Student Loan Debt: The Cost Of Higher Education

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Posted in Debt Help
Posted by J. Douglas Hoyes, CA, CPA, LIT, CIRP, CBV

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As the cost of higher education increases, so to does the amount of student loan debt for those graduating from university or college and entering the workforce. I have two teenage sons, one of whom is starting to plan for university, so the increasing costs of education are something that I, as a parent think about regularly.

To discuss this topic I invited my business partner and co-founder of Hoyes Michalos, Ted Michalos back to the show. We talk about the average student loan debtor, explain why females carrying student loan debt have more difficulty paying it off and Ted points out that student loan debt doesn't only delay big life events for graduates, but ultimately, it affects the overall economy as well.

The Average Student Loan Debtor

Ted and I agree that post secondary schools are primarily a business. Although education is one goal, they need to make a profit and one way to do so is through ancillary fees. Ted comments on this business-first approach stating that,

the part of this that really drives me crazy is that we know that more and more students are borrowing more and more to pay for their education, and I'm not sure that they're getting value for the money. I mean, when they get out, they've got this huge debt load.

So who is graduating with this huge debt load?

During our Joe Debtor study, we found that more than one in eight, or 13.4% of bankruptcy or consumer proposal filers have some kind of student loan debt, averaging around $14,000. Moreover, those who are filing insolvency with student debt are required to have been out of school for at least seven years under the Bankruptcy & Insolvency Act to qualify for student debt forgiveness. This means that our clients are not recent grads and that current students will be facing even higher student loan debt upon graduation.

Female Student Debtors

One trend that came out of our study was the prevalence of female student debtors.  60% of those who file a bankruptcy or consumer proposal with student debt are female and have 20% higher debt loads than their male counterparts; namely $15,000 vs. $12,000. Employment ratios between males and females are relatively equal, but females are found to have more periods of instability at work due to maternity leave, sick leave, family care leave or disability. This combination of higher debt payments and periods of unstable work make it difficult for female student debtors to service their debts. Ted explains that,

these female student debtors aren't incurring debt for luxury items or for things that the rest of us would find superfluous. They're doing it to survive.

Student Loan Debt Delays Big Life Events (& The Economy)

Those who file bankruptcy or a consumer proposal with the highest amount of student debt are between 30 and 39 years of age and have been out of school for more than seven years. As Ted points out,

that is the age where you're getting married, buying your first home, having your first kid, getting your first car. I mean, all of these firsts are supposed to be happening in your life and the student loans, I'm convinced, are delaying some of these decisions.

With the burden of having to pay back inflated student loans, along with other forms of debt including credit cards and payday loans, it's not uncommon for people to put off buying a home or a car and getting married and having kids because they simply can't afford to make it all work.

Not only are these life events delayed for those individuals trying to service their student loan debts, but they are also delayed for everyone. When younger generations are not buying homes, cars or other big ticket assets, society as a whole is affected and the delay ripples through the entire economy.

Should Parents Help To Pay Off Their Child's Student Loan Debt?

A topic up for debate is whether parents should help their children to pay off student loan debt. The main problem is that the 50+ crowd are facing their own debt issues. Ted explains that

the fastest growing segment of debtors - people incurring debt - are the 50 plus crowd. The folks that should be at the point in their lives when things are getting better, we're seeing them accumulating more and more debt relative to the other folks that file.

It's difficult to service your own debts, help your children to pay off debt, save for retirement, pay for regular expenses and help aging parents all at once. Our advice is to work toward getting out of debt first, before considering to help others (including children) out of their debt.

Read the full transcript below to get more information about:

  • The kinds of debt that student debtors are taking on to service their student loan debt.
  • Ted's advice for students and parents struggling to pay off student loan debt.
  • Ways to prepare for post secondary school to avoid taking on unmanageable debt.

