Monday, August 18, 2014

Student debt in Canada

I got curious about student debt when I saw a YouTube presentation about the "squeeze generation." The point of the talk was to explain how difficult life is for the under 45 group compared to their baby boomer parents.

The video repeated the common claim that average student debt was about $23,000. I've always been puzzled by this claim since most of my friends were able to help their children get a university education just as our parents helped us. Most of our children were able to graduate from university (undergraduate degree) with no debt.

If about half the graduating class got help from their parents, as we did, then the average debt of those students with debt must be about $46,000 and that's unreasonable.

There must be something wrong somewhere. I Googled "student debt, Canada" to see if I could figure out what was wrong. Most of the articles were like this one: Student debt, dismal job prospects threaten Canada’s economy. The author, Brenda Bouw, says,
The average Canadian student graduates after four years in university with about $27,000 of debt, according to data from the Canadian Federation of Students (CFS). It also says the average student needs about 10 years to pay it off.
The link to the Canadian Federation of Students doesn't work but I was able to find another: Student Debt. It wasn't very clear but it did say, "For more than a decade, students studying in Ontario and the Maritimes have had the highest average debt loads, averaging more than $28,000."

That certainly implies that the average student graduates with $28,000 of debt. It doesn't say whether this includes post-graduate education.

I also found this interesting article on the CBC News website: Average student debt difficult to pay off, delays life milestones. It says, ...
Average Canadian student debt estimates hover in the mid- to high-$20,000 range. The Canadian Federation of Students pegs it at $27,000, which is close to the nearly $26,300 many students said they expected to owe after graduation in a recent BMO survey.

Simon Fraser University's annual survey of more than 15,000 graduating students found debt-saddled students reported an average of about $24,600 in 2012. When debt-free graduates were added to the equation, the average dropped to about $14,500.
That's what I suspected. When they say that the average student graduates with a debt of $27,000, what they mean is that the average student with student debt has a debt of $27,000. That's not the same thing.

I also found a link to this table from Association of Universities and Colleges of Canada

It seems to confirm my suspicion that "the debt of an average student" actually means "the average debt of students with loans." Using the AUCC figures, about 60% of Canadian college and university students spend more on their education than what they get from their parents, scholarships, savings, and part-time jobs. The average debt is about $25,000. I don't know what the median value is and I don't know if this is only debt from undergraduate studies.

I also don't know the total cost of university or college in Canada. I suspect it's about $10,000 per year for students living at home and commuting to school and about $15,000 per year for students who go away to school. Does anyone know the real costs?

I think tuition at public universities and colleges should be free and I think parents of the baby-boomer generation have an obligation to help their children get an education. I think that students should not have significant debt when they graduate but I hate it when people don't give me the correct data and information. It destroys their credibility. I tend not to listen to someone when I perceive that they are not thinking critically.

Just tell me that 60% of students graduate with debt and the average debt is about $25,000 and I'll start listening to the rest of your argument.


  1. I disagree. baby boomers should stop helping their children get a university education. I witness lots of students who could not care less about studying. If at the very least they paid for their own education, perhaps, only perhaps, they would care about their courses and the work that they should be doing in order to get their degrees. They have no idea how costly it is for their parents to pay for it.

    University is not for everybody, and parents should not encourage (read push) their kids to go that way, let alone pay for it.

  2. A agree that the 20-plus figure might be an exaggeration, and I agree that university tuition should be free. But entrance should be hard.

  3. A student debt of $25,000.? I don't know about Canada but a graduating senior at a university south of the border would be in fat city with a debt that small. Many such individuals here owe in the 6 figures after 4 years of college. When I was an undergraduate at UC Berkeley, the tuition charge was $50.semester, regardless of the number of credit hours. Today, one would be hard put to distinguish the difference between Berkeley and Stanford (or UCLA and USC) in terms of tuition charges.


