13 Worrying Student Debt in Canada Statistics for 2021

Nowadays, most people get a college degree at some point. And while education is more and more critical in the modern world, it’s also expensive, especially in the developed nations.

The thing is:

In Canada, students have to find their way in a very competitive game. Quite often, getting a student loan is the only solution to their problems. In fact, student debt in Canada statistics show about half of Canadian college graduates are in some form of student debt. 

So, it should come as no surprise that a student debt crisis is slowly becoming a real thing, with students facing astronomical tuition fees that have potentially far-reaching consequences. As it becomes harder for students to repay their debts, the lending banks can also be affected. This would then impact everyone linked to these banks. 

With the average cost of post-secondary education topping $80,000, the basic right to education is in question. 

Let’s have an in-depth look at the most important stats.

Essential Student Debt Statistics (Editor’s Choice)

  • 75% of Canadian students have government-backed, while around 36% choose private bank loans.
  • Total student debt in Canada is at least $18 billion.
  • There are more than 1.7 million student borrowers in Canada.
  • The average student debtor owes at least $26,075.
  • Students of medicine and related fields have the biggest loans.
  • The average interest rate for government loans is around 2.5%.

Student Debt Data for Canada

1. Canadian students can get loans from the government or private organization programs.

(Source: CIBC)

All students in Canada can apply for a federal student loan. The Canada Student Loan Program helps students pay up to 60% of their tuition, with or without interest. The national student loan interest rate varies but is usually somewhere around 2.5%. These loans’ interest is usually charged upon graduating, and applicants have an optional six-month grace period.

The interest for private loans is usually higher and is charged as soon as the funds are received. These are referred to as a student line of credit in Canada because they don’t differ essentially from other bank loans. Banks might require parents to co-sign the credit. Private loans can take on the form of a home-equity line of credit. 

The government also awards various grants to various groups of students, and these don’t have to be repaid upon graduating. 

What’s more:

Canada offers various provincial student loans. In Manitoba, for instance, medical students are in high demand, and there are many grants for this specific group. So, scholarships, bursaries, and school loans are on offer. British Columbia has special programs for applicants with disabilities, besides the standard grants and loans provided by StudentAidBC.

2. Total student debt in Canada rose from $15 billion in 2010 to $18.2 billion in 2017.

(Source: Hoyes; Canadian Federation of Students)

Keep in mind that this figure only accounts for government loans. So, the total debt is most certainly higher than $18.2 billion. Not only that, but it has probably continued to increase since 2017. However, we are still waiting for official statistics for the most recent period. 

Now:

This rise has far-reaching consequences – for instance, student debt in ON is slowly getting out of hand. In 2018, one in six insolvencies in the whole of Ontario was signed by student debtors. Also, in 2018, extrapolations showed that more than 22,000 ex-students across Canada filed for insolvency.

3. The number of students taking loans rose from practically zero in the 1960s to more than 1.7 million in 2017.

(Source: Hoyes)

Once again, these student debt statistics only concern federal loans. No one really knows much about private student loans, even though several financial institutions offer popular private student loans, among other services. A professional student line of credit is harder to track because many private banks are involved. 

So, the 1.7 million is the very minimum of Canadian student debt holders. 

The answer to why we’ve seen such a steep rise has to do with the increasing scholarship fees, competitiveness, and increasing demand for higher education. These all combine to make higher education a very valuable “commodity.” 

student debt in Canada statistics

4. The average student debt in Canada was $26,075 in 2015.

(Source: StatsCan)

This is the total average when all students – undergraduates and graduates – are included. This data comes from official government studies of both federal and private loans. 

In 2015, around 50% of college students owed $15,300 on average. Bachelors were much worse off, with $28,000 in debt. It’s the same with Master’s students, while Ph.D. graduate debtors owed $33,000.

5. Master’s and Ph.D. students owe much more than college and Bachelor’s graduates.

(Source: StatsCan)

The higher you get, the more you pay. College students more often have smaller debts (below $25,000), with only about 20% of debtors owing more than this.  On the other hand, Doctorate students are much more likely to have large loans. 

Key takeaway:

More education equals more debt. Click To Tweet

6. The government has increased the grant for full-time students to $6,000 and part-time students to $3,600, student debt Canada 2020 stats reveal.

(Source: canada.ca)

Canada has introduced a massive student debt relief program in order to alleviate some pressure from the students, many of whom were struggling with their loans even before the COVID-19 pandemic.

What’s more:

The weekly maximum limit was also changed to take some pressure off debtors – from $210 to $350 per week. Student loan forgiveness in Canada in 2020 was also mooted; however, we have yet to see whether the Liberals, who are pushing for debt cancellation, will be able to meet their objectives in 2021.