Student Debt Relief Resources:

FULL TRANSCRIPT show #58 with Ted Michalos

student-loan-debt-transcriptDoug Hoyes: Today we're going to talk about the high cost of higher education and student loans. It seems that every week I read a story in the press about the high cost of college and university and it was an issue in the 2015 federal election campaign. Every time one of the leaders visited a college campus there were demonstrations about the plight of students. Of course, under the constitution, education's a provincial responsibility so I'm not sure there's a huge amount the Feds can do about it.

But I digress here, so, what's the big deal? Why is this an issue? I guess, one of the issues is that my perspective is a little out of date. I graduated from the University of Toronto in 1987, with a four year degree in commerce and economics. My recollection is that my tuition fees were something like $500 a term or around $1,000 a year. Now maybe I'm wrong, maybe it was a couple of thousand dollars a year. And obviously that didn’t include books and living costs. But it wasn’t a huge amount.

Now I went on the U of T website and apparently today the tuition fees for a basic arts and science program are just over $6,000 a year. And for a business and commerce program it's just over $14,500 per year. Plus you add in over $1,500 in ancillary fees, so my program today would cost over $16,000 a year. And of course, like I said that doesn’t include books or supplies or living costs.

So, okay, costs go up, right, what's the big deal? Well, I went to the Bank of Canada inflation calculator and something that cost $1,000 in 1987 would cost $1,845 today, if you just adjust for inflation. So, that's using an average of average inflation rate of 2.2%. So, over the last 28 years that's an increase of about 85%. So, obviously something is out of whack here. If inflation says my education should cost $1,850 per year, but it's actually something like $16,000, what's the deal?

So, to talk about it I've invited my Hoyes Michalos co-founder and business partner Ted Michalos back on the show. Ted, how are you doing today?

Ted Michalos: Just fine thanks, Doug.

Doug Hoyes: So okay Ted, you graduated from university in 1991 so you're timelines are similar to mine. Does it surprise you that university education costs so much today?

Ted Michalos: I hadn’t given it a lot of thought 'cause as you know, my children are fairly young so I've still got another decade before I have to start worrying about this. I recall that you've got a boy going to university next year so this is near and dear to your heart.

Doug Hoyes: Absolutely, well yes.  I've got two teenage sons who will be entering post secondary education sooner rather than later. So, yeah it is something I think about. You know, I guess when I look at the numbers I'm shocked that the ancillary fees are greater than the cost of what I was paying back in tuition in the day.

Ted Michalos: I think that's the key to this whole thing. I mean you and I have talked about this off air a number of times. And really post secondary education has become a business. So, they can charge whatever amount for tuition - and I'm sure that they're federal regulations and provincial regulations that say this is how much you're supposed to get from the students - but the ancillary fees, all the add-ons, the athletic fees, the student centre fee, the whatever you want to call it.

Doug Hoyes: The health centre fee.

Ted Michalos: That's right. I don’t know that they're regulated to the same extent and it's the university's opportunity to just pile them on. And what will the market bear? How much can we charge before it becomes a question of: well maybe I should go to that other school because their ancillary fees are lower?

Doug Hoyes: And you're right, post secondary education has become a business. It's not about educating the students; I mean obviously that's a part of it. But I get the impression it's more about how many can we push through the system. It's almost like a factory; let's see how many we can get in.

Ted Michalos: Well, my biggest complaint is that it's not vocational training. So, the universities are always quick to say that we're giving you an education; we're teaching you how to think. That doesn’t mean you're going to get a job. So, the part of this that really drives me crazy is that we know that more and more students are borrowing more and more to pay for their education, and I'm not sure that they're getting value for the money. I mean when they get out they've got this huge debt load.

Doug Hoyes: Because 50 years ago, I mean you and I weren’t in the workforce then, but I assume a high school education was kind of the standard, and frankly, maybe it was a grade 10 education that was a standard in order to get a job. Now I think it's become, well if you don’t have post secondary college education, university degree, you can't even get that entry level position. So, you're right it has kind of pushed it all up.

