Over 1-in-4 (26%) Canadian post-secondary students said they have considered dropping out of their program because of money, new poll finds
A new survey of Canadian students by education savings specialist Embark and Léger reveals the vast majority (82%) of students find the financial realities of a post-secondary education to be overwhelming.
TORONTO, Aug. 14, 2024 /CNW/ - A new poll released by Embark, Canada's education savings and planning company, reveals post-secondary students are finding it harder to simultaneously pay for and go to school – leaving them education rich, but cash poor.
Key Statistics:
- 44 per cent of post-secondary students are spending at least three-quarters of their total income on post-secondary education, without factoring in food and living expenses.
- 64 per cent of students stated they would not be able to afford their education without the help they received from their parents. In fact, 43 per cent claimed they would have to drop out if their parents did not support them financially through it all.
- Over 1-in-4 (26%) said they have considered dropping out of their post-secondary program because of money.
Click here to view national and provincial data related to the study.
Despite 3-in-4 (75%) reporting that their parents have helped them financially, many students are stretching themselves far too thin. The data outlines the financial realities of today's post-secondary students and the lasting impact as they enter their careers, as well as what steps can be taken to improve the probability of better financial outcomes.
Financial Realities of Today's Post-Secondary Students
Student debt has become an accepted part of the post-secondary experience, with almost half (48%) of students polled currently having, or expecting to have, student debt. In fact, 1-in-3 students (33%) said they currently have more debt than savings. When asked, 49 per cent stated they were worried about the future with how much debt they were taking on, and over 4-in-5 (82%) claimed the financial realities of a post-secondary education were overwhelming.
The cost of education has historically outpaced Canada's target inflation rate, and both the cost of living and education have rose significantly in recent years. As a result, 74 per cent of students polled said it is very hard to afford a post-secondary education and over half (52%) have had to cut out certain necessities to make ends meet in today's high-priced environment.
To help fund their education, just under two-thirds of students (64%) said they have a part- or full-time job to help pay for school. While 39 per cent state their grades have been affected by their financial obligations and over 3-in-4 (76%) say it is difficult to balance school and work at the same time, it has become a necessity for many to offset costs. However, finding a job during school may prove increasingly difficult. Current economic conditions have led to a tough job market for part- and full-time work, cutting off what many students see as a financial lifeline.
"In today's challenging job market, it is particularly difficult for younger Canadians to secure part- and full-time jobs. For those who rely on employment to support their education, this adds another layer of difficulty on top of rising education and living costs," said Andrew Lo, President & CEO of Embark. "Our survey showed that 68 per cent of post-secondary students wish they had saved more money before starting school, a sentiment that will only grow stronger in our current economic conditions. Students and their parents would benefit from starting education savings early to provide a larger financial cushion in volatile times."
Carry Debt Post-Graduation
Canadians find the value in pursuing an education, with 61 per cent of students surveyed saying it is hard to succeed in life without a post-secondary education. However, 2-in-3 (66%) state that graduating with student debt will make it harder for them to become financially independent from their parents and start their life after school. This is particularly true as 41 per cent of those polled intend to live with their parents after post-secondary school for a prolonged period because of student debt.
Looking at how much debt they expect to accumulate, students expecting to graduate with debt think they will accumulate $25,382 of debt graduating from school and it will take them 2.8 years to pay off on average. In actuality their level of debt is likely be far greater, with Statistics Canada recently reporting the average figure to be $30,600 in 20201. Student loans also often take much longer to pay off, with loans like Ontario Student Assistance Program, for instance, being designed to be paid back over 9.5 years.
How Can We Better Prepare Students for Post-Secondary?
For many (59%), being a post-secondary student marked the first time they have had to handle their own finances. Making financial decisions for the first time, particularly in the face of handling both major costs and day-to-day spending, can be incredibly stressful. Two-thirds of students (66%) claim that looking at their bank account causes them anxiety, and 52 per cent say they simply avoid thinking about debt and money. Even for those who want to face their money troubles head on, 66 per cent of students say they want to improve their finances but do not know how.
Compounding onto this, students find there is insufficient transparency around post-secondary options and information. Almost 3-in-4 (73%) students polled wish there was more transparency about post-secondary options, and almost half (49%) said if they could go back in time, they would make different decisions about their education.
Additional statistics include:
- 57 per cent wished they knew more about post-secondary school before making a decision of where to go or what to study.
- Almost three-quarters of students polled (74%) stated that navigating the post-secondary process is complicated.
- 69 per cent wished they had more guidance when planning their post-secondary education.
- Looking back, 47 per cent believe they were not provided enough information to make an informed choice about post-secondary education.
"The lack of preparedness of students in choosing their post-secondary education is a shortcoming we all bear. For young Canadians, this is a significant financial and life decision that will impact their futures," said Lo. "At Embark, we are addressing this by offering more resources to enhance transparency on post-secondary options and related costs, enabling more informed decisions."
Tips and Tricks to Set Up Students for Success
For Parents:
Get granular and forecast. If you are interested in helping your child pay for school, the first step is to forecast the cost of your child's education. Figure out how much of it you would like to help pay for, and from there, work backwards to understand how much you will have to save. Embark can help with its RESP calculator, which can project your child's costs and help you define your goals.
Save smarter. A registered education savings plan (RESP) is a great, tax-advantaged way to help you set aside funds for your child's post-secondary schooling. The money you contribute to an RESP grows tax-free when in the account, and when withdrawn, what you have grown is treated as taxable income to your child, who is typically in a much lower tax bracket. The best part is, the government will put money towards your child's education for just saving in an RESP. If saved correctly, this works out to an additional 20 per cent on your first $36,000 saved.
Be transparent. Talk to your children about how much you saved and whether you will help them pay for school. The vast majority of students (80%) wished there was more transparency about the cost of education, and parents can be their first resource. Speak to them early to help them budget, and create savings goals to help them build an education nest egg using actual costs and data. The more time they have to do so, the better off they will be.
For Students:
Do your research. Learn more about costs as well as program requirements and demands. From polling post-secondary students, 45 per cent wish they had done more research into different schools while applying for their post-secondary education. Thankfully, Embark has just launched its Career & School Matcher that can help chart a post-secondary path based on your desired profession and project costs.
Start building your financial literacy early. The more active a role you take in building smart spending and saving habits, the better. This also takes away from the sticker shock of everyday expenses once you live independently and can help you better manage and plan for the cost of education.
Think about program intensity. If a program requires a lot of time and energy, take that into account when budgeting and financially planning for school. By having a financial cushion in an RESP, you will likely have significantly more breathing room if you do not have as much time to work during the school year, or are unable to find a job right away.
About Embark Student Corp.
Embark is Canada's education savings and planning company. With over $6.3 billion in assets under management, the company is committed to empowering families along their post-secondary journeys by giving them the resources and tools they need to better plan and save for all that comes with an education. Registered as a Scholarship Plan Dealer across Canada, the company manages almost 600,000 RESPs for Canadians nationwide and helped approximately 53,600 students through post-secondary studies last year.
Leger's completed an online survey with 1010 students, ages 17-26, who attend university, college, or technical college, between June 26th and July 17th, 2024. A probability sample of 1010 respondents would have a margin of error of ±3.1%, 19 times out of 20.
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1 Statistics Canada. (2024, March 22). Student debt from all sources, by province of study and level of study. https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3710003601 |
SOURCE Embark Student Corp.
Media Contact: Joyce Li | [email protected] | 416-414-4797
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