The most indebted generation in Canadian history
August 19th, 2016 - 3:08pm
As we prepare for another school year, I can’t say I envy anyone counselling a young adult on how to proceed after high school. They must be conflicted by consistent statistics that show how higher education can lead to record debt while not necessarily providing the kind of opportunity expected from such a significant investment. While we have been seized with the issue for years, a new report from Oxfam confirms that Canadian youth are earning less, employed less, and carrying the burden of a record amount of debt once they graduate. This, despite clear promises made to Canadian youth in last autumn’s election, shows that nothing much has changed and some of those promises have vanished into thin air.
If it were simple enough to merely bypass higher education and avoid debt, more Canadians would choose that path. However higher education is important for a lot of jobs that our society and economy depend on. For students who can pay out of pocket the choices are easier since they avoid paying interest on debt. The Oxfam report explains that students who borrow to bank-roll their education pay up to 40% more than those who can afford tuition.
There would be less of a problem if the indebted students were able to use their degree to quickly find suitable employment, but that isn’t the case. Today’s young graduates are dealing with more part-time, precarious employment that pays less and offers little in the way of security. Oxfam tells us that the unemployment rate for this group in Canada runs double the national average.
If debt is a large part of the problem, we have to look at how tuition plays into the equation and, according to Oxfam, it is a growing part of the phenomenon. They tell us that undergrad tuition has tripled over the last 20 years. This can be directly linked to the crippling debt many graduates carry and forces one to wonder how other countries can provide tuition-free post-secondary education. Norway, Sweden and Germany are comparable countries that offer free tuition for higher education to their citizens. For those who are worried that people would take advantage of this, there are ways to ensure that won’t occur. Among the simplest is to require students being granted this opportunity to maintain their grades. Still, tuition is only a part of the problem and the stubbornly under-performing job market for young Canadians should be seen as the more immediate challenge.
Apart from less work in general and the shift towards part-time and precarious work for more young Canadians, Oxfam also tells us that this age group is being paid less than they were thirty years ago. This shouldn’t be a surprise since it is the direction that the market place has been steadily moving for that same period of time. Think of how many disputes have been settled by changing the rules for younger workers about to enter the work force. Defined contribution pensions might lead the list, but there are other ways that the current work force has hobbled those about to follow.
That means students who carry an average $30,000 debt after completing a four year degree are being asked to accept less, pay more, and still maintain a tax base that allows for all the conveniences of a modern state. Not only is that unfair, it is also a big gamble and surely we need to shift this burden before it becomes even more of a crisis.