09/27/2013 07:25 EDT | Updated 11/27/2013 05:12 EST

Tuition debt carried by many parents to help kids

Many Canadian parents pay a hefty portion of students’ tuition fees, even if it means sacrificing their financial stability, to help their children avoid a post-graduation life burdened by tens of thousands of dollars of student debt.

Ross Campbell, a 56-year-old financial planner, and his wife knew they wanted to help their two daughters graduate university without the girls owing a cent.

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“That was sort of a focus of ours,” Campbell explains, “because we hear a lot of the horror stories that some students have $40,000, $50,000 in debt.”

Average Canadian student debt load statistics vary depending on who does the math and how they do it. Lower estimates, which add debt-free graduates into the equation, hover around $14,500. Higher estimates, which focus only on debt-saddled graduates, add an extra $10,000 to the total.

The Campbells started putting aside money for each of their daughters the month they were born, joining the roughly half of Canadian moms and dads who open up their wallets during for their children’s studies. An annual Bank of Montreal student survey found 44 per cent of students rely — at least in part — on their folks’ generosity. While the 2012 Canadian University Survey Consortium, which surveys more than 15,000 students, found nearly 60 per cent of parents contribute some funds towards university costs.

Postponed retirement, lines of credit

Not all of these well-intentioned parents can afford to do so.

The Campbells were lucky, says Ross, because his daughters were not in university simultaneously, but pursued their degrees consecutively over a span of eight years.

Their RESPs covered tuition and books, but the Campbells paid for residence —  later rent — and living expenses out of their monthly budget, setting them back almost $1,000 each month.

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Ross will work as a financial planner a few years longer than he originally intended, and would have had to postpone retirement by another two years if he had funded his elder daughter's masters degree.

The Campbells are typical of Canadian parents with children younger than 25, suggests a recent CIBC survey. About a third of parents will delay retirement because of costs related to paying for their children's university education.

The same study revealed about a third of parents will take on personal debt to help their kids avoid having to do so.

Norah-Jean Perkin and Richard Aniol partially funded tuition and living costs for their three kids.

Paying about $200,000 for over a decade of education between the trio meant the couple had to take on "a lot more debt" on a credit line, says Perkin. They gave up owning a second car and slashed their entertainment budget.

'A huge leg up,' for graduates

Still, both couples say their financial sacrifices were worth it for their kids to graduate without five-figure debt loads, giving them a natural advantage post-graduation.

"I feel like I have a huge leg up," said Leslie Campbell, 23, who graduated debt-free from Trent University in 2012. "I think I would be in a very different mindset if I had a lot of undergrad loans."

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Her father, Ross, says he and his wife wanted to give their daughters the flexibility to take "a bit of time to find the type of career that they want to go into" rather than be forced into settling for work because they are locked into large monthly loan payments.

Leslie, who readily admits she is lucky to hold a bachelors degree without debt, has been flexing her adventurous muscles and testing out various career paths since graduation. She participated in the federal government's French language explore program, studying French in Quebec for five weeks. She saved some money while working at a summer camp and travelled across Canada. The list of experiences Leslie has been able to fund because she's not worried about student loan payments goes on.

Debt delays post-grad lives

- Sixty-three per cent said their debt delayed their ability to purchase large items, like cars.

- Almost three-quarters said they had to put off saving for retirement or making other investments.

- About a third said debt impacted their career choices.

- Two-thirds at least somewhat agreed that the need to pay student debt hampered them from furthering their career.

- Almost a fifth said their debt delayed them from moving out of a family member's home.

Theresa Aniol's parents funded her first four years at Toronto's York University, but she acquired a student loan to pay for her fifth year. The 25-year-old says she decided to do so partially out of guilt and partially because she yearned to be more independent.

She graduated owing about $8,000 — after grant deductions — and says, "realizing now, having to pay it back and what that means in terms of how I can go about my life now," is definitely stressful.

Her parents, who ended up with more loans than she did after her and her siblings' educations, afforded Theresa "a lot of flexibility and choice," she says.

"It didn't take long at school to realize how special and important that was."