So, you hit on the whole issue of financing education and I guess that's really what it comes down to. Back in the day, when you and I went to university, you could get a summer job and earn enough to pay certainly for your tuition, and perhaps a considerable cost of your education, so you didn’t have to get into massive student debt. Today that's not the case. I mean crunch the numbers for me. So, let's say I can get a summer job making minimum wage or slightly higher. Maybe I get a job making $12 an hour.

Ted Michalos: Alright, so you're making $480 a week, gross if you work 40 hours. There's 16 weeks in the summer for a university student so you might make $6,500. And you'll have some tax taken off of that so let's say you're able to save $5,000 because mom and dad pay for all your expenses over the summer. Well, the example you gave earlier was that the tuition was going to be $6,500. So, I can't save enough in my summer break to pay for my tuition, let alone my ancillary fees, my books, my living expenses and I may even want a beer once in awhile.

Doug Hoyes: No, no university students would ever do that, I'm sure. But yeah you're right; the math just does not work. You cannot earn enough in a summer job to pay the full cost of your education. And obviously, yes, you can have a part-time job while you're in university; I worked throughout university too. But let's face it, you can't be working 40 hours a week and still carrying a full course load. It just doesn’t make sense.

So, let's take a look then at some of the trends that we have observed in our own world and in particular using student loans to finance education. So, of our clients who have filed either a consumer proposal or a bankruptcy, what can you tell us about the level of student loan, student debt that they're carrying?

Ted Michalos: Well, so the first thing is more than one out of eight. So, I think it's now 13.4% from our last study are filing bankruptcy or proposal with some sort of student loan. So, that's up half a percentage point from the last time we did the study, and it's been up every time we do the study which we do every two years.

Doug Hoyes: And just to stop you there, that doesn’t sound like a huge number but you're not going bankrupt because of your student loan because of the way the rules work.

Ted Michalos: Right and it's hiding a fact too, so we're talking averages here when we talk of one in eight of our clients. If you look at single moms, student loans are much more likely to be the cause of their personal insolvency and the debt level is going to be higher. So, it depends on how far you want to drill down into this.

Doug Hoyes: Well, so we're going to talk about the single mothers and the female debtors cause you're right, that's a big issue. Give me the big picture, then. So one in eight of people who end up filing a proposal or a bankruptcy have student debt. What kind of debt levels are we talking about?

Ted Michalos: So, the average debt level right now is just about $14,000. Keep in mind that you're excluded from including student loans in a bankruptcy or proposal unless you've been out of school for seven years. So, we're getting people filing with student debt, but it's not the people that graduated last year. So, the debt level of the current student is significantly higher and we're going to see that as a trend passing over time.

Doug Hoyes: So, these are people who in a lot of cases have been struggling to pay their student debt for perhaps seven years or more. They've still got $14,000 worth of debt, student loan debt, by the time they end up filing for a bankruptcy. So, are all these people unemployed? What's the issue?

Ted Michalos: No, the vast majority are working; it's something like 86% of them. But they're take home pay is lower than the average person that we see. And I think that makes sense because they got into the workforce later. I mean it's not clear now, because the expectation is you're going to have a degree, that the degree will earn you more money long-term. It's the card you need to play for access to the system, but the longer you've been working probably the higher your pay is going to be, if that makes any sense to people.

Doug Hoyes: Yeah it does and I see what you're saying, there's that kind of time lag, a bit of a delay there. So, the average person has $14,000 worth of student debt - of the people who have student debt when they end of filing bankruptcy - obviously that's not the only factor. If you've only got $14,000 worth of debt, you're probably not going to go bankrupt assuming like you said 86% of them are working, they've got jobs. There's obviously other factors that are coming into play here.

