Sticker shock for students

Ginella Massa has worked hard to reach her fourth year of university. Along the way, she's tried her best to keep her student debt to a minimum. But even though she's worked part-time and moved home to save money, it has crept up to a discouraging number.

She recently received a letter from OSAP with an update of what she owes – $31,867. It was a shock, considering she thought her debt was running at about $20,000.

"And that's before the interest kicks in. I knew I owed a lot, but I didn't realize just how much that really was. It's a big reality check," says Massa, a communications and sociology student who is also taking broadcast journalism in a joint program offered by York University and Seneca College.

The 21-year-old Toronto resident worked this summer at Harbourfront Centre and has continued to pick up hours as an usher at the theatre there, even though it makes for a heavy schedule if she takes on too many hours.

"My job is flexible, which is great. But it's always a toss-up – fewer hours means less income; it's always a sacrifice."

Massa's situation is not unusual. The average student debt across Canada is about $25,000 by graduation, according to the Canadian Federation of Students.

A debt clock on the federation's website shows the overall student debt is now more than $12.8 billion. And that's just the federal portion of student loans. It doesn't include the 40 per cent of loans that come from provinces or private sources, and it doesn't include any interest.

"From talking to students on any campus in this country, we find many have part-time jobs and some are driven to part-time studies to make ends meet," says Katherine Giroux-Bougard, national chair of the federation. "What's scary is that many people might not even try (to go to school) because when you hear those numbers, it's a pretty scary debt to have when you're in your early 20s."

Massa has learned along the way where she can cut expenses. She lived near campus in her first year-and-a-half of university, sharing with two roommates, including her older sister, and paid $500 a month for rent. When that became too costly, the two girls moved back home. She now lives an hour from school and commutes by TTC at a cost of about $100 a month.

"I actually just got my (driver's) licence over the summer and I drive to school about once a week. Although it cuts my travel time in half, gas is way too expensive and parking at York University is ridiculous, so it's not really much of an option."

Her tuition is between $4,500 and $5,000 a year depending on how many credits she is taking.

The Association of Universities and Colleges estimates a four-year undergrad degree costs about $50,000 – or $12,500 per year. Depending on the program and province, that total can rise to $60,000 or $80,000.

Estimating how much your degree or diploma will cost can be difficult because of variables such as accommodation, transit and extra program fees.

"It's one of the big mysteries for students and parents," says Tom Hamza, president of the Investor Education Fund, a non-profit organization that helps Ontarians with financial literacy.

"They don't have a very clear idea how much this is going to cost them," he says. "And it can be a difficult thing for a footloose 18-year-old to recognize they may actually graduate with a $40,000 debt."

One way to avoid racking up a huge debt is for parents to open a Registered Education Savings Plan and start saving when their children are young. (A calculator at investored.ca helps determine how much parents need to save.)

The federal government adds 20 per cent to each contribution, to a maximum grant of $500 per year per child and a lifetime limit of $7,200 per child.

The fund can be invested and grows tax-free, as long as the money is eventually spent on the child's education (or moved to an RRSP in the child's name).

Hamza suggests students should consider the high cost of education when considering which degree or program to take.

"If I'm going to have a $40,000 debt, am I going to take that engineering degree that gives me a $50,000 salary on the other end, or the degree that has great uncertainty as to how much I'm going to earn?"

He adds that when the provinces allow schools to hike tuition fees, the long-term effects on families are often not considered.

"Nobody in government is going to stand up and say, `Guess what, Canadian family, you're going to have to save this much more, starting five years ago, because of this policy decision.'"

According to Statistics Canada, tuition fees for the 2007/2008 academic year for full-time undergraduate students rose in six provinces.

The biggest increases were in New Brunswick and Quebec, where fees rose 4.8 per cent after a 10-year-freeze, and in Ontario, where they grew 4.4 per cent.