Class of 2000: How are they faring two years later?

Profile of recent graduates
Key labour market outcomes
Trends in student debt
Trends in debt repayment
Summary

Investing in a postsecondary education continues to pay off for young Canadians. Employment and earnings levels are higher than for those without a postsecondary education and unemployment rates are lower. About half of those who graduated in 2000 owed money on student debt. While this was similar to the percentage in 1995, the big difference is that those who graduated in 2000 owed substantially larger sums of money.

Drawing on data from the 2002 National Graduates Survey (Class of 2000), this article describes recent college and bachelor graduates and their employment, earnings and debt situations two years after graduation. While some had managed to pay off their student debt, many others still owed money and some were experiencing difficulties in paying off their debt.

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Profile of recent graduates

In 2000, about 270,000 students graduated from public college and university programs in Canada. Half of these graduates had completed bachelor degrees, 37% received college diplomas and 12% received graduate degrees (Master and Doctorate).

Note: Numbers of graduates are rounded to the nearest 100.

Source: Mary Allen and Chantal Vaillancourt, 2004. Class of 2000; Profile of postsecondary graduates and student debt. Culture, Tourism and the Centre for Education Statistics – Research Papers. Statistics Canada Catalogue number 81-595-MIE20040016.

Women made up the majority of bachelor (61%) and college (57 %) graduates in 2000, as they had in 1995. Not all fields of study reflect the overall male-female split, however. For example, among bachelor graduates, men made up about three-quarters of the graduating class in engineering and computer and information services, while nine out of ten nursing graduates and a large majority of psychology and education graduates were women.

The image of the young graduate who finishes high school, goes straight to university or college, finishes in the standard time and goes straight into the labour market is not the norm for the majority of college or bachelor graduates. The typical (median) age of 2000 graduates with diplomas or degrees from both college and bachelor programs was 23. However, older students make up a significant part of the postsecondary student body. In fact, for both college and bachelor graduates, about 40% of the graduating class was 25 or older when they completed their programs.

As the range of ages suggests, graduates take a variety of pathways through postsecondary education. In fact, the majority of graduates at both levels had been out of school for some time prior to starting their programs or they had some postsecondary education prior to enrolling in their program.

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Key labour market outcomes

The National Graduates Survey and other surveys, such as the Labour Force Survey, have consistently shown that college and bachelor graduates do better in the labour market than those with no postsecondary education. Notable labour market results include:

• Ninety percent of 2000 college and bachelor graduates had jobs two years after graduation; 81% were working full-time. About 7% were unemployed in 2002.

• Female college and bachelor graduates were slightly more likely to be employed than their male counterparts two years after graduation. However, they were less likely to be working full-time.

• Although college and bachelor graduates were equally likely to find work after graduation, the jobs the bachelor graduates found came with higher earnings. Median annual earnings for a typical employed bachelor graduate were $39,000 in 2002. The typical college graduate earned $31,000.

• Women graduates typically earned less than men. However, the gap in earnings was greater for college graduates. Median earnings for female college graduates were 82% of male earnings compared to 88% for bachelor graduates.

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Trends in student debt

At the time of graduation in 2000, about half of college and bachelor graduates were in debt for their education. Government student loan programs were the major source of student borrowing: 45% of bachelor graduates and 41% of college graduates owed money to government student loans programs when they graduated (Table 2).

In addition, almost one in five college and bachelor graduates borrowed from other sources to finance their education. Among college graduates, 33% used only government student loans, 8% owed money only to non-government sources and another 8% owed money to both. Bachelor graduates were more likely to turn to both sources for funding. While 34% owed only government student loans, 8% owed only non-government students loans and 11% owed money to both.

Table 2: Government student debt for the class of 2000

	College	Bachelor
Graduates with debt to government student loans	41%	45%
Average government student debt owed at graduation	$12,600	$19,500
Indebted graduates who paid off their debt by two years after graduation	18%	22%
Proportion of debt paid off by those graduates who still owe	24%	23%
Graduates reporting difficulties repaying debt	30%	24%
Graduates with large debt ($25,000 or more) at graduation	5%	14%

Note: Excludes graduates who have pursued further education.

Source: Mary Allen and Chantal Vaillancourt, 2004. Class of 2000; Profile of postsecondary graduates and student debt. Culture, Tourism and the Centre for Education Statistics – Research Papers. Statistics Canada Catalogue number 81-595-MIE20040016.

