The economics of higher edumacation

A couple interesting pieces relevant to me as I step out into the "real world."

The first, from Eli Schuster, appeared in the National Post August 19, while Connie Gibb's piece was in the August 26 edition of the Globe and Mail.

National Post: Eli Shuster
Two degrees, no job

According to the federal government, 93.2% of Canadians in the labour force, or 16,173,000 of you, are financially better off than me. I'm unemployed. I have a Masters Degree, but I can't find a job.

Misery loves company, and I have my share of it. The July Labour Force Survey says there are at least 1,173,500 others across the country in my shoes, and the unemployment rate for Toronto -- 7.5% -- is higher than the national average of 6.8%.

Experts disagree on how to measure unemployment. I don't know what the "true" rate might be. But anecdotally, I know plenty of individuals such as myself -- university-educated, but not trained to perform any specific job -- who can't find work in this New Economy. Others are underemployed, while nearly everyone else hates their job.

Even practical training isn't a guarantee of employment anymore. A buddy of mine with a Human Resources background was recently out of work for almost two years until he found a steady gig. Another friend, who studied Web site design before the Dot-Com meltdown, was told by her instructor to never take a job for less than $30 an hour. She eventually wound up designing Web sites for between $8-$10 an hour until she left to teach English in Korea.

Personally, I don't know where I went wrong. I studied hard, earned mostly A's in high school, and graduated with two degrees in Political Science from York University and the University of Toronto (I also wasted two years at Queen's pursuing a PhD I never finished). Unfortunately, I'm now stuck with nearly $40,000 in student loan debts, and I've been declared "overqualified" for lots of run-of-the-mill jobs.

While it's nice to be able to sleep in late or take relaxing bicycle rides through the park on a Monday, let me assure you that unemployment isn't a nice, long holiday. It's weeks and weeks of nothing to do, and a slow-moving emotional roller coaster of fear, envy, self-doubt, and even abject depression, brightened occasionally with glimmers of hope when job prospects come along.

English poet Mary Howitt called poverty a "weary thing ... full of grief and pain. It keepeth down the soul of man, as with an iron chain." I don't know which is worse: the terror of possibly running out of money and winding up broke on the streets, or feeling excluded from the consumerist lifestyle that predominates in the Western world. Former classmates from high school and university are getting married and buying condos; I feel fortunate when I can pay the bills on time.

Long-term unemployment eventually means walling yourself off from the rest of the world, and putting your life on hold. Seeing the latest movies, buying the latest clothes and CDs, or even enjoying a pint or two with friends at the local pub become guilt-laden extravagances. Dating becomes an impossibility: Women just don't want to date a guy who's broke, and I lack the self-confidence to ask anyone out, anyway.

If you lose your job, get ready to take advice -- lots of it. Your friends and family will offer all sorts of helpful suggestions: some useful, some extremely obvious ("Have you tried that Workopolis website?"), and every one completely unsolicited. Just nod your head and smile if you want to maintain your relationships.

Oh, and get ready for a buyer's market for labour. If you find yourself prepping for a job interview, get ready to answer any number of asinine questions that could be thrown your way by interviewers who don't have a clue. "What's your favourite movie?" and "what's the craziest thing you've ever done?" are two of my favourites. (A friend was recently asked if he believed he had the "driven-ness" to succeed. My friend looked the interviewer in the eye, smiled, and replied that his "drive" was just fine.)

As a child, I could never get enough of summer vacation. But these days, the thought of getting up early, slogging through the morning rush hour and putting in long days at the office sounds pretty good.

Eli Schuster is the Toronto-based writer and editor of www.grumpyyoungcrank.blogspot.com. He has a Masters Degree in Political Science from York University, and could really use a job.

National Post: Connie Gibb
Warning to student loan borrowers: Beware!

Almost everyone thinks higher education is a good investment. Half the students in college and university are borrowing at record levels to finance their education, hoping their investment will pay off. On average, students graduating with bachelor degrees owe more than $20,000 in government debt, not including private loans. They can expect to earn a median salary of $39,000 two years after graduating.

Many student loan borrowers are in school to escape the low-wage sector of our thriving economy. In the past two weeks, I've read hundreds of letters from students seeking extensions on their tuition payment deadline. They all sound the same:

“Please allow me to pay my tuition when I get my student loan in September. As the attached pay stubs show, my current job pays $8.50 an hour. I've attached a breakdown of my living costs to show why I have not been able to save enough to pay my tuition.”

A few decades ago, the cost of living was lower and tuition was cheap. You could work your way through university and avoid going into debt. Statistics Canada reports that, in 2003, the median income of Canadians slid, with the biggest declines in Victoria and Vancouver at 3 per cent. To low-income earners, higher education offers a ticket out of minimum-wage land.

Student loans are a social program. To qualify, you have to show you have limited resources. You are free to use your student loan for a degree in engineering or Eastern religions. No one will question your choice of program or ask how you'll repay your loan four years down the road. You won't know the interest rate you'll have to pay, because it doesn't come into effect until repayment kicks in after graduation.

Scott Hannah, executive director of the Credit Counselling Society of B.C., says: “Students enrolling in university or other postsecondary programs for general interest should look at every opportunity to pay for these programs without going into debt.”

One out of every four students reports difficulty in repaying student loans. Some of them find their way to the Credit Counselling Society. Many of these individuals have large debts and low wages. Mr. Hannah describes them as the working poor. For them, the higher education investment hasn't worked out. And what they find is that the government that was blithely unconcerned about their ability to repay at the front end shows a different attitude at the back end.

Those who have difficulty repaying their student loans may be faced with a damaged credit rating, bullying collection agents, and a bankruptcy law that currently prevents them from discharging their student-loan debts in bankruptcy until they have been out of school for 10 or more years. “Student-loan debt is treated differently from consumer debt and has harsher penalties for non-payment because of the burden on taxpayers,” Mr. Hannah says.

For many young people, student loans are their first experience with debt. The current system is a complex bureaucracy, poorly understood by students. A common problem is that students don't realize they have two loans: They apply on one application for both federal and provincial loans. When they graduate, they have to arrange two repayment plans. Some students fall into accidental default on their B.C. student loans; they arrange their repayment schedule for their Canada Student Loans and think they're done.

Students should be warned up front at the application stage about the consequences if they run into difficulties repaying their loans. They need to find out job placement stats and starting salaries in their chosen field. They should know what interest rate they'll be paying when they first apply. They need to be educated about debt and the remedies available to them through both levels of government.

This year, the federal government increased student loan limits from $165 to $210 a week. Higher student-loan limits and higher tuition costs ensure that students will continue to graduate with higher debt loads. Let's hope they get well-paid jobs; they're going to need them.

Connie Gibbs, past chair of the Association of Student Awards Personnel of B.C., has worked for more than 20 years as a financial aid adviser to students at a B.C. community college, university and institute of technology.