Ted Michalos: Well, if you want to really get me going, 25% of the students, of the folks that file with student loan debt, are using payday loans. Now 18% of the people who file normally have it. So, it's almost 50% of the student loan carriers are using payday loans. And these are the worst form of debt that you can possibly imagine.

Doug Hoyes: Yeah and I'll put links in the show notes 'cause you've had many rants on payday loans. We talked about them again on the first show of the season back in September as well, as well as last year. What kind of dollars in payday loans are we talking about, of the people who also have student loans?

Ted Michalos: So, the average person that's carrying, there's about $2,500 worth of payday loan debt. And just to put this in perspective, we were just talking about what the student might make in their summer job: $400 to $480 a week over the summer. Well, so over a four week period they might bring home $1,600, their student loan, their payday loan debt is $2,500. I mean it's just impossible to service.

Doug Hoyes: The numbers are huge and obviously we're kind of comparing apples and oranges here. 'Cause obviously we're talking about people who are now not students anymore, they're in the workforce. And so, other than the student loans I assume they're also carrying things like credit card debt.

Ted Michalos: And they've got about $12,000 worth of credit card debt. So, we just - the average student profile, if you want to add those up quickly, $29,000 to $30,000, the student loans make up about 40% of the total. Credit cards are another 40% and then payday loans are the last chunk of it.

Doug Hoyes: And they could potentially have other debts as well, taxes or whatever. So, I guess you kind of alluded to this earlier then, the trouble with this is I'm kind of building my life, right? I'm getting to the point where I'm out of school, I'm now just building a family. Give me a sense in terms of the age of the people we're talking about, what's the profile of this person who's burdened with student debt look like?

Ted Michalos: Well, remember what I said earlier, you've got to have been out of school for seven years before you can include a student loan in a bankruptcy or proposal. So, the average age of these people is somewhere in the 30 to 39 years old. They've got the highest percentage of student debt.

And that's the age where you're getting married, buying your first home, having your first kid, getting your first car. I mean all of these firsts are supposed to be happening at this point in your life and the student loans, I'm convinced, are delaying some of these decisions. You've got to service your student loan debt; you can't afford to be saving money for that first mortgage. You can't afford to be getting the car, you've got to seriously consider whether you can afford to have a kid. Although I found if you give too much thought to having a kid you might never have them. But that's a different show and a different conversation.

Doug Hoyes: And I hear what you're saying, this isn’t just a theoretical argument, it's not like oh well those kids today they should work harder and make more money. The implication of not being able to - or coming out of school with debt is that everything then gets delayed.

Ted Michalos: And it's not just delayed for them, it's delayed for all of us. I mean one of the chief drivers of our economy are new home acquisitions; people building and moving into new homes. It's buying all these big capital ticket items you buy when you're first setting up a house. Well, if you have to delay that for five to ten years 'cause you're dealing with your student loans, that means George who works at the plant who puts together refrigerators isn’t building a refrigerator for you for the next five to ten years and so on and so on.

Doug Hoyes: It does ripple through the entire economy, it hurts all of us. Now you had alluded earlier to female debtors. So, I'm sitting here thinking, well what's the difference, males, females, they all get to go to school. If you look at university attendance I think it's pretty well evenly split between males and females. But you're telling me there's a difference. What's the difference, why, what's the scoop on that?

Ted Michalos: Yeah well let's start with some numbers 'cause we're numbers guys; 60% of the people that file with student loan debt are female. So, it's not a 50/50 split, it's a two to one split women over men. The female student loan carriers have got 20% higher debt or more debt than the males. So, the average male's got $12,000, yeah about $12,500; the average student - female student - about $15,000. That may not sound like a lot, but that extra $2,500 makes a significant difference to your monthly payments. And worse than that, the total amount of debt when a student female loan debtor files, the student loans are about a third of the total, with the men it's about 25%.

Doug Hoyes: So, and that is significant. If my student loan payment is going to be $100 a month or something 'cause it's on one of these long repayment terms, an extra $2,000 or $3,000 plus interest, really delays things in terms of getting things paid back. So, what's the problem then? Why is it that student loans are more of a problem for women than men? What are some of the issues that they're faced with?

