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Planning to Take a Gap Year While Studying in Canada? Rethink the Financial Implications

Planning to Take a Gap Year While Studying in Canada? Rethink the Financial Implications

As students continue to readjust to the new normal post-COVID lockdown, many scholars have soon found various reasons to delay their post-secondary school studies. The majority have concerns about studying online as often haven’t explored education beyond in-person instruction before now.

Many believe the traditional university experience contributes to their tertiary learning and wouldn’t trade the routine for anything in the world. For various reasons, we now have some international students pausing their dreams of studying abroad just to take a gap year. However, these actions have a lasting financial effect on their studies in the future.

If it wasn’t so rampant now due to many schools in Canada promoting virtual education, taking a gap year isn’t a new deal. Both Canadian and foreign students take a year off from academics for volunteer activities, to get a job, maybe travel, or just some time to cool off before their post-secondary studies. Clearly, like everything else, the pandemic now gives a different meaning to the idea of taking a gap year. Now students have to study from home!

With every student having their various reasons for taking a gap year, the decision might attract a lot more consequences than anticipated. Skipping a study year for whatever reason comes at a significant cost. Let’s see if these few would help you change your mind:

  • While you skip an academic year, you could potentially lose US$90,000 from your lifetime earnings
  • Do not forget the part where tuition increases annually
  • University students in the United States that pause their academics have a 13% slim chance of returning to the degree program in 5 years
  • In all Canadian tertiary institutions, there isn’t a guarantee for students that defer their admissions at some point. They also have to compete with the majority trying to get the limited spot in their degree or diploma programs

A Loss of US$90,000 in Lifetime Earnings

Whichever angle you choose to look at it from, there are lifetime financial implications of taking a gap year from studies. If you miss out on a year, you create a financially unstable loophole in the future where you could have earned with a college degree. Sadly this creates an income wedge that’s almost impossible to recover from. The Federal Reserve Bank of New York recently estimates a US$90,000 loss in lifetime earnings for deferring your studies.

The study deduced that a typical 22-year-old graduate earns roughly US$43,000 annually fresh from college and should be looking at a US$9,000 increase in three years. However, if he/she had deferred their studies for at least one year, they’d make US49,000 at 25 years old instead; amounting to a US$3,000 decrease. While this amount may not seem like a lot right now, remember that the cost of living continues to skyrocket daily.

Still on the subject of earnings, delaying your studies by just one year has regretting financial implications especially for scholars aiming for careers in high-earning fields. These days, pursuing promotions in any career is now more competitive than ever which makes bagging increased earnings a tug of war. Another study estimates a whopping US225,591 loss in net lifetime earnings for accounting scholars that decide to take at least one gap year.

Tuition May Be More Expensive Next Year

Quite a few tertiary institutions plan to freeze their 2021-2022 academic sessions again which might not come as such great news. This means students in these institutions would also plan to pay increased tuition next academic year expected to be costlier from this year. As we expect an 8% increase in tuition annually, this corresponds to expecting the cost of studying to double in the space of nine years.

Aside from the fluctuations in inflation annually, other factors could also contribute to increasing intuition. For example, many institutions had to invest greatly in enabling the students to get the best learning experience from their online learning program. To maintain the quality of this learning experience over time, schools have to continuously upgrade their online learning programs which increases the cost of tuition.

Here’s another angle to look at it from; deferring your academic year may also reduce your chances of qualifying for financial aid. Financial aids like bursaries, awards, and scholarships are often only awarded to students that show undivided interest in their studies. While many might overlook this financial support, foreign students may want to rethink the importance of this aid in their budget for studying independently abroad.

Students Who Interrupt Their Studies Are Unlikely to Return

In reality, students that interrupt their studies almost wouldn’t return to complete their programs for various reasons. Even when they have graduation in sight or just a few semesters to get their long-awaited degree or diploma. Frankly, a few have cogent reasons for deciding to take a break from their studies, but while at it, they mainly lose the morale to further afterward.

Aside from likely not returning within the space of five years, students that fall into this category would always regret not obtaining their degree early enough. A report by the US Bureau of Labor Statistics estimates a US$415 decrease in median weekly income for persons working without a complete education. That estimates to be more than US21,000 annually.

It gets worse when you sit for a minute to realize that this amount keeps increasing over time considering multiple factors. Yes, students that defer their studies are likely to return to the program but that decision would also make a huge difference in their lifetime earnings. If for some reason you’ve decided to pause your studies, ensure there’s an achievable plan that guarantees your returning through the competition.

Increased Competition

Well, as many would argue, not all implications that come with deferring your studies are financially related. Amid the current restructuring in tertiary institutions in Canada, preferences on delaying your studies are only entertained for incoming students. However, this luxury isn’t extended to students that defer their programs. With the level of uncertainties in the educational sector today, you might have to start from scratch all over.

Yes, starting from the very beginning like you did with the submission of transcripts, forwarding tons of documents for screening and approval, and presenting a workable study plan. Here’s a little hint on what the competition would be like in the 2022 academic session. Since the results from the QS International Student Survey tell that over 54% of students have requested a deferral to take a gap year until 2022 due to COVID-19.

When these students choose to return, they’d have to compete for limited spots with incoming and younger students. Before now, we’d have advised that you weigh your options before making a decision. But as it stands, there are just too many factors at stake with future implications when you decide to take a gap year from school.