At this year's Annual Conference of the Canadian Economics Association, Armine Yalnizyan gave a presentation entitled "Surviving the Recovery: The Distribution of Canadian Household Debt." The panel was co-sponsored by the Canadian Association for Business Economics and the Progressive Economics Forum.
As Armine made clear in her presentation, household debt in Canada has steadily risen over the past two decades. In 1990, the average Canadian household had debt representing just under 90 per cent of its personal disposable income. Today, that figure stands at roughly 150 per cent.
But some groups are affected more than others. The chart below (used in Armine's presentation) gives a breakdown of which age groups in Canada are most likely to hold household debt. Clearly, those Canadians most likely to be in debt are over the age of 25 and under the age of 45.
I can't help but make two observations here. First, this is precisely the age group most likely to be struggling with student debt. Second, student debt in Canada has risen quite dramatically in recent years. According to the Canadian Federation of Students, average student debt for a four-year degree in Ontario has increased by 175 per cent -- from roughly $8,000 to roughly $22,000 -- in the past 15 years.
It therefore seems to me that one very direct way for senior levels of government to tackle rising levels of household debt in Canada is to reduce student debt -- by reducing tuition fees, improving student financial aid programs or both.
This article was first posted on The Progressive Economics Forum.
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Unfortunately our trend has been to follow the US lead in Education as well as other fields. Average tuitions seem to range between $25,000-$55,000 per year in most universities there, depending on the prestige and/or standing (eg. as a state university).
Queen's University in Kingston, ON has been lobbying government for a long time to get the right to go private and become the "Ivy of the North".
Despite this, many studies are now questiioning the value of a university degree versus a much less costly alternative - a college diploma, especially in light of the employment prospects for new graduates. I would suggest that an apprenticeship program in a trade of interest may also be of more value to a student who might otherwise become a mediocre graduate in some BA program.
With these considerations in mind, at least we have alternatives in post-secondary education that not only put less strain on family finances, but also may provide better employment opportunities in this evolving job market.
There was a pretty decent article called Student debt bankrupting a generation that was published in the Ottawa Citizen yesturday. I just started my own blog to vent about this stuff. The whole thing makes me so mad. The Ottawa Citizen article was the final straw that got me writing, I can't believe that poor woman couldn't finish her degree because she's too poor. I feel even worse for the younger ones, tuition goes up every year. It seems that the younger you are the more screwed you are.