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STUDENT DEBT AND ECONOMY
A letter from a student in one of Edmonton’s local alternative/arts newspapers made an important observation that all of us should take notice of (Vue Weekly, Issue 445, April29, 2004, http://www.vueweekly.com). Chris Boutet, a recent graduate from the University of Alberta, commented that, as the “proud owner of an as-yet-unpaid-for $20,000 English degree” he is very familiar with the latest Statistics Canada survey that cites student debt as rising more than 76 percent since the start of the 1990’s.
Chris considers himself one of the lucky ones, he had support from family, and came out at the bottom of the scale, borrowing “only” $20,000 over 2 1/2 years. He comments that most students owe far more than $25,000, since this is a figure based on the cheapest degree and comes nowhere near what engineering, science or medical degrees will be repaying. But where he really hits home is in his comment regarding the impact this huge collective student debt will start to have on the Canadian economy as a whole. He makes a very logical observation: if a significant portion of the disposable income of 40 percent of young people ends up going towards paying their student loan, how much will be left over to reinvest in Canada’s economy? A recent graduate facing a student loan payment of $300-$500 a month or more for the next ten years will not be rushing out to buy luxury items in a hurry – let alone essentials such as cars and homes. What will the impact be on our country’s economic growth?
Only time will tell, but as Boutet points out, “with all these shiny new poor kids wandering around, the shrewd investor might expect a new boom era in the non-perishable food production sector” with a lot of Kraft Dinner in their future.