Students Will Owe $30K by Graduation: Debt Management Critical

Three-quarters (74 per cent) of Canadian post-secondary students believe they will need to supplement their schooling with more training after graduation, despite already spending on average $14,000 each year and expecting to owe $30,000 in debt by the time they complete their current program.

Those are the findings of a CIBC poll of more than 1,500 Canadian full- or part-time students, which also reveals that — despite their growing education bill — two in five students (41 per cent) have zero savings in place.

“Students are telling us that they’re worried about finding a well-paying job after graduation, and the need for more training and higher costs of some degrees is adding to the already high education bill,” says David Nicholson, Vice-President, CIBC Imperial Service. “The key to success is having a detailed budget and financial plan that takes you from your schooling to your earning years. Parents can help by building savings early on, and helping students understand how to manage their money and borrow wisely.”

But a separate survey shows that the majority (56 per cent) of Canadian parents are leaving money on the table when it comes to saving for their children’s post-secondary education. In an Ipsos poll of 1,768 Canadian parents for Knowledge First Financial, more than half (56 per cent) of respondents said they have not taken advantage of various grants available within a Retirement Education Savings Plan (RESP), and nearly one-third (31 per cent) with kids aged 14-22 admit that they have not started saving at all.

Advisors can obviously help families identify the various savings vehicles available, along with corresponding government benefits, but could you do more to educate your clients about family debt management?

Marcia Elaschuk, DFA-Business Services Specialist and Knowledge Bureau Faculty Member, will explain at the upcoming CE Summits how you can address various aspects of family debt management with your clients. Strategies include:

• Managing Debt through Life Milestones — Advisors will learn about the tax consequences to gross earnings and how spending can be affected with a better plan throughout different life changes. Show clients how they can find new money to pay down debt using RRSPs, TFSAs and other strategies to prepare for retirement.
   
• Managing Consumer Debt — For families, consolidation of different lines of credit, student loans and credit cards to finance life events is a key ingredient to solvency and savings. The advisor should be instrumental in helping clients choose the right debt and achieve better credit scores.
   
• Presenting Debt Reduction Solutions — How to consolidate debt in various stages of life: Students, Families and Seniors. Tools: Debt Reduction Solutions Calculator.

Learn how to incorporate professional advice on this critical topic into your practice in 2017. Register now online or call 1-866-953-4769 to attend the November CE Summits or to enroll in the Debt and Cash Flow Management self-study course (free trial available).

Do you think the government does enough (e.g., Lifelong Learning Plan, Registered Education Savings Plan) to support post-secondary education in Canada? Take our September Poll!

©2017 Knowledge Bureau Inc. All Rights Reserved.

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