FLM 2017: How to Learn from the Debt Regrets of GraduatesNov 02, 2017
It’s Financial Literacy Month (FLM), and many graduates in Canada are leaving school with much more than an education. According to a recent BDO poll, student debt is a common problem among 21-39 year old graduates.
If you’re thinking about post-secondary schooling, or you’re in school now, there’s still time to heed the advice of graduates before you take on debt.
Regret 1: Spending now means putting off goals later
Once they finish their schooling, many grads want to get on with the rest of life — buying a home or a vehicle, starting a family, or enjoying vacations.
For grads with debt, those goals are farther away. In our poll, those still paying off debt say they’ve had to put off buying a home, having kids, getting married, and even saving for retirement.
Solution 1: Work more hours during school
Some graduates who still have debt say that if they could go back, they would have worked more hours while going to school.
If you have the chance to work while in school, or if you have a lucrative side-hustle, putting the time in can mean leaving school with less debt. And that could mean not delaying your goals later.
Learn how personal finance blogger Steven Van Sluytman used his income from co-op experience to help pay for university and avoid graduating with debt on Money We Have.
Solution 2: Budget
If you aren’t tracking what you’re spending, and you aren’t minimising your non-essential purchases, you’re at risk of overspending. Some graduates with debt now see the benefits too late: 30 per cent say they would have lived more frugally or budgeted while in school.
The east-coast blog My Alternate Life also talks about alternate funding, like scholarships, being helpful too.
Regret 2: Rushing into it
Many graduates have a hard time finding a job in their field after graduation. That means often taking a job that pays less, and that can mean it takes longer to pay off debt.
Solution 1: Take your time
If it works for you, it’s ok to take a few years to work and save money for university. Doing so can reduce or even eliminate your student debt altogether. If you have to work outside your field when you graduate, you won’t feel the same pressures as you might if you have debt payments to make. It could also reduce the likelihood that you need debt relief after graduation.
If you’re dealing with student loan debt now, read about your debt relief options here.
Solution 2: Reconsider your program
Looking back, over 20 per cent of grads with debt say that they would have taken a degree or diploma with better employment prospects after graduation. Going to a local college or a less expensive school was also cited, and can save you a lot in tuition or living expenses.
There are a lot of unknowns with post-secondary education, but how much debt you take on doesn’t have to be one of them.
Read more about the results of our student debt poll along with some ideas for reducing your debt load in these BDO blogs: ¾ Grads Under 40 Have Student Debt Regret and 7 Helpful Tips from Grads to Reduce Your Student Debt.