Yahoo Finance Students regret taking on debt while in school: poll
Financial regret affects even the most financially savvy savers, and when debt burdens you through decades of your life, it becomes akin to the houseguest that doesn’t quite know when to leave no matter how many hints you drop.
According to a recent poll by BDO Canada, two-thirds of Canadian graduates under the age of 40 say they graduated with student debt, owing just over $22,000. The poll also found that 62 per cent of graduates say they are still paying off those debts and expect to take another five years on average to become debt free. The top student debt regrets that graduates cited were not living frugally nor having a budget and not working more hours at a side job during school.
Lingering student debt can seep into many aspects of life and delay life goals. The poll found that three-quarters of graduates regret taking on debt at all.
“We’ve seen that student debt can delay some of life’s milestones, like getting married, buying a home or saving for retirement, and with interest rates rising again, those student debts could take even longer to pay off,” says Doug Jones, President of BDO Canada Limited.
Education is an investment, and while taking on some debt might seem inevitable, there are ways for students to mitigate the total debt burden. Ganan Prabaharan, a third-year engineering co-op student at the University of Waterloo says he maintains a budget and keeps his spending in check while studying.
“Once I started my first co-op term, I was paying for everything myself and I started budgeting,” says Prabaharan. “For instance, I’d have $8,000 for tuition, $2,000 for housing and I’d be left with $1,000 to $2,000 for everything else. I did a mental check to make sure I wasn’t spending too much.”
Prabaharan was introduced to budgeting apps early on and uses them to create a budget, resulting in the discovery of many spending patterns he wasn’t previously aware of.
“Right now, I try to stick with credit because my app tracks it,” he adds. “When I spend cash, it’s harder to track.”
It’s not too late
Monitoring your spending and working during school are both great ways to lessen your debt burden, but if you’ve already graduated with debt, it’s not too late to accelerate your repayment schedule and move towards meeting your financial goals. It all comes down to two principals: make more and spend less.
Working a second job – or ‘side hustle’ – for one to two years post graduation can do wonders to your debt load and shave off years of your repayment schedule. There are plenty of options out there for those willing to work including restaurant serving, freelance writing, retail sales and Uber driving, just to name a few.
When it comes to spending less, setting a budget is key. It will enable you to find patterns in your spending and adjust your habits accordingly. With all of the budgeting apps out there, there’s really no reason not to budget.
Many graduates are hesitant to adjust their lifestyles in the short-term, but doing things like meal planning, cutting cable or living with a roommate to save on rent costs can go a long way in eliminating debt quickly.
Debt doesn’t have to be scary, or even a regret. But it does have to be addressed, and the quicker you do it, the more time you have to spend on the things that matter and save for the future.
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