtaining meaningful, higherMay Luong is with the Labour and Household Surveys Analysis Division. She can be reached at 613-951-6014 or perspectives@statcan.gc.ca.
January 2010 Perspectives 5
I
nterest in student loan debt heightened in the
May Luong
1990s when the average tuition fees jumped by 10% two years in a row. While the rate of tuition increase subsequently fell back to single digits, between 1989/1990 and 2008/2009 tuition fees more than doubled in constant dollars (Chart A). 1 The rise in tuition fees in most provinces brought increased attention to levels of student borrowing and associated debt loads. One study found that between 1982 and 1995, the proportion of bachelor’s graduates with student loan debt rose from 45% to 47% for men and from 39% to 44% for women. Average loan amounts at graduation for those with a bachelor’s degree also rose during this period by 121% for men and 145% for women (Finnie 2002). The rise in average tuition fees is the result of a substantial shift in the funding of postsecondary education (PSE), a change requiring students to pay proportionally more while governments pay proportionally less (Schwartz and Finnie 2002). Between 1989 and 2009, average tuition fees as a percentage of total revenues for universities and colleges more than doubled, rising from 10% to 21% while funding from government fell from 72% to 55%.2 Although the cost of postsecondary education has increased for students, most individuals interested in pursuing studies are able to do so,3 whether through personal savings, parental contributions or government-sponsored student loans (see Canada Student Loans Program). For those not eligible for governmentsponsored programs, loans through private institutions are also available. It is widely accepted that borrowing for postsecondary education is a long-term financial investment. Individuals spend time and money on their education to increase the chances of obtaining meaningful, higherMay Luong is with the Labour and Household Surveys Analysis Division. She can be reached at 613-951-6014 or perspectives@statcan.gc.ca.
January 2010 Perspectives 5
I
nterest in student loan debt heightened in the