Ted Michalos: What we found is that it's not a question of employment. So, they're equal percentages of women and men with student loans that are filing bankruptcies or proposals that are employed. The issue is that female students are experiencing more unstable income. So, they're periods of unemployment for them or perhaps a maternity leave or disability leave or perhaps they're taking care of a family member that's not doing well. There are lots of reasons that are all womens' issues and it affects them at the bottom line.

Doug Hoyes: And it's not particularly fair but you're right. That's the way it is. It's much more likely that a female is going to end up taking care of a sick parent for example. Or obviously having a baby (that's pretty much a female thing from what I understand), they're the ones who are going to be going on maternity leave. And sure males can go on paternity leave as well, but it's this interruption in employment that then makes it that much more difficult to pay back the student loans and just delays everything from there. Is that essentially what it is?

Ted Michalos: Fall back to the comment we made five minutes ago where if you're in school you're delaying being out in the workforce and making money, and so when the female student graduates, she's got her employment interrupted, it also delays her ability to make money. It's pretty straight forward.

Doug Hoyes: It all flows through.

Ted Michalos: Without sounding like somebody on the left, the biggest single issue might be single parents; 37% of the female student debtors are single parents looking after one or more children. It's 30% for all the people - all the women that file with us, and only 18% of all debtors.

Doug Hoyes: Yeah, so just to restate that, 37% of people with student debt are single parents, as compared to 30% of all women who get into financial trouble and only 18% of all debtors. So, it skews very heavily that single females are going to have student debt.

Ted Michalos: That's right.

Doug Hoyes: And that again leads to what you just said, everything else flows from that, then.

Ted Michalos: That's right. And quite frankly that's why they end up falling back on payday loans and credit cards. It's all these different things to get access to money, just so they can survive. These female student debtors aren’t incurring debt for luxury items or for things that the rest of us would fine superfluous. They're doing it to survive.

Doug Hoyes: And you talked about how this delays everything going forward, what about, I mean do you have anything on numbers like things like home ownership? 'Cause you made that point and that makes perfect sense to me, if that's delayed, then that's not just something affecting the individual, that's affecting the entire economy. What kind of numbers do we have in that case?

Ted Michalos: We've been doing these studies for quite a while now. And previously, the home ownership percentage was about one in four. And so, one out of every four people that filed bankruptcy or proposal with us - it was one in three, now it's one in four, now I'm confusing the issue. So, it means a third fewer people are able to access the home market. And we've got historical low interest rates right now; it should be going the other way. It doesn’t make sense that fewer and fewer people are able to own homes.

Doug Hoyes: But obviously lower interest rates also make home prices higher and that kind of flows everything - everything flows through it, too. So okay, people are listening to this now and I know we have a number of older listeners, people even older than you and I, who went to school many years ago, their kids are grown, whatever. And they're saying look this is not a big deal, why don’t the parents step up then. If you want your kids to go to university then you should step up.

I mean there's things like RESP's, you can start contributing when your kid is born, so by the time they get to university there should be lots of money put aside there. And if you weren’t able to save well you can still be contributing, you can go out and borrow if you're an older person now and finance your kids or your grandchildren's education. What's the problem with that?

Ted Michalos: Well, the real issue is we're seeing it now, they call themselves the sandwich generation. The folks that are in their 40's, 50,s 60's, well let's say 50's, 60's, that have got children doing post secondary and they're trying to help them out. And they've got parents going into institutions, or require some sort of care or assistance. And they're doing exactly what they said. They can't fund it out of their income and so they're borrowing, they're refinancing their house, they're cashing out retirement savings or they're running out credit card or other debt. The fastest growing segment of debtors, people incurring debt, are the 50 plus crowd. The folks that should be at the point in their lives when things are getting better, we're seeing them accumulating more and more debt, relative to the other folks that file.

