New financial realities of post-secondary students

Based on the TD Newroom article published September 25, 2020

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 a combination of virtual only or real and virtual halls.

In some cases, in-person classes have been completely 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 continue to be cancelled. Add in the upheaval the pandemic is causing to peer support systems and social lives, and this academic year is already looking like it 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 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 continuing to see increased interest in grad school from some upper year students who are viewing higher education as a possible safe haven; a place to weather the storm of economic uncertainty while hopefully 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 is starting their post-secondary education or is opting to enroll in graduate studies, they and their parents will likely need to re-examine their financial plans.

Financial considerations for Fall 2020

Between government relief programs such as the Canada Emergency Student Benefit (CESB) - and the Canada Emergency Response Benefit (CERB), which were implemented by the government to help support students during the initial months of the pandemic, and independently bolstered emergency loans issued by some institutions, many Canadian students had access to additional financial support to help them continue their university studies during the onset of the pandemic. These financial aids may not continue this fall as government and private programs adjust to the constant changes imposed by the pandemic.

"Even if a student had applied – and qualified - for one or both of these government relief programs," according to Julie Sutherland, an Assistant Branch Manager for TD in Halifax, Nova Scotia, "Students and parents still have a lot to take into consideration for and financial planning will be important to them."

Sutherland typically welcomes parents and students to her branch in the summer months, ahead of the new school year, to field inquiries about lines of credit and deposit accounts for students. While this year was no different, the specifics of their financial situations were changed from pre-pandemic school years.

"We saw people come in for the same products and services, but it was the expenses that had 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 saving either due to not paying rent and/or not commuting. But they could still be dealing with increases in expenses that come with online learning, such as paying for Internet access and addressing computer hardware and software needs."

To help students with 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. It's important to note that, as advised on the government's website, you'll receive a T4A tax slip on the amount of CERB you receive. If you repay the CERB before December 31, 2020, the CRA won't issue a T4A for that payment.

"I 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."

Be clear about your spending habits and budget for the new academic year

"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 may have made over the summer. With the start of the new school year, your priorities may have changed and you will have to revisit them throughout the school year to help you keep control of your spending and stay within your budget," said Sutherland.

"You can easily do this with spend tracking tools like TD MySpend, which give you a snapshot of your current spending habits. Once you have an updated view of your spending and your student expenses, you can rework your budget, You can also 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 in the short and long term."

Explore your credit options

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

Products like a student line of credit may be an option, and students seeking financial aid can also explore the Canadian Student Loans Program offered by the Government of Canada.

This content discusses current topics of interest in a general and informational manner only and may not be appropriate in all circumstances. Please ensure that you seek advice personalized for your situation from the appropriate professional, consultant or subject matter expert on the topic of interest to you.

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