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Dealing with back to school budget blues

BACK to school time means building up debt time for more and more students

Statistics Canada reports the class of 2005 graduated with an average of $18,800 in student debt, up from $15,200 in 1995. Post-secondary graduates who owed $25,000 or more on their student loans jumped to 27 per cent from 17 per cent.

"Many post-secondary students are living on their own for the first time, juggling school and living expenses - all of which can be very stressful," says Kavita Joshi, director, Student Banking, RBC.

One-third of first-year postsecondary students (37 per cent of the females and 27 per cent of the males) expect to have significant debt on graduation day, according to the 2011 RBC Student Savings and Spending Poll.

Having enough money for school is a worry for 54 per cent of the students, with young women (61 per cent) more concerned than young men (48 per cent).

However, depending on their inclination, students are more likely to focus on their studies (or social lives) than on their finances.

The study found 34 per cent of students are using online and mobile budgeting tools to control their spending.

"Online financial management tools are a great resource to help you keep track of how much you are spending and where you are spending it," said Joshi. "When you have your finances under control, it's much easier to focus on what you want to achieve in school and after graduation."

If you are a parent who wants to help minimize this debt load, make sure you have clear guidelines (in writing) - especially if your financial help is related to the student's efforts.

For example, you might offer to match (one for one, or two for one) what your student earns during the year. Or you could set a dollar amount related to percentage or grade results (as in "performance rewarded is performance repeated").

Perhaps pay 85 per cent of this money directly to the institution for fees and the remainder to the student as "spend and enjoy" reward money.

Students worry about the red ink:

- Debt load continues to climb

- Women more concerned than men

- Parents might consider incentive help

Mike Grenby is a columnist and independent personal financial advisor; he'll answer questions in this column as space allows - email

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