Inflation woes are hitting everyone these days, but is it really something you need to care about if your tuition cost is already settled? Ideally, inflation woes won't derail your degree progress, but you should still learn about how inflation can affect your student budget.

The annual inflation rate rose to 6.5% in October 20221, making it the highest level of inflation in 30 years.2 The bad news is that rates are predicted to keep rising as the cost of groceries and gas continues to climb. Even if your degree costs are sealed in, inflation can affect many other areas of your budget, such as housing, groceries and transportation. However, there are a few things you can do to keep your budget stable and fight inflation. Read on to learn how.

How does inflation affect college and university students?

The consumer price index (CPI) or, in simpler terms, the price of goods, has risen 6.9% since last year.3 There are several main causes of inflation, including dealing with the aftermath of the pandemic and with supply chain issues. Not only are prices higher due to shortages, but even products or groceries in abundance are going to cost more because they're more expensive to produce and transport.

The rising price of bacon (and other foods): What you need to know about inflation 

How is inflation affecting students? These price increases then make the value of money not go as far as it did last year. However, you might not feel the inflation impact everywhere. For example, paying a few cents more for certain groceries or a little bit extra for your favourite streaming services won't deflate your budget. You'll instead feel it with goods you rely on often that have been hit by the biggest price changes, such as the price of gas.

To offset the rate of inflation, the central bank, the Bank of Canada, will need to hike interest rates.4 Interest rates have gone up since the pandemic, and it will affect students' purchasing power for car loans and refinancing student loans. The higher the interest rates for loans, the higher the amount borrowers will have to repay, taking it longer to repay. However, with a proper financial strategy in place all of that is manageable, as long as you anticipate the extra costs from the start.

Tuition and inflation rates

University tuition rates have been outpacing inflation rates since 2017 and are predicted to keep up their steady 2 to 3% annual growth. In 2018, the cost of a four-year degree with residence was $85,454 and in 2037, the cost for the same degree and residence will likely be $127,446.5

A chart showing the estimated increase in post-secondary costs from 2018 to 2037, with and without residence costs

Even in the case of deflation, or a time of weak economic growth, high tuition rates will still be the norm. While this current level of high inflation might not affect the degree you are pursuing significantly, it can make it a lot more expensive to pursue postgrad degrees and certifications. You might start seeing higher prices in necessary costs that surround your degree, too, such as campus food plans, books and lab fees.

Why are tuition costs rising?

Rising inflation rates touch almost every other daily expense, including university tuition costs. The causes of inflation in the higher education sector happen for a number of reasons, some of which are listed below.

  • Employees need higher pay: When the cost of living goes up, salaries must also go up to combat the effects of inflation. Universities across Canada provide employment opportunities for up to 310,000.6 You can see how fast costs can add up if employees' annual salaries increase 4.2% to match inflation.7
  • Utility costs affect colleges and universities, too: Think your utility bills are high? Even smaller-sized universities use a lot of energy, water and gas to operate daily. They also have large internet and phone bills, along with garbage removal service, cleaning and software licensing costs. You might pay an extra $20 per month when your utility bill goes up. When a university's bills go up, they can increase to tens of thousands per month.
  • More resources are needed: Going back to university post-pandemic means students need more mental health counseling and guidance on getting their degrees and careers back on track. This means universities will need to hire more counsellors and provide more resources to students.

Tips to manage your budget while inflation increases

Even if you can't control the cost of things, you can control your budget. Having a tight handle on how you spend your money as a student will benefit your finances after university.

How do students manage inflation? As inflation increases, you need to be creative with handling the cost of living expenses. Here are a few impactful ways you could consider to make your student budget go further:

  1. Rethink transportation costs: Having your own vehicle makes balancing work and school life easier. However, if the price of gas on top of your car maintenance fees are adding up each month, then you could reconsider the perks of car ownership. Research alternative transportation methods, such as public transport and ride-sharing.
  2. Map out the best place to live: On-campus housing might be the most expensive choice because even though you have roommates, you still have to pay a flat monthly rent. However, if you rent an apartment or a small home near the university, you might be able to increase your number of roommates and see a decrease in your monthly living expenses.
  3. Consider grocery shopping instead of a meal plan: While a meal plan may seem like the most convenient and cost-effective option, you might actually be saving money if you do your own grocery shopping. Especially with programs like Scene+TM that help you earn points while shopping for food. Plus, meal prep could be a fun activity to try out with your roomies.
  4. Refinance variable student loans: If you have government-funded student loans at a set low-interest rate, don't touch those. However, if you received funding through private lenders with a variable rate, you might want to refinance these loans to a fixed rate to give you some peace of mind.
  5. Use a rewards card: You can't avoid spending money altogether, so why not get rewarded for the shopping you already do? The Scene+TM ScotiaCard debit card available with eligible Scotiabank chequing accounts allows you to earn one Scene+TM point for every $5 you spend on debit transactions (plus earn a point for every $1 spent at Cineplex Entertainment theatres).* You can then redeem your points towards travel, shopping, entertainment and more.


Despite inflation rates changing, it's important to stay positive and prepare for the changes in your student budget and make smart financial decisions. That last one is true regardless of what the rates are doing.

Need a little more guidance? Come in and speak to a Scotia advisor today