Education is one of those things that, theoretically, should be considered to be “good” debt. But, facing today’s interest rates placed on these loans (5.5% is the current average rate until the rates increase,) and the fact that tuition is growing well above the pace of inflation (5% and 2% respectively,) it can sometimes be difficult to see just how “well worth it” that education is. Especially with the Canadian Federation of Students pegging the average debt load graduates hit with the workforce with at $27.000.
So just how worthwhile of an investment is it to pay all that money for your education?
“I still think education is the great enabler,” says Craig Alexander of TD Bank. “You may be at a disadvantage compared to other generations, but it’s still a higher rate of return than without any post-secondary education.”
But, he says, you must get an education that will actually pay off in the end, and land you a job once you’ve finished college or university. He says that not finding a job right after graduation can hold up your career and stall your earnings for the remainder of your time in the workforce.
“If you experience a bout of unemployment early in your career, it does back up your wage growth over time,” he says. He goes on to say that those who do experience that unemployment, the difference between your wages and graduates who have been fully employed since graduation can reach as high as 9 per cent over just one or two decades.
This is why, says Carleton University professor Saul Schwartz, it’s so important for students to very carefully decide what they want to do before entering a program, and doing their best to make sure there’s a job out there for them when they graduate.
“We still have a mismatch between the education that people are getting and the jobs that are available,” he says. “[We still see students] borrowing $30,000 for a film studies degree with no job in sight. But there is an adjustment going on.”
But students may be starting to realize just how important it is to line up today’s offered courses with tomorrow’s potential job prospects. Swhartz says that Carleton has already closed more than one humanities course because there was simply no demand for it – most likely based on the fact that there are no real jobs available right now for it.
So is the money you invest in an education worth the return that you’ll see on it? With virtually no job growth over the past decade for those without post-secondary degrees and diplomas, yes it is. But, just like any other type of investment, it depends on where you put your money.