    Tuition from the early 70s through today in nominal 2013 dollars. It makes it clear why Larry is wrong. Also, you can quickly find the student debt numbers for seniors is at 70% with the average amount close to 30k. Maybe it is all different up north

    1. It makes it clear why Larry is wrong.

      It's not very clear to me. What do you think I was wrong about?

      Maybe I was wrong about which country I live in?

    2. Your privilege is showing. Canada has had amazing tuition inflation. In nominal 2013 dollars it has tripled since 1990. In case you don't understand that means adjusting for inflation it costs 3x as much in tuition to send your child to school as it did in 1990. You compared it to when you went to school which was a lot further back. So the numbers would even be less forgiving for such a silly comparison. For a family to pay for average in-province tuition it would take almost 20% of the median average household income - in Canada. (The actual Canadian costs and student loan numbers are readily available without much google-fu.) Even using your own estimates in the post you would end up with most students having substantial debt in a median income family in Canada.

      This reminds me so much of law professors whining how it wasn't hard to find a job - 30 years ago.


    3. The median family income in Canada is $75,000. Tuition plus books runs about $7,500 per year. The average student should be able to earn $3000-4000 per year, most of which could be applied to university expenses if they are living with their parents. Tuition fees are tax deductible for parents and grandparents.

      I'm not denying that poor families will have trouble finding extra money to send their kids to college. That's why we have scholarships and bursaries. And I'm not denying that middle income families (like my family was when my kids went to university) will have to make a few sacrifices.

      I expect Canadian families to make those sacrifices, whenever possible, in order not to burden their children with huge debts.

      What concerns me is the growing assumption, by parents, that just because students can get loans, the parents don't have to help out. I've heard from students who don't get any help from middle income parents because it's assumed that every student will take out loans and graduate with debt. That's the new normal.

      BTW, tuition fees in Canada remained constant for almost twenty years. The tuition that I paid in 1966 is equivalent to $3600 in 2014 dollars. It has only doubled in 50 years even though it has tripled in the past twenty years.

    4. I'm using OECD numbers at rare the gold standard. Median household income is around 40k. What the heck are you talking about?

    5. Sorry - phone response is always questionable. Dang. The OECD numbers are the gold standard. I really don't know where you got your median household income numbers which are so much higher than the US that pretty much Canada would have been invaded.

  5. It is interesting to see how much digging you needed to do to clarify this issue. One would wish that journalists were clearly in their reporting.

  6. I don't think there is much problem because these university people come from the upper classes as usual anyways.
    They want these educations to get the better things so they have to pay for it!
    Why should the people pay so they get better then you.
    i think the press just wants the public to pay students university costs for many agendas. they would tell us its helping all of us but really its helping the prveledged kids as usual.
    The common people get skrewed.
    lots of things wrong with canadian universities but making kids pay for thier own gain is a right thing.
    Either they make the public pay or they lower costs. why do universities cost so much ?
    These kids expect to get everything free because they don't appreciate that canada was a hard won civilization and it seems our wealth came easily from the snowdrifts.
    make the kids pay or get real jobs.

  7. I've always been puzzled by this claim since most of my friends were able to help their children get a university education just as our parents helped us
    Larry, your privileged is showing. Not all of us were fortunate enough to have university-educated parents with high paying jobs. I came from a lower-middle class family, and while my parents were able to help out a little bit, it was largely summer jobs and student loans that got me through university. Given that median family income in Canada is ~$74k/yr, the 10k+/year (I don't know the real number either, but yours seem reasonable) is beyond what most families can afford, even with RESPs and whatnot.

    In my case, not only does my experience run opposite of yours, but so does the experience of most of my peers - most of us have/had education debts that were tens of thousands of dollars. The cost of university is very much a barrier to lower-income individuals, and IMO, represents a serious inequality here in Canada.

    I don't think there is much problem because these university people come from the upper classes as usual anyways.
    LOL, most of the professors in my department have the same background as I - their parents were farmers, machinists, salesmen/women, etc. I think you need to actually visit a university before formulating your opinions.