• Stephanie Hinds

Will the government's new tactics really help students in debt?

Today, the federal government rolled out it’s plan to help make student loan repayment more manageable for post-secondary graduates in Canada. Those who don’t earn at least $25,000 annually don’t have to start making payments.

While the move is bringing a sigh of relief to hundreds of thousands of Canadians, for most people planning to take advantage of this opportunity, it will just keep them in debt for longer.

The thing is, graduates know this. But the trade-off of making smaller monthly payments for being in debt longer is a choice many are forced to make. For those living on their own, those who have yet to secure full-time jobs and those who have dependents, the benefit that this will bring is that it offers more flexibility in repayment. It alleviates the stress of having to manage rent, groceries, insurance, other fixed and miscellaneous expenses and student debt simultaneously. It gives them more room to breathe in a society where millennials are suffocated by debt.

With average student loan debt in Canada in excess of $25,000 for university graduates, and provinces like Ontario and Saskatchewan paying some of the highest tuition in the country, the government’s solution fails to address the root issue of soaring tuition costs, crippling student debt and meager job opportunities for students entering their respective fields.

The average cost of one year of university tuition in Ontario ranges anywhere from $5,000 to $10,980.

But these highly sought after degrees land graduates in a job market where for the most part, they are still only deemed qualified for low-paying, entry-level jobs, sometimes outside of their field.

So why are these degrees so expensive in the first place?

Perhaps it’s because university degrees are reported to earn students an extra $1-million over the course of their career, in what's called the "million-dollar promise". But in order to see this potential increased cash flow, we have to start getting ahead some way, somehow. Instead, student debt is causing a generational backup.

Seniors well past the age of retirement still fill jobs that their predecessors are eager to take over, putting our job market at a virtual standstill. Those lucky enough to break in to it only get there through enduring a survival of the fittest type of competition.

And the idea that 65 is the age of retirement? Say goodbye to that. According to the Broadbent Institute, the average senior is overwhelmingly financially unprepared for their golden years. The three main causes of this are the cost of living, mortgage debt and less than desirable earnings.

How is it possible that in a country reported to be carrying $28.3 billion in outstanding student loans in 2012, has not found a way to ease the burden of going to school? Other than creating a seemingly more glorified Repayment Assistance Program, of course.

If the government has money to make partial interest payments on behalf of students, if the government has money to come up with more and more grants each year, why on earth can’t the government redirect that funding to the principle loans, or regulate the cost of post-secondary schooling?

Don’t be fooled by smoke and mirrors. Pay off your debt as fast as your situation allows you to, despite the "help" offered by the government. Because this was just another day of business for the government.

But for the rest of us, this is our life. This is our money. And this is our future.

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