Student debt is not all bad08 February 2007
I read this article on CBC and I can't help but disagree with it. I know many students with loans that spend money like it grows on trees, my condo roommates come to mind. Granted, I know many who manage their money very well, but they are not the ones with huge debts. Those with massive debts are those that don't seem to understand either the value of a dollar or how to manage money.
The student groups are really playing on people's cheapness in complaining about high tuition. Although I don't agree with them that tuition is too high, I can see where they are coming from and would not mind if tuition was lower. However, the ideal situation would be if tuition could be kept at current levels (or go down) and the governments would make more significant contributions to education. We would all be better off in this scenario. So it is time to stop complaining about high tuition and start pushing for more funding. Both parties have to be willing to pay part.
First, I don't think tuition is too high because education is a valuable investment. There is so much talk about how you need a degree to get a "good" job and yet many students don't see the value in going to school except to get that imaginary "good" job. Four years (or more) is a lot of time to invest in something that is simply a means to an end. Now if the job you get at the end of it is great and you work there for many many years then you will see a significant return on your tuition investment. Where else can you invest $40,000 and get such significant returns? I know you can end up unemployed, but that doesn't necessarily mean that the education was not valuable.
Second, I will admit that I don't have any student debt because my parents have paid for most of my education, but I have contributed to some of it. But I know that I would feel this way even if I had to pay. In my years at post-secondary, I have taken many courses (62 and counting) and I have found that those people who have a free ride are often the ones that take it less seriously. This likely has something to do with not taking ownership of the education. If we all paid lower tuition would people still take ownership of education like they do now while they are debt laden. Many probably still would but a greater group than now wouldn't because it isn't that much money.
Getting back to extravagant lifestyle, I believe that budgeting should be a prerequisite to being awarded loans. I know that one has to submit a budget of sorts to get a loan but much of that projection goes out the window once the money is transferred. Managing finances is an essential skill (like civics) that is not taught enough anywhere. Students need to understand that using credit for luxuries is not the best plan. A car in university is hardly a need but often my debt-laden friends own a car.
When I lived in Edmonton, I didn't have a car and I managed very well. I lived close to the university so that I could walk there or take transit (but I never took the bus to or from the university). Being close to the university also put me close to two grocery stores, so I could easily carry my food home. Being within walking distance of many attractions allowed me to live without a car and the accompanied payments (insurance, gas, repairs...) and this allowed me to reduce my yearly budget by a significant amount, which would make a noticeable difference on a student loan or in on bank balances.
I hear the complaint that if you live closer then you pay more, though this is true I am willing to bet that the cost of being close is less than that of owning a car. I still lived a 40-45 minute walk from the university, so close really is up for interpretation. If a 5 minute walk is far then that is a choice and when making choices secondary costs need to be considered because they will affect your costs.
Anyway, I think through this seemingly random set of thoughts I just want to make the point that tuition might seem high if it is looked at as a single payment but when it is looked at as part of the investment of education, along with time, it is not that high for the end pay-off. And that many people, adults and students, do not know how to manage money so saying that student debt is too high and is not caused by lifestyle is simply untrue. Part of student debt is the cost of living but that is part of the investment. If you could work full-time and go to school full-time without running out of time in the day or going crazy, I'm sure many would, but that is not feasible so living costs become part of education costs.