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The Burden of Student Debt

October 20, 2020

For more and more young Canadians, their biggest concern is whether the cost of post-secondary schooling is worth the burden that comes with student debt.

According to a 2018 graduating student survey by the Canadian University Survey Consortium, 50% of students graduate with debt, and of those, the average debt reported was $27,929.

Further, according to the Canadian Student Loan Program, paying off student debt takes most students about 10 years.

Starting last school year, the federal government reduced the interest rate on its floating-rate student loans by 2.5 percentage points to prime. Interest on fixed-rate loans was reduced 3 percentage points to prime plus 2. Graduates also got a break from accruing interest during the six-month grace period students have after leaving school before they must begin paying off their debt. This means they will pay less interest in the long run.

Paying down loans is difficult

Still, many new graduates enter the workforce as unpaid internships, temporary workers or low-wage employees, which makes paying down their debt extremely challenging if not impossible. Having to repay a few hundred dollars a month for a decade is delaying other key life milestones, such as buying a home or having children.

The following table shows that student debt is on the rise across all levels of post-secondary study.
 
* Bachelor's includes bachelor's degrees, degrees in medicine, dentistry, veterinary medicine and optometry, university certificates below bachelor's degrees, and university diplomas below bachelor's degrees.

** Master's includes master's degrees, university diplomas above bachelor's degrees, and university certificates above bachelor's degrees.

Source: Statistics Canada's National Graduates Survey (NGS), Student Debt from All Sources
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