Bitti, M. T. (2011) Student loans a hard lesson National Post, June 4
This article provides some sobering statistics about student debt in Canada:
- $26,680 Average debt for university graduates in 2009.
- $4,724 Average university tuition fee in 08/09, up from $2,591 in 1999.
- $20 billion Current debt for post-secondary education borrowed from all sources.
- $1.2 million Daily increase in student loan debt owed to the government of Canada.
- $149.5 million The amount of unrecoverable student loan debt.
- 27% Number of people with debt loads above $25,000 when they leave university and college, up from 17% in 1995.
- 8% interest rate on federal loans; after default in repayment, interest rates compound rapidly (prime business rate is 3%).
We like to pat ourselves on the back for using e-learning to increase student flexibility, but one reason why our online enrollments are growing is because this is often an attempt by students to keep down their debt, by working part-time and ‘time-shifting’ their study to e-learning. One of many consequences of increasing part-time work to avoid large debts is that it takes longer to graduate as a result. In other words, online learning is becoming the food-bank of education – necessary, but often a second best alternative to dealing with the real problem, which in both cases is poverty. (Ironically, many online students are refused federal loans because they are not classified as full-time students – a double whammy).
David Molenhuis, chairman of the Canadian Federation of Students, hit the nail right on the head when he stated:
You shouldn’t have to accumulate so much debt to get through school. That’s where we want to start……..Canada does not have a national vision for its post-secondary education system. For the billions of dollars we pour into the system, we do so without a vision for outcomes. We don’t know what it is we want to get out of our colleges and universities in order to meet the needs of the 21st century.
There are also grave economic consequences down the road, as the article points out. Roger Sauvé, author of the 10th edition of Canada Job Trends Update 2011, states
The burden of student debt has also caused graduates … to take jobs that aren’t their first choice and so they will have to wait even longer for their net worth to turn positive, leaving them a shorter period of time to build up adequate retirement savings. As a result, the economy may grow less quickly than in the past as this indebted generation allocates more of their wages to paying off student debt and then having to save as much as possible each year to build up their net worth…. It is not a positive for the economy.
Since increased tuition fees are the cause, and Canada’s tuition fees are well below those of both the USA and the U.K., the economic consequences for these countries is even more severe.
What is needed is a complete rethinking of public higher education policy, based on a cost-benefit analysis and a more sophisticated look at the market and ability to pay. For instance, I would support every person having the right to four years state-funded post-secondary education. But do we need to subsidize lifelong learners who have already had these four years and are now in the workforce and able to pay full fees? Do we have the best balance between professional and trades training? Are we providing sufficent education and training opportunities for unemployed youth? In other words do we have too many going into more expensive university graduate education when what is needed are more power engineers or nurses or training for disadvantaged learners? Do we have a system with built-in flexibility that can adapt to major shifts in the labour market? What funding model would provide that flexibility while also ensuring equity of access? Where is the debate on this? It certainly was completely absent from the last municipal, provincial and federal elections in Canada this year. (We could say the same about how to pay for our health service). Instead we get beer and circuses from our politicians (i.e. Christy Clark in a Canucks jersey lighting dead Olympic torches).
Helping reduce – or more likely deferring – student debt is a valuable role for online learning. However, many of us would prefer it to be used because it leads to better learning, not because it ameliorates a poorly developed public higher education funding policy.
For the situation in the US, see: Tuition costs vs middle class income in the USA