|Paying for University
The Canada eZine - Education
Like many university students, Justin Tetreault works full-time in the summer and part-time during the academic year to make ends meet. Unlike most, however, he's been doing so since Grade 6, when he started his first paper route, saving the money so he could pay his own way through university. Now in his fourth year at Algoma University in Sault Ste. Marie, Ont., Tetreault, who is majoring in law, justice and political science, has paid all his own educational expenses, including tuition and books, without help from his parents and without student loans. "I always knew I wanted to be a lawyer," says Tetreault, 21, who will graduate debt-free and hopes to proceed immediately to law school. "My parents encouraged me, they really wanted me to go to university, but they think it's better for me to pay for it myself."
The Tetreaults aren't rich, but they are middle-class: Justin's mother works at a call centre, his father at a car dealership. However, though they allow their son to live at home rent-free while he attends Algoma, "our philosophy is that he should pay for university himself because he will get more satisfaction from it and value it more if he does," explains Suzanne Tetreault. "It's a good lesson for kids to work hard for what they want. I don't think children should be given a free ride."
It's hard to argue with the results: while working 16 hours a week at a gas station, Justin maintains an average of 86 per cent, holds two scholarships based on academic performance, served as vice-president of the student council last year, remains active in campus politics -- and finds time to do walkathons for the homeless. "If my parents offered me money I'd certainly take it," he says, "but I'm proud that I've paid my own way. It's been a valuable lesson for me to have to work for so long and to assume ownership for my education."
Universities are busier than ever before: in 2005, there were more than 806,000 full-time students in Canada, an increase of almost 150,000 over the previous four years, as well as 273,000 part-timers. And the majority of Canadian families do contribute toward their children's post-secondary education, whether in the form of outright grants or long-term loans. In 2006, 56 per cent of Canadian undergraduates received financial help from their families -- on average, $6,400 -- according to the Canadian Undergraduate Survey Consortium's study of more than 10,000 students graduating from 25 Canadian universities. In fact, family contributions are "the single most common source of educational funding," though three-quarters of all students rely on a combination of funding sources, including government student loans, scholarships, their own savings, and bank loans.
One of the most compelling reasons for parents to help out is simply that it increases the likelihood their kids will go to college or university. Students who don't receive financial support from their parents may delay attendance in order to earn money; research shows that every month spent out of school decreases the chances of ever enrolling.
Nevertheless, as tuition and residence bills come due, some parents believe the best thing they can do for their children is not pay them, despite the fact that the average cost of a year at a Canadian university, including books, fees, room and board and other living expenses, is close to $13,000. Forcing children to fend for themselves, some parents believe, builds character and increases the likelihood they will succeed at university and in the workplace. "There are a lot of stories about kids who waste mom and dad's money and party all year. And there are too many kids out there who seem to think, way into adulthood, that their parents owe them things," says Caroline MacLean, who works at a radio station in Owen Sound, Ont. The MacLeans loan their 20-year-old daughter Christine some money to attend McMaster, but fully expect to be repaid. "It's not that we don't want to help her, but that children need to learn fiscal responsibility."
Others believe, just as firmly, that parents who can afford to pay, but don't, have a thing or two to learn about responsibility themselves. "What kind of parent would not pay, even if they had to make sacrifices? What kind of person does not want the best for their child?" spluttered one medical aesthetician in Toronto when asked who should foot the bill. "I pay for everything for my sons. They are both studying in the U.S., and they are good boys who bring home A's. And by the way, they will be taking care of me when I am old!"
Many parents view paying for university as an extension of paying for piano lessons or private school: a parental responsibility, rather than an optional frill. "There are certain obligations you take on when you become a parent, and I don't think those obligations stop at the age of 18," says Jerry Dykopf, a partner at Kraftberger LLP, an accounting firm in Toronto. "Certainly, there are better ways to teach your children self-reliance than by not paying for them to go to university." Dykopf, who was born in Poland, knows something about self-reliance, having put himself through university because "I came to Canada with $80 in my pocket and my parents could not afford to help me." His daughters, 21 and 18, have it easier: their parents are paying for everything remotely school-related, from tuition to books to parking. The Dykopfs view the $80,000 or so they will spend on their children's post-secondary education as "an investment in the future."
