According to research from the Higher Education Strategy Associates, the weight of student debt may be lighter than previously thought.
Factors such as a graduate’s income, interest rates and tax rates have faced many changes in the past two decades.
These changes have eased the burden of student debt, Alex Usher, president of Higher Education Strategy Associates, said.
In an article Usher wrote for Maclean’s titled “Rising student debt burdens are a myth”, Usher said that an increase of provincial grants has led to a decline in student loans.
“The basics are tax credits have tripled, grants from admissions have trippled, grants from universities have gone up tenfold … it’s an extra three or four billion in the system from governments and institutions,” Usher told the Journal.
Taxes that were cut in the late 90s and early 2000s have led to a higher income for recent graduates after taxes, he said, making debt easier to pay off, even when considering inflation.
“After-tax income is actually up … so the average graduate is earning slightly more than they did 15 years ago,” he said.
After-tax income has decreased roughly from 28 per cent to 22 per cent since the early 2000s, following cuts made by the provincial government to income tax.
Lowered interest rates have made an impact on students’ ability to pay off debt as well.
“[Interest rates] went down quite sharply after the financial crisis in 2008, so they are now at three per cent,” he said. “That knocks a couple of thousand off what you are paying each year. It’s a significant amount of money.”
Usher said debt in general has been reduced in the last decade, due to more money being spent by institutions to support students.
He said the Canadian Undergraduate Survey Consortium (CUSC) have researched these debt levels.
According to the CUSC, the average debt has decreased to roughly $21,541 in 2012 from $26,238 in 2005.
“You put that all together, and it’s a really significant declining debt load,” he said.
Concerning tuition costs, Usher said it isn’t increasing at the rate it was in the early 1990s. Tuition currently increases at the rate of inflation plus one or two per cent, he added.
Queen’s student assistance operating budget allocation increased from $17 million in 2000-01 to $29.4 million in 2011-12 according to the 2011-12 budget report.
AMS Academic Affairs Commissioner Allison Williams said the burden of debt can be difficult to assess as it involves many factors such as the amount students owe, the interest accumulated and debt as a function of earnings.
She said the current impact of student debt is what is most important to address.
“We can see that students are participating less in the economy as a result of their debt, and this points to the burden it has caused,” she told the Journal via email.
“The University sets aside a portion of new tuition revenues towards the Student Access Guarantee … [it] ensures students who have need in excess of OSAP have an alternative revenue stream,” Williams said.
She also said that debt can be analyzed differently, as Usher has compared the current debt to the debt faced by students in the 1990s.
“What cannot be disputed is that debt continues to have a marked impact on students long after they graduate from university,” Williams said.
Tags
Debt, Finance, student awards, student loans
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