Keep your wallet handy. Here’s what post-secondary education REALLY costs
Toronto, ON – September 4, 2012: A new research study from Canada’s independent personal finance comparison site RATESDOTCA paints a bleak picture of the real price of post-secondary education - a total cost of $78,817 for students not living at home. While conventional wisdom indicates a degree or diploma are necessary for future career success, rising costs and compound interest are major hurdles to future financial security for university and college graduates.
The study found that the average university student graduates with close to $28,000 in debt, and it takes an average of 14 years to pay it off, based on an average starting salary of $39,523. Even if students live at home while in school, an undergraduate degree will set them back over $35,000.
“I think everyone was surprised by the results,” said Kelvin Mangaroo, President of RATESDOTCA. “On the surface, we already knew that the hard costs were on the rise, but when we delved a bit deeper and looked at accrued interest on student debt and on the timelines to pay it off, the actual final tally was quite jarring.”
Today’s average post-graduation debt levels of $28,000 stand in sharp contrast to the government student debt average of $19,500 in the year 2000, according to Stats Canada.
The independent study compared tuition rates for various areas of study across Canadian universities and colleges, as well as books, supplies, and the cost of living in different cities. The study also accounted for accrued debt, projected inflation and interest charges.
The Results: University
Total Cost of a four-year university degree if Living at Home:
- Average Canadian University Tuition Cost (4 years): $21,464
- Total Expenses (Books, Transportation, Entertainment, etc): $11,520
- Interest on Average University Graduate Debt: $2451*
- Total Cost: $35,435
Total Cost of a four-year university degree if Not Living at Home:
- Average Canadian University Tuition Cost (4 years): $21,464
- Total Expenses (Books, Transportation, Entertainment, Housing, Meal Plan, etc): $45,520
- Interest on Average University Graduate Debt: $11,833*
- Total Cost: $78,817
Results: College
- Total cost of a two-year college diploma if Living at Home:
- Average Canadian College Tuition Cost (2 years): $5356
- Total Expenses (Books, Transportation, Entertainment, etc): $5,760
- Interest on Average College Graduate Debt: $244*
- Total Cost: $11,360
The total cost of a two-year college diploma if Not Living at Home:
- Average Canadian College Tuition Cost (2 years): $5356
- Total Expenses (Books, Transportation, Entertainment, Housing, Meal Plan, etc): $22,760
- Interest on Average College Graduate Debt: $1,991*
- Total Cost: $30,107
Time for Average University Student to pay off Student Debt: 14 years*
Total Cost of University Student Debt (Including Interest): $33,887*
Time for Average College Student to pay off Student Debt: Approximately 6 years*
Total Cost of College Student Debt (Including Interest): $11,784*
*According to the Canadian University Survey Consortium, the average university student debt for a four-year degree is $27,747 at graduation; the average college student debt is $10,889 at graduation, based on a two-year diploma.
Interest calculations were based on the assumptions of 5% gross annual income being put toward debt, with 3% annual interest rate, compounded annually.
About RATESDOTCA
RATESDOTCA is the largest impartial rate comparison service for personal finance products in Canada. Founded in May of 2008, their easy-to-use comparison engine provides much-needed transparency to the Canadian financial market and allows visitors to quickly find the best mortgage rates. Their new Mortgage Tool App for the iPhone also allows house hunters to compare mortgage rates using their smartphones. Over 2 million Canadians have turned to RATESDOTCA to save money on their mortgage, insurance, credit cards and GICs.
