Not rich, not poor enough
Middle-class students often don’t qualify for government loans
Too rich to qualify for full student loans but too poor to pay the tab themselves, Canada’s middle-class students are being squeezed into troubling debt and daunting work schedules to cover the cost of higher learning, a new study shows.

With a $10,000 gap between what the average post-secondary student earns each year and what they pay for their education, middle-income students often must take out pricey bank loans and jobs that eat into their studies, warns the study by the Canada Millennium Scholarship Foundation on the cost of higher education in Canada.

This “middle-income crunch” means students in families earning $50,000 to $75,000 a year are almost twice as likely to borrow from the bank to pay for school as classmates whose families earn less than $25,000 a year, said the report.

And they are half as likely to have a government loan with its lower interest and gentler payback terms.

“We’re concerned at this tendency to take out private loans; it means the system of student aid the government set up is not enough to cover the costs students have to pay,” said Norman Riddell, executive director of the foundation, which provides scholarships and studies higher education costs.

“There is a danger the middle-income families are getting squeezed as costs go up faster than inflation.”

The report, released yesterday, says a full-time post-secondary student needs on average $14,500 a year for study-related expenses, yet the average student earns only about $4,500 a year.

When a student loan goes beyond $10,000 a year, the chances are 30 per cent higher the student will not complete the program,” said Riddell.

Working middle-class
The report also shows that among students who start the school year with no intention to work, 60 per cent of those from middle-income families end up working for pay, compared to 40 per cent of the lowest-income students.

Source: Metro News

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