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How to afford university? “Buy now, pay later”

Canada should adopt innovative program that sees students pay for post-secondary education after they graduate
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Gord Woodward, July 8, 2013 4:31:10 PM

You don’t need a university degree (and probably couldn’t afford one, even if you did) to realize that rising post-secondary education costs are a huge problem for parents. Oh, and students may have a bit of an issue there too.

Our kids are racking up the bills as they drink party hook up hit the books on campus. So much so that when they finally sober up get serious graduate, they’re about $28,000 in the hole on average – and will be paying that off for the next 14 or so years.

So why is student debt bad for us parents, when it’s our grown children who are responsible for it?

Well, duh: because the more they owe, the longer they will live with us! C’mon, people, this isn’t rocket science (a degree, come to think of it, we wish our kids would get rather than majoring in philosophy or fine arts. Though those fields do have some value, we admit, in that they do equip students to serve society … burgers and fries and other fast food entrees).

Perhaps fearing life with 30-year-olds in their basements, legislators in Oregon are contemplating a unique way of managing post-secondary costs. In the grand academic tradition of plagiarizing adapting an idea (this one from Australia), the politicos are suggesting that students pay no money up front for university, instead tithing three per cent of their employment income to the state for 20 years after they graduate.

Hawking university like it was furniture (“No money down, no payments for four years!!”) may sound unseemly, but the Pay it Forward, Pay it Back proposal has a lot of merit and should be considered on this side of the border. Payments would exceed the amount owed, so each person would end up contributing a bit of extra cash that would then be used to finance the next generation of students.

The drawbacks? Starting such a program would require billions of tax dollars. And students going into high-paying fields like the medical profession may balk at participating, give how much it could cost them (three per cent of $200,000 a year adds up).

But those wrinkles can be ironed out in a Canadian version. The program would become self sufficient. Collection of payment could be done along with income tax. And caps could be set on repayment amounts, to protect high income earners.

As an additional benefit, parents could close the Bank of Mom/Dad. The full responsibility for financing post-secondary education would be shifted to where it belongs — onto the people who most benefit from a university degree.

That very prospect is likely to generate a heated debate between generations, especially in Quebec, where students translate the word “tuition” to mean “free or we riot.” People in their 20s (students) tend to lean to a New Democrat view (“the state should fund all of our needs”) whereas people in their 40s (parents) have a more Liberal perspective (“the state should provide for those who need it most” and those in their 60s (grandparents) become Conservative (“Get the hell off my lawn”).

Regardless of philosophy, though, we can all agree that university degrees shouldn’t cost our kids their financial futures. Mountains of student debt aren’t healthy for society. Reforms such as Pay it Forward, Pay it Back are necessary.

The sooner we get started, the sooner we can convert the basement into a Man Cave.

 

Image credit: Middle College

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Gord Woodward

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