Doug Hoyes: And so, it's not as simple as saying okay well, you're 55 years old, help your kids out. Those are the people who are also in financial trouble.

Ted Michalos: That's exactly right, 'cause you can't be helping your kids and your parents and looking after your own retirement which is coming 10 years from now. If you haven’t started saving for your retirement by now, you're going to be in trouble. That's another show.

Doug Hoyes: And we have certainly talked about seniors issues on this show as well. So, to wrap up this segment, really what we're saying is, it is a problem; student debt is continuing to grow 'cause the cost of education continues to grow. There's no other way to do it in a lot of cases other than to finance it through debt. And it's not just a student issue; it affects the entire economy because it delays choices. And it's not something that parents can just write a cheque for because they've got the same kind of financial issues as well.

Ted Michalos: What we have to decide is how are we going to educate and train our population? So, is it something we're all going to pay for or are we going to continue to pass the cost of this onto the individuals that do it. And it's a balancing act. But harp back to this, schools have become a business. The fact that ancillary fees are higher than tuition fees tells you that the universities are looking at ways to pay for things other than just providing the education. And it's something we've got to deal with, sooner better than later.

Doug Hoyes: And unfortunately, we don’t have the answer to it but you're right, ancillary fees today are higher than what tuition was back in the day when we went. And it's something we're all going to have to put our heads together and find a solution on. Great, thanks very much for joining me today, Ted.

Doug Hoyes: It's time for the Let's Get Started segment here on Debt Free in 30. My guest today is Ted Michalos and we've been talking about the costs of higher education and in particular the fact that it ends up being financed to a considerable extent through student debt, student loans. And we talked about why that's a problem. It's a problem because that delays life for a lot of people. I end up not getting married, not buying a home, not having kids. It has a significant effect on the entire economy. And unfortunately, seniors can't just walk in and pick up the slack for their kids 'cause they're also in debt.

So Ted, let's talk about then some practical recommendations to help alleviate this. So, if you are a student or if you are a parent approaching post secondary education, what are some of the things that you think they should be thinking about?

Ted Michalos: The sooner you begin to put a financial plan together for school, the better. The compounding power of interest is a wonderful thing. If you can afford to set up an RESP, Registered Education Saving Plan for your kid, you'll get matching funds from the government, the income will be protected from a tax perspective, but you have to start early. If you wait to start one of these things when your kid is 14 and you got four years to save the money for school, it's not going to happen. Better yet, start it when they're four months old if you're able to. I know that's a challenge because your income is lowest at that point and you've got all these other things you're trying to do, but the earlier you start to save for your kid's post secondary education, the better off you'll be.

Doug Hoyes: And with an RESP as you say it's - the income is sheltered, you're not paying taxes on it every year and the government does kick in a certain amount each year based on what you put in, so you're in effect getting the government to chip in a bit more. And we have talked about RESP's in the show in the past; I'll put a link in the show notes to that show over at hoyes.com.

So, being proactive and you're right, it's not always as easy as great let's put in money because if I'm 26 years old, I'm still paying off my own student loans and I've just started a family, I probably don’t have the money to be putting it in, but I guess still having a plan makes sense. I guess I better get my own debts dealt with as soon as possible, then.

Ted Michalos: Yeah and that's probably the second bit of advice, you've got to avoid incurring other types of debt. So, student loans in and of themselves, you had a goal, you got your education, you did it on purpose. Now you've got to learn to live in whatever means you are earning. So, avoid credit card debt, the lines of credit, stay away from payday loans.

Doug Hoyes: You're not a big fan of payday loans [laughter].

Ted Michalos: The more debt that you're carrying, the more difficult it's going to be to plan and prepare for that savings that we were just talking about in the first portion.

Doug Hoyes: And so, let's say I've graduated, I'm a student, I'm a former student now and I have a student loan or a student loan of credit, something like that, what's the thought process there for me, then?

