The number of days of income it takes to pay for your child’s degree soars, study finds

While a poor family has to spend 1,268 days of income to pay for a child’s university degree, a rich family only has to kick in 137 days of income, a new policy institute analysis reveals.

Skyrocketing tuition and stagnating incomes for all but the very rich have dramatically increased university costs in the past decade, the Canadian Centre for Policy Alternatives said in a study, “Under Pressure: The Impact of Rising Tuition Fees on Ontario Families,” released Wednesday.

In 1990, a poor family would have had to divert its total income for 981 days to pay for tuition, textbooks, tax breaks, and living expenses for a four-year degree. A rich family would have had to divert only 135 days of total income.

The income-to-tuition gap sapped middle-income families, as well, the study said.

The institute divided household income into five tiers: about $150,000, about $80,000, about $55,000, about $33,000, and about $15,000 as average after-tax income.

The money needed to pay for a university degree jumped by 32 days for the second tier, 47 days for the third, and 99 days for the fourth.

Families have good reason to be alarmed, study authors David Macdonald and Erika Shaker said.

“Young Canadians who hold student debt have lower net worth, are less likely to own homes, are less likely to have savings, and less likely to have investments.”

Meanwhile, “Ontario undergraduate tuition fees are now the highest in the country. In 1990, the average university student paid $1,680 a year ($2,500 in 2011 dollars). This fall, the average undergraduate student will pay an estimated $6,500 for a year.

“By the last year of their four-year degree, an Ontario undergraduate student entering university this fall will pay over $7,500 a year.”

For prospective dentists, engineers, lawyers and doctors, the disparity between how long it takes rich, middle-income and poor families to pay off tuition alone was far worse.

Paying for a dentistry degree would cost a poor family 2,410 days (6 ½ years) of income this year, compared with 286 days a decade ago and only 264 days of income for the wealthiest families. For the very middle-income range, tuition for that degree has soared from 95 days of family income to 699 days.

“Relatively small changes in the tax system could dramatically reduce university tuition rates,” the study said.

“For just over $100 a year for the average family, tuition fees could be reduced to 1990 levels.”

As well, diverting the $1.6 billion in corporate tax cuts introduced by the Ontario government in 2009 could more than have covered the $1.5 billion hike in tuition fees in the last decade, the study said.

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Source: Toronto Star