Canadian college and university students face new financial realities as they return to class

Back in March, as governments around the world began locking down economies and requiring schools and workplaces to close in an effort to stem the spread of COVID-19, colleges and universities across Canada moved thousands of students off-campus and into online classrooms in a matter of weeks.

Now, after several months of virtual education only, many Canadian colleges and universities are welcoming students back to real and virtual halls.

For a number of students, the institution they are returning to this fall looks significantly different than the one they walked away from in March.

In many cases, in-person classes have been replaced by online learning and virtual courses, with many students opting to live at home rather than on campus. In addition, exchange programs, internships and part time jobs have been cancelled. Add in the upheaval the pandemic is causing to peer support systems and social lives, and it's looking like this fall is going to be unlike any in recent memory.

"Many students are anxious and have very real concerns about their careers and financial futures, as well as how they will thrive in an online setting, while others are more curious and engaged in some ways than usual," said Maurice Fernandes, a career education specialist with the Faculty of Science at Ryerson University.

Given the uncertainties and challenges COVID-19 has brought to the job market, Fernandes said he's seeing increased interest in grad school from some upper year students who are seeing higher education as a safe haven; a place to weather the storm of economic uncertainty, allowing them to build more career options after they graduate.

Of course, any decision to extend post-secondary education carries financial considerations.

Whether a student opts to enroll in new programs or, take on additional student loans to help pay for school as a result of lost wages from a cancelled job or internship, they and their parents will likely need to re-examine their financial plans.

New financial considerations for fall 2020

Between government relief programs such as the Canada Emergency Student Benefit (CESB) and the Canada Emergency Response Benefit (CERB), and independently bolstered emergency loans issued by some institutions, many Canadian students have had access to additional financial support to continue their university studies during the pandemic.

"However, students and parents still have a lot to take into consideration for the year ahead, and financial planning is going to be really important for them," according to Julie Sutherland, an Assistant Branch Manager for TD in Halifax, Nova Scotia.

Sutherland typically welcomes parents and students to her branch ahead of the new school year to field inquiries about lines of credit and deposit accounts for students. This year is no different although the specifics of their financial situation have changed.

"We are seeing people come in for the same products and services, but it's the expenses that have changed," said Sutherland.

"Many students were unable to work over the summer, and instead received CERB or CESB. With online learning and living at home, students could be looking at significant savings from either not paying rent and/or not commuting. But there can also be increases in expenses that come with online learning, such as paying for Internet access, and addressing computer hardware and software needs."

To help students prepare for the unprecedented academic year ahead, Sutherland recommends that students consider the following:

Put money aside for taxes

"Not all students may realize that they will have to pay taxes on the CESB or CERB amounts that they've received, because according to the federal government website it's considered part of their income." said Sutherland.

"I strongly suggest talking to a tax advisor if you received either of these benefits to get specific advice about how much you should be putting aside for your 2020 income tax return."

Get clear on your new spending habits and budget

"Your expenses might have changed drastically this year from last, so it's important to be honest about your current spending habits, especially things like online shopping, takeout food, and other leisure spending that you made over the summer, as you may have to change your priorities with the start of the new school year," said Sutherland.

"You can easily do this with spend tracking  tools like TD MySpend, to give you a snapshot of your current spending habits. Once you have an updated snapshot of your spending and your anticipated student expenses, you can rework your budget and then use tools like the TD Cashflow Calculator to help keep you on track with your school-year budget."

Use savings to invest in yourself

"If you will be living at home and saving on rent and/or commuting costs, it's a good idea to consider investing in yourself," said Sutherland.

"Talk to a financial advisor about creating a disciplined savings plan and automatically setting aside a certain amount of money on a monthly or bi-weekly basis in a savings account. This 'emergency expense fund' can be helpful to you both for the short and long term."

Explore your credit options

"However, if you are a student that may need additional financing this year, you should look into possible credit financing options" said Sutherland.

TD offers a student line of credit, and students seeking financial aid can also explore the Canadian Student Loans Program offered by the Government of Canada.