The cost of post-secondary education has been steadily increasing in Canada, leaving many graduates with student debt that is becoming much more difficult to pay back. Today’s students face ever growing tuition fees, additional compulsory fees, and residence fees. In fact, the national average undergraduate tuition fee in 2018/2019 was $6,838 with Ontario tipping the scales at $8,838. And this doesn’t factor in the cost of residence and a meal plan per year.
As a result of these costs, it shouldn’t be a surprise that students requiring a Canada Student Loan now graduate with more than $28,000 in student debt. And while recent changes to OSAP may make it easier for those in need to access more credit, it may also cause some to take on even more student debt.
We’ve seen the impact student debt can have, firsthand in our firm. Based on our study of student debt, we found that the average student debtor was 36 years old, one in four was a single (lone) parent and 60% are female. The inability to find a job paying enough to allow them to repay their loans and the financial hardship caused by these loans led them to file for insolvency to deal with their student debt.
What can you do if you’re struggling with student debt?
If you are having trouble repaying your student loans, there are solutions that you can look at.
You can try negotiating new payment terms to repay your loans, asking to pay a more affordable monthly amount. Be aware however that this will keep you in debt longer as it extends the length of your loan, making you pay more in interest.
Alternatively, you could see if you qualify for government repayment assistance programs. You may qualify for a reduced monthly payment or partial interest relief however there are conditions and you will still be required to repay your loans.
If your student debt seems to be insurmountable and you have been struggling to pay it off for years, consider meeting with a licensed insolvency trustee.
A Licensed Insolvency Trustee can help you review two student debt relief options available in Canada:
- A consumer proposal which allows you to make an offer to repay a portion of your student debt, along with other debts, based on what you can afford.
- You can consider filing bankruptcy to eliminate student loan debt.
To see if you qualify for either of these solutions, you will need to talk with a Licensed Insolvency Trustee. They will want to know how long you have been out of school, since student debt is only automatically discharged by the Bankruptcy & Insolvency Act if you have been out of school for at least seven years.
They will also want to talk about other debts you owe. Most people we help who carry student debt also have significant credit card debt and often payday loans. Even if your student debt does not meet the 7-year rule for automatic discharge, it may be helpful to consider filing insolvency to eliminate your other debts making your student loans more manageable especially if those debts charge a very high interest and you are only making minimum payments towards those debts.
Student debt relief is possible, but it is a little more complex than dealing with basic credit card debt. For more information read our student debt help FAQ page.