The future, it turns out, costs about the same as it did a decade ago: the real cost of university tuition has remained remarkably stable, according to a new study by the Educational Policy Institute in Toronto. Every year, Statistics Canada releases tuition figures higher than the previous year's, "but once you adjust for inflation and the massive increase in tax credits for education, which effectively act as an after-the-fact rebate on tuition, it turns out that the real increase in tuition has been less than $600 over the past 10 years," says Alex Usher, author of the report "Beyond the Sticker: A Closer Look at Canadian University Tuition Fees." "In fact, tuition is, in real terms, lower now than it was in the 1999-2000 school year."
This is good news for large families, where parents must weigh the need to save for retirement against educational costs. Colleen and Phil Madonia, who own a printing business in Markham, Ont., wanted all four of their children to get degrees and began saving for it as soon as they could. "They've all done well and I think in part it's because we're paying: they respect the fact that our money's on the line and they'd better not waste it," says Colleen, whose eldest son graduated from Queen's three years ago with a degree in engineering. Currently, the Madonias have a daughter at Queen's and a son at Waterloo, "and then some breathing space, when maybe we can save for retirement, because our youngest is 8."
Other parents foot their kids' educational bills because they would rather tighten their own belts than see their children burdened with large debts. "The idea that you have to repay a loan after you finish university and are in the workforce is such a hypothetical, way-in-the-distance idea when you're 18. I remember getting my student loan money and thinking, 'Oh, they'll forget all about this,' and running out and buying boots with it. I accumulated debts just by being young and naive," says one health care researcher. Now that her son is heading to the University of Toronto, she and her husband have decided to pay for everything, so he can graduate debt-free. "The bank is very eager to give him a line of credit, but my fear as a parent is that he'd be like me, and run out and buy a car with the money," she says. "And I say that even though he's very responsible and hard-working and has always had jobs."
University administrators agree that even seemingly sensible students may, in fact, be financially illiterate. "A lot of these kids have never written a cheque, they've never had to do a budget, they have no idea what anything costs, and suddenly they may have a whole lot of money in a bank account that's intended to last six or eight months," says Deborah Robinson, associate registrar at the University of British Columbia, where eight financial advisers counsel individual students and conduct workshops on such topics as why financing your education on credit cards is a really, really bad idea. Three-quarters of Canadian students have credit cards, because "so much shopping is done on the Internet now. And some use credit cards to pay tuition and fees in order to get air miles," says Robinson. "But many don't understand compound interest. When we show them a calculation of how much you pay in the end for, say, a computer, when you just pay your minimum card balance every month and the interest continues to mo
unt, they usually gasp. They just don't get it."
Financial literacy, say parents like the Tetreaults and MacLeans, is not a problem for their children, who have, of necessity, mastered the art of saving, budgeting and spending wisely. Early on, Justin Tetreault decided to make small daily sacrifices -- brown bagging his lunch, cheap seats at the baseball game -- rather than accept a student loan. There were big sacrifices, too: turning down acceptances at the University of Toronto and the University of Windsor because, he reasoned, by attending Algoma he could save thousands of dollars by living at home.
Many students who have made these kinds of trade-offs agree with their parents: it's for their own good. "I am more responsible and have a better sense of budgeting than I would have if I had not been encouraged to manage my own finances," says Coralie D'Souza, 21, who is in her final year at the University of Toronto. Her parents pay her tuition but she is responsible for everything else, and believes it has given her a significant advantage both academically and in the workplace, not least because "I have, in a sense, been forced to learn how to manage my time effectively." To put it mildly. Last year, D'Souza worked 21 hours a week at two different jobs, one at City Hall and one in an X-ray clinic, logged 10 hours a week volunteering at the university's sustainability office, and put in an untold number of hours as an elected student governor.