Ted Michalos: This is probably the hardest decision that you've got to make but you've got to make paying down that debt a priority. Don’t just pay the interest on the debt, pay towards the principal. And that may mean that some of the things you thought you were going to get when you graduated school, the new car, the nicer apartment, the nicer furniture, maybe you ought to put those off for a year or two or three to clean this stuff up. It'll pay dividends for you in the future but it's a tough decision to make today.

Doug Hoyes: And student debt is different than regular debt because the payment terms are a little more flexible. You don’t have to have it paid off in two years - it's not like Revenue Canada debt where you've got to pay it off or else they're going to lower the hammer on you. In a lot of cases you've got many years to pay it off, there's interest forgiveness periods, lower interest. What you're saying is even if the interest is relatively reasonable, hammer away at it, get it cleaned up, be done with it.

Ted Michalos: And anytime you just make minimum payments, you're carrying on a debt longer than it should. You throw as much money at this thing as you can.

Doug Hoyes: And so, how do I go about doing that? Or I guess the better question is, what if I can't?

Ted Michalos: Well, I mean if you can't you've got to talk to somebody. I mean there are rules and regulations regarding student debts and there are some restrictions, but frankly, if student loans are a problem, they're probably impacting your finances across the board. And so, you need to speak to somebody who can help you prepare a budget, to try and live within your means, or to address ways that you can deal with the debt that you have.

Doug Hoyes: And as we've alluded to earlier, the rules for student loans and we're talking specifically about government guaranteed student loans, are different if you go bankrupt or file a proposal than other debts. And the main difference is what?

Ted Michalos: Well, so the restriction is you've got to have been out of school for seven years now before you can include a student loan, so, a government supported loan in either a bankruptcy or proposal, which if you think about it is somewhat ludicrous. I could go to a big bank tomorrow, take out $50,000 and open a new business and go broke in a year. And I retain all the knowledge and skills that I learned in that year of going under; whereas, if I go to school for four years I have to wait for seven before I can do the same thing. It doesn’t make any sense to me.

Doug Hoyes: It kind of reinforces your point though that the education business is a business and they've managed to lobby to get special treatment for their loans and as a result you can't just get rid of them in a bankruptcy. And we're not saying that we advocate going to school and the next day going bankrupt to get rid of them. I think we're advocating a more holistic approach where all stakeholders have to look at how post-secondary education is funded. And whether it makes sense for a lot of students to actually be going to university programs, when perhaps a college or something more vocational would make more sense. So, in summary then, what you're saying is be proactive, have a plan and that's the best way to deal with the debt.

Ted Michalos: That's right; your education is going to be one of the largest purchases you make in your life. You've got to take a much more organized disciplined approach to it.

Doug Hoyes: Great, that's how we'll end it. That was the Let's Get Started segment; we'll be here to wrap it up right here on Debt Free in 30.

Doug Hoyes: Welcome back, it's time for the 30 second recap of what we discussed today. On today's show Ted Michalos and I talked about the high cost of post secondary education and we discussed the significant burden caused by student loans, both on former students specifically and society in general. That's the 30 second recap of what we discussed today.

So, what's my take on post secondary education? As I've said on this show before, I believe it's essential that you do a lot of research and number crunching before you sign on the dotted line for a big student loan. The first and most important question is, do I really need to go to college or university? I know that we're all conditioned to believe that a university degree is essential to getting a good job, but is it? In some cases, yes, you can't be a doctor or other professional without a university education, so if you're goal is to enter a profession that requires post-secondary education, fine.

However, if you aren’t really sure what you want to do with your life, which is quite common among high school students, getting a big student loan should not be at the top of your list of things to do. Working for a year or two may be a better option and you may find out that learning a trade or just getting some work experience is a better option than getting a big student loan. Every situation is different, so crunch the numbers and make an informed decision.