Majority of students anxious or stressed about finances: 69% anticipate they will graduate with debt

With the cost of an undergraduate degree currently estimated at $80,000, it is essential for parents to start saving early for their children’s future post-secondary education. The recent TD Canada Trust Education and Finances Survey showed that many of today’s students are having a tough time managing financially – and it is taking its toll. Twenty-one per cent of post-secondary students report being stressed about their finances, saying that they continually feel like they do not have enough money. Another 36% are anxious, saying that they should be able to manage, but it will be a challenge.

“Our research revealed that only 27% of students can depend on RESPs to help fund the costs of their education, which reveals a significant lost opportunity,” said Carrie Russell, Senior Vice President, TD Canada Trust. “RESPs are an unbeatable way to finance post-secondary education – they benefit from the Canada Education Savings Grant, they allow for tax-sheltered growth and they can be used for tuition at universities, colleges, trade and technical schools. If you are a parent with young children, open an RESP now – it is an excellent investment in your kids’ future.”

The TD Canada Trust Education and Finances Survey, which looked at the attitudes and behaviours of Canadian post-secondary students, revealed that 41% of students are spending more money than they save. Not surprisingly, most students anticipate they will be in debt when they graduate: 69% of students project they will graduate with some debt with 17% saying their debt will be in excess of $25,000.

“Amassing enough money for post-secondary education can be a challenge, but it is much more economical to save ahead than to borrow at the last minute,” says Russell. “That said, if students are heading to school in the near future and have not put away enough, they should pursue all potential avenues available, such as a part-time job, scholarships, bursaries and assistantships.”

How are students financing their education?

Parents are helping their children with the costs of post-secondary education, but only in part. Sixty per cent of respondents say that their parents pay for a quarter or less of their expenses and only 10% say that their parents pay for 75% or more.

Twenty-seven per cent are relying on RESPs to help finance their education, and 44% plan to rely on student loans or lines of credit.

“If students have explored other options, such as part-time jobs and scholarship programs, but still cannot get ahead, they should talk to their bank about student financing options. These are specifically structured for students and generally have more flexible and generous financial terms than standard loans or lines of credit.”

Student income

Seventy per cent of students are working during the summer with the majority of those students earning between $2,500 and $7,499 (60%). Half (49%) will use the money to pay for their education, but only one-quarter (24%) say it will cover all of their expenses.

To fill in the gaps during the year, many students have part-time jobs (36%), take out student loans (26%) or borrow from their parents (18%). Only 8% rely on their savings and another 6% rely on scholarships.

Surprisingly, among students borrowing from their parents, 41% say that they are expected to pay them back. Another 43% say they won’t have to pay their parents back and 16% haven’t yet broached the subject with their parents.

Financial expectations after graduation

Will the long years at school pay off? The majority of students (62%) expect a starting salary of less than $50,000. Only 13% have loftier expectations, hoping to make more than $60,000. Another 17% don’t know what to expect their starting salary to be.

Although 57% of students are anxious or stressed about their finances for school, 37% of students believe that they will be rich some day. The definition of rich varies; three-in-ten define “rich” as having more than $1 million in the bank, but 60% say that they will be rich by having less than $1 million.