Students caught in inflation spiral: Financial experts

by Agostino Di Maria

Sept. 24th 2009

As Faisel Jaffer swipes his debit card for the third time to kick off a new school year at the University of Toronto Book Store, he admits he thinks about money on a daily basis.

“Every minute of everyday,” he says.  “Costs have been increasing each year; it’s tough to save any amount of money in the summer due to the rising costs of everyday items.”

Jaffer, who is enrolled in the neuroscience program at the University of Toronto, is one of many post-secondary students who have become frustrated with the financial burden for obtaining an education.

“The government should definitely offer more support,” he states. “OSAP is not enough, which is why we are seeing so many students drop out. They just cannot afford the continuing costs over a full school year.”

Recent data from Statistics Canada illustrates that Jaffer is one of the millions who are currently being affected by high inflation rates across Canada. The data showed a steady inflation of everyday necessity items between the years 1990 and 2008. Within these time periods, according to Statistics Canada, the cost of bread has increased 300 per cent, cars 200 per cent and gas 200 per cent. During that same time period, the average family income has only increased 11.8 per cent

“I believe it,” said Jaffer, after being presented with the data. “Gas is a great example, which is probably why so many students are relying on public transportation or car pooling. It’s just too much.”

The noticeable gap between wages and inflation has led many students to resort to government loans in order to continue their education.

Katrina Roberto, a journalism student at the University of Toronto, echoed the worries of Jaffer and the rising costs of post-secondary education.

“I am a 4th year student, and yet I am taking out an OSAP loan for the first time. That should say enough right there,” she said.

A survey of 30 random students at the University of Toronto Scarborough campus further illustrated the fears of both Roberto and Jaffer. Of the 30 students, 25 carried some form of student debt, while 21 carried a student debt amounting to $15,000 or more.

Daniel Miched, of Primerica Financial Services, is not surprised about the debt load.

“Students require more education in finance,” he said. “Not only with the risk of increasing costs, but also the concept of the university as a business.”

According to Miched, there was never a course offered in high school called “Financial planning” so students do not know how to handle these types of situations.

Though a recent report by CBC News put inflation actually dropping slightly below zero throughout the month of August, other financial consultants are urging students and others not to get too complacent.

“It is likely headed for another increase for September and October,” says Danielle Dimtses, also with Primerica. “I wish that they did not air that report because now people are going in with a mentality that things will start to get better; this is definitely not the case.”