Student Loans: How big a problem is it?
There is over $13 billion in outstanding federal student loans and a further $5 billion in outstanding provincial student loans. Thousands of young Canadians receive student loans and many of those students begin a debt cycle that becomes a millstone around their necks.
In BC, more than 60,000 students will apply for student loans this year while BC student unemployment reaches 21%. The cost to the province of unpaid student loans is growing at 30% a year. Seems like a crisis worth solving, doesn’t it?
A group of BC-based MBA students are trying to address this problem. Their company, Sustainable Debt Solutions Inc., is developing a pilot program that teaches students how to manage their money – everything from knowing how to live within your means, tracking your income and expenses, and how to save. The program will teach students how to develop a plan to pay back the loans within a reasonable amount of time. The goal is to increase repayment rates of student loans overall.
Why would they be talking to us? We both agreed that students that are applying for students loans could benefit from financial literacy training. BCSC has developed a comprehensive program called The City, to teach financial life skills to BC high school students. University students could benefit from taking this course, in particular, the credit and debt module, in order to help them figure out the best way to anage their way through post secondary education.
This fall, BCSC will launch its revised and updated version of The City. It believes that the resource should be used not only to educate high schools students, but could be used in continuing education courses in community colleges and for helping students manage their student loan debt.
To read previous posts on this and other topics, click on Let’s talk about investing.