Get smart: Help reduce student debt

As kids prepare to go back to school, the government estimates total student debt levels will surpass $15 billion this month.

Simple things, like a proper budget and buying renter’s insurance to prevent losses from laptop theft and house party damage could go a long way in reducing the financial burden after graduation, experts say.

"Student debt has reached epidemic proportions," said David Molenhuis, national chairperson of the Canadian Federation of Students.

University tuition fees were up 3.6% last year averaging $4,917 a year while other compulsory fees rose 6.8% to $749, according to figures from Statistics Canada.

And with tuition fees showing no signs of abating, it’s crucial students get a handle on their day-to-day expenses, which can add up quickly.

The costs for rent, transportation, food and other expenses can top $30,000 depending on the school and living arrangements.

“Students in search of higher education can find themselves in more debt than they bargained for at graduation,” said Investors Group financial planning expert Aurele Courcelles.

A difficult job market makes budgeting, maximizing savings, smart borrowing and protecting credit all the more important, Courcelles says.

Students living away from home should also be prepared for what one insurance expert calls the “accidents of life.”

Home insurance for tenants covers theft and damage to personal belongings including clothes, iPods and expensive textbooks -- even if they’re stolen or wrecked by a housemate’s guest.

“This is a typical loss that most companies out there cover. The problem is that most students don’t know that they have this protection,” Henry Blumenthal of TD Insurance said.

Pricey personal items aside, insurance also covers students for liability if they are found responsible for starting a kitchen fire, for instance. It can even cover the costs of legal counsel in cases of Internet disputes.

Coverage for thousands of dollars in losses can start at $2 a month and shouldn’t cost more than $12 a month for the average student.

“It’s very inexpensive and it’s peace of mind,” Blumenthal said.

Combining auto and home insurance often results in the best savings.

The very first thing is to invest in a free phone call to an insurance advisor who can help determine whether a family member’s existing coverage already applies.

All too often claims experts will visit the site of a fire or other disaster only to find dozens of students facing a costly bills without any coverage, Blumenthal said.

“It’s a very, very sad experience.”