For graduates who owed money to both sources, the combined debt was considerably larger than for those with debt from only one source. At the college level, graduates with only government student loans owed an average $12,500 at graduation, while those with only non-government debt owed only $7,100. The 8% of students who had borrowed from both sources owed, on average, $19,200.

Bachelor graduates who borrowed from both sources owed substantially more. Average debt for those with only government student loans was $19,500 and for those with only non-government debt, $9,500. However, the 11% of graduates who owed to both sources owed, on average, 32,200.

Although there was no change in the percentage of graduates with government student debt, students in bachelor programs who graduated in 2000 owed about 30% more than the Class of 1995 and 76% more than the class of 1990 (in 2000 constant dollars). College graduates with government student loans owed 21% more than their counterparts who graduated in 1995 and 76% more than the class of 1990.

These increases mirror the rise in tuition fees over the 1990s. Average undergraduate tuition fees (in current dollars) more than doubled in 10 years, an increase from $1,872 in 1993-1994 to $4,024 in 2003-2004.

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Trends in debt repayment

The size of government student debt owed upon graduation varied widely. Some students accumulated large debts over the period of their education, while others only had small debts that could be readily paid off after graduation

About one in five graduates who left school with student loans paid them off completely two years after graduation. For the graduates who still owed money two years after graduation, about three-quarters of their debt remained to be re-paid. For college graduates, the average debt remaining was $10,600. For bachelor graduates, the average debt remaining two years after graduation was $17,200.

These graduates were also more likely to report having difficulties in debt repayment. Of those with remaining debt, 28% of bachelor graduates and 34% of college graduates reported difficulties repaying their debt compared to only 9% of both bachelor and college graduates who had paid off their debt by 2002.

The ability to pay off debt is influenced by a number of factors: size of debt, employment, earnings, interest rates, and personal circumstances. It is not surprising, therefore, that the graduates who were able to eliminate their student debt in the first two years following graduation were advantaged in many of these respects.

First, the average debt on graduation for students who paid off their debt within two years was significantly lower. Bachelor graduates who were debt-free had started out with about $8,000 less debt; debt-free college graduates had started out with almost $6,000 less debt.

Graduates who were able to pay off their debt by 2002 also had higher incomes after graduation. On average, graduates who had paid off their debt had personal incomes that were 13% higher for bachelor graduates and 24% higher for college graduates.

At the bachelor level, there was no difference in the employment rate of graduates who had paid off their debt by 2002 and those who hadn't. However, at the college level, 94% of those who had paid off two years later were employed at the time of the interview, compared with only 88% of those with remaining debt.

Family circumstances also play a role. College graduates who had paid off their debt by 2002 were less likely to be married and fewer graduates at both levels reported having dependent children.

Bachelor graduates were more likely to leave school with large student debts (Figure 1). Fourteen percent of bachelor graduates who had not continued their studies owed $25,000 or more when they graduated and on average, 38% of these bachelor graduates with large debt reported having difficulties repaying their loans.

Figure 1. Percentage of graduates with varying sizes of government student debt at time of graduation (Class of 2000)

Source: Mary Allen and Chantal Vaillancourt, 2004. Class of 2000; Profile of postsecondary graduates and student debt . Culture, Tourism and the Centre for Education Statistics – Research Papers. Statistics Canada Catalogue number 81-595-MIE20040016.

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Summary

The majority of graduates from public colleges and bachelor programs did not fit the stereotypical image of young Canadians who continue their studies straight from high school to college or university complete their programs and enter the labour market for the first time. Instead, many students are older, many of the graduates in the Class of 2000 had taken time off after high school, and some had completed previous postsecondary degrees or diplomas.

While labour market outcomes for these graduates were generally good, about half of the college and bachelor graduates from the Class of 2000 carried student debt upon graduation and the average size of that debt was notably higher than for students who graduated in 1995.

Two years after graduation, about one in five borrowers from the Class of 2000 had paid off their government student loans entirely. Not surprisingly, graduates who had managed to do so had started out with smaller than average debts and had higher incomes than graduates who still owed money in 2002.

A small, but notable, proportion of graduates left school with large student debts. This was especially the case for those who graduated from specific fields of study, with medicine ranking as the program associated with the highest levels of debt among graduates. Further, despite the fact that these students had higher than average incomes, they were more likely to report difficulties repaying their loans.

The Class of 2000 will be surveyed again, in 2005. The information they provide then will allow us to answer a number of important questions concerning their earnings and employment experiences over a longer period of time and how these relate to their ability to pay off their student loans, compared to previous cohorts of graduates.