Few students, however, have her self-discipline. And working more than 10 hours a week, say Usher and Robinson, tends to have a negative impact on marks or makes it impossible to participate fully in campus life. Many students whose parents opt not to help have no other choice, however, particularly if their families' assets are large enough that they don't qualify for student aid. "Government student loans are there for the neediest students," says Robinson. "The philosophy behind them is, if parents value education, it's a sacrifice. It's not that you get to keep a boat and a house and go on vacation, it's that you as parents have a responsibility to pay for education. At UBC, family assets are what we look at first when considering loan applications."
Some parents, however, simply don't consider university-age children to be dependents. "My daughter is 20 years old, for goodness sake, and no longer living at home -- why should we be considered financially responsible?" wonders Caroline MacLean, who, at 20, was married, working and owned a home. Christine, now in her third year at McMaster, qualifies for a loan of just $132 from the Ontario Student Assistance Plan, so she'll be using her savings from a summer work/study job, working part-time during the school year, and borrowing from her parents to come up with the $15,000 she'll need this year.
Debt is not necessarily bad for kids, says Phil Clavel, author of I Am Not an ATM Machine: How Parents Can Regain Control of Their Lives While Still Loving Their Children, to be published this month. "You develop responsibility, better savings habits, and a sense of seriousness about moving on in the world. Some parents can't think clearly about these issues because they are motivated by guilt. Sometimes, wanting the best for your child means putting the brakes on and saying, 'No, I'm not going to pay for that,' or loaning your children the money rather than giving it to them outright."
"I'd rather borrow from my parents than from the bank, because they won't charge me interest," says Christine MacLean, an A student who believes that working and assuming debt has made her more serious about her studies and given her an edge in the job market. But, she says, "To be honest, it is hard when reading week comes along and everyone else is going to Cuba and shopping in New York, and I have to save my money. I'm not angry at my parents, but there are times when I feel sorry for myself."
Still, many self-supporting students point to the existence of a maturity gap with classmates who blow off courses because they can always retake them, bankrolled by mom and dad. "I feel like an adult, and I don't think I would feel this way if my mother were paying for me," says Ophthalee Tep, 22, the assistant manager of a jewellery store in Toronto and a fourth-year student at York University. "And I work really hard to get the best marks I can. If I didn't, and I were wasting both my time and my own money, it would be really upsetting."
But others take the opposite approach: since mom and dad aren't paying, they can't say anything about my marks (or my beer consumption, girlfriend or haircut). Angelo Volpe, who put himself through university by working construction during the summers, admits to "doing the least amount of work to get by." Paying his own way was stressful and money worries took a toll on his grades, says Volpe, who graduated three years ago and is now the foreman at a construction company in Toronto. "But it's the main reason I'm successful and a lot of my friends are struggling. They weren't taught to fend for themselves. Their parents gave them everything and it made them lazy."
Although it's impossible to track numbers, common sense indicates that a student who receives no parental help would be much more likely to give up and drop out. Those who persist, however, may be more attractive to employers than their more pampered peers. After interviewing college students for summer internships this year, one employer noted in a Wall Street Journal Web forum, "The ones paying much of their own way bowled over the competition in terms of maturity, confidence and seriousness of purpose. These aren't kids; they are impressive young adults."
The prospect of future gains is only marginally comforting to Yenna Hua, whose mother announced in July that she will not be contributing financially this year, Yenna's last at York University. "She wants me to know the value of a dollar, and I do respect that it's her life and her money and she has worked very hard for it," says Hua. "But I have to say, right now I'm freaking out. I like to shop and go to clubs and everything else a girl likes to do, and there's no way I'll be doing any of that this year. I have to save my money."