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Furthermore, a2019 study by insolvency firm Hoyes, Michalos & Associates Inc. called student debt in Canada a “crisis,” as it was increasingly a factor in insolvency filings.
Student debt contributed to a record 17.6 per cent of insolvencies in Ontario in 2018, the study found. If the situation was similar in other provinces, then approximately 22,000 ex-students could have filed for insolvency that year in connection with school-related debts, Hoyes, Michalos & Associates said.
The study also found the average insolvent student debtor owed $46,373 in unsecured loans, including $14,729 in student debt, with rising tuition costs seen as the driving force behind the red ink. Moreover, while “poor” financial management was viewed as the leading cause of debt issues, nearly a third of student debtors said that employment and income problems had added to those concerns.
“Graduates leaving university often end up working in unpaid internships, part-time positions, and minimum wage jobs,” the Hoyes study said. “They are increasingly unable to find a stable job with enough income to support both student loan repayment and living expenses.”
(Graduates) are increasingly unable to find a stable job with enough income to support both student loan repayment and living expenses
Hoyes, Michalos & Associates study
That employment picture has been made much worse by COVID-19, and particularly so for younger people. Statistics Canada reported employment among those aged 15 to 24 was still 17.4 per cent less in July than it was in February.
“The average student takes about 10 years to repay a loan, and that’s hundreds of dollars a month that they’re paying as they’re going through that process,” said Nicole Brayiannis, the national deputy chairperson of the Canadian Federation of Students. “That limits the ability for young people and graduated students to be able to participate in the economy.”
