Everyone envies teachers the amount of time off they have each year, their strong benefit and pension plan and higher than average salary. With the average secondary school teacher in Ontario making around $51,000 a year you wouldn’t think we would see many teacher’s getting into financial trouble. Surprisingly that’s not the case. Paying off student debt is a major struggle for many new teachers.
The problem is that entering the teaching profession is a lot more challenging financially than it used to be. A recent client, we’ll change her name to Sarah, is a perfect example. A now 38 year old teacher with the Durham District School Board, Sarah needed 6 years of post-secondary education just to qualify to become a teacher. This level of education left her with more than $35,000 in student loans and a monthly student loan payment of almost $500 a month before she even found a job teaching.
It took Sarah more than a year after graduation to even get on a supply list. During that time she picked up part time jobs waiting tables in restaurants and bars just to keep up with her student loan payments once her 6 month grace period expired. Not making very much, she, like many of her peers, used credit card debt to pay the rent and other living costs.
Even after making the supply list, Sarah wasn’t working full-time as a teacher. A couple of maternity leave contracts helped, but generally she kept up her outside part-time work while she waited for a full time offer from a local school. And Sarah is not the only teacher-in-waiting facing these types of job prospects. It’s not unusual to be 30 before you get a permanent job with most school boards in Ontario.
New teacher hire statistics
A report by the Ontario College of Teachers found:
- Only 31% of teachers certified in 2008 reported that they found a full time position after one year;
- 38% were only teaching part time; and
- 17% reported that they could not find a job teaching anywhere.
An article in the London Free Press gave some more dire statistics about job prospects for new graduates:
- In 2014 one third of first-year teachers were unemployed;
- After three years 50% still weren’t working full time;
- After five years, 40% still had not found a full time teaching position, anywhere.
Debt piles on top of student debt
At a time when most want to be getting married, have children and buy a home, teachers are likely not working full time in their profession and continue to cope with student debt.
In addition, many are also trying to pay off heavy credit card debt built up during the lean years as a supply teacher. And since most supply teachers need a car to get to all the different schools they are called to, they borrow more money to buy a car.
Given all that, it’s not surprising that by the time Sarah was 28 her monthly debt payments had ballooned to almost $1,800 a month.
Once a teacher is successful at finding a full time position, they quickly find out that their summer break comes with another financial pitfall. While they are off, teachers receive no paycheques in July or August. It’s well into September before they see their first pay. During that time they have to continue to make their student loan payments, car payments, pay rent and eat.
For many that means that their student debt balances go up, not down. The average student loan balance for insolvent debtors is actually highest during a person's 30's and 40's.
Average Student Debt by Age Group:
- 18-29: $12,737
- 30-39: $14,844
- 40-49: $14,189
- 50-59: $10,099
Increase in teachers filing insolvency
This type of job market has been the reality for new teachers for more than 10 years now and that’s likely one of the reasons why we’ve seen an increase in the number of teachers coming through our offices in recent years looking for a way to restructure their student debt.
A teacher like Sarah, in their mid- to late-30’s, is often saddled with $40,000 in unsecured debt including student loans, credit card debt and bank debt.
If they are lucky enough to be working in their profession, a teacher’s higher income level means that a consumer proposal is usually their best option. If they have been out of school themselves (attending not working) for a minimum of seven years, their student loans are included and will be forgiven as part of the consumer proposal. Even if they have not been out of school for seven years, sometimes the solution is to file a bankruptcy or proposal to eliminate credit card debt, student lines of credit and other personal debts so they are able to pay off their student debt on their own.
It’s a calling to become a teacher. Unfortunately for too many, it’s also a financial struggle to gain a foothold and the security most associate with the profession.