Finally, Canadian students will not be required to fulfill their fixed contribution for the school years 2020 and 2021

7. Government loans, in almost all cases, have lower interest rates, around 2.5%.

(Source: Hoyes)

What this means is that debt consolidation will probably be one of the worst options for students with government loans. Anyways, banks in Canada are reluctant to approve consolidation plans for student loans. 

Consolidation, on the other hand, may be an interesting option for those students who already have a credit line, especially if the first deal included high-interest rates. Of course, this means that you have first to find a bank ready to help you consolidate your old credit with a new one with a better interest rate. 

8. Thanks to the Seven Year Rule, government-guaranteed loans are much more favourable when it comes to insolvency, student debt in Canada statistics reveal.

(Source: Hoyes)

Loans issued by the government are guaranteed, which means that the government vouches for you in case you’re unable to pay off the money.

Here’s the deal:

After filing for bankruptcy, ex-students can get debt relief if more than seven years have passed since they stopped being students. 

These regulations are provided in the special section of the Bankruptcy and Insolvency Act, not in the more general Canada Student Loans Act. 

9. Two-thirds of students who graduated in 2015 still hadn’t repaid their debt by 2018.

(Source: StatCan)

This goes for all levels of study, but postsecondary education is especially notorious for getting people in tricky financial situations. 

According to student loan debt statistics for 2018, Ontario students are more likely to have repaid the debt within three years of graduating. 

On the one hand, this means that OSAP (Ontario Student Assistance Program) is quite efficient and has a good selection system. 

On the other hand, the chances of employment in Ontario are particularly favourable. 

It’s the opposite with Quebec and the Atlantic provinces, where students are more likely to prolong the return of their loans. 

10. Recent student debt in Canada statistics reveal 51% of students doubt they will be able to pay next year’s tuition.

(Source: StatCan)

Students are more and more worried about their financial situation. 68% believe they will soon use up all their savings. Canadian students also worry about being able to pay the current expenses that are not necessarily linked to education – 51%, to be specific.

It gets worse:

54% of them are considering additional debt in order to consolidate the current debt burden.

These student debt Canada statistics were collected in April and May 2020, signifying increasing financial anxiety over COVID-19 economic issues. 

11. The average time to pay off student loans in Canada is between 9 and 15 years.

(Source: TD Canada Trust)

Students of medicine and related fields owe the most money; however, they are very likely to get well-paid and stable jobs upon graduating. This is especially true for the highest levels of education – individuals with professional degrees in the medical field owe around $69,122.

As a comparison, the average student loan debt in Canada for social science students on the same education level is $58,611.  

On the other hand, business school graduates are less likely to have debt. 

12. In 2015, around 36% of all students in debt resorted to bank loans and credit lines.

(Source: StatCan)

Still, most students had government-sponsored student loans – around 75%. Interestingly enough, a significant proportion of students – from 23% to 27%, depending on the level of education, found money to pay for their scholarships with friends and family help. 

Now:

Medians for government and bank loans are roughly the same – from  $10,963 to $25,556 for government loans and $9,821 to $59,994 for bank loans. This last number may surprise you, but $59,994 is the median for individuals holding professional degrees who took bank loans. 

As far as medians for government loans are concerned, we see that these numbers are somewhat lower compared to the average given above. This is the reason why we have to use different statistical tools to represent student debt statistics for Canada accurately. The average is higher than the median, which might mean that a relatively small number of big debtors “pull” the average up. 

13. In 2013, confidential student debt in Canada statistics was stolen from Human Resources and Skills Development Canada. 

(Source: Canada Student Loans Class Action)

This may not seem like that big of a deal, but a Canada Student Loan Class Action followed. Ultimately the students won in 2018

Here’s what happened:

Stats from 2000 to 2007 were stolen, and all individuals who had studied in this period and whose data was stolen were eligible for reimbursement. On account of the inconvenience caused by the theft of information, all affected students could apply for a $60 one-time payment.

Those with actual losses were eligible for further financial reimbursements. 


Conclusion

We see that most students in Canada face certain financial difficulties involving student debt. A majority of students take government loans, which is one of the best options due to low-interest rates and the fact that no money has to be repaid before graduation. 

Also, the interest doesn’t accumulate before graduation, which is another reason why the situation in Canada still hasn’t reached the level of crisis it has in the US.

But it’s not all good news:

A general student debt reduction in Canada is fairly unlikely, in light of the growing Canadian population and increasing financial burden of education, especially postdoctoral studies. In turn, student debt contributes to the steady increase in household debt.

We may see the situation changing drastically in case students start opting more for typical bank loans. Private institutions will in no case be as lenient and forgiving as the government and federal funds, such as NSLC (National Student Loans Service Centre). 

FAQ

How do student loans work in Canada?

Usually, students would apply for NSLC student loans. NSLC also offers financial advice, educational plans, and loan management services. Integrated student loans are paid back directly to the federal government, while non-integrated necessitate two different payments to the federal government and home province. 

Applicants can use the student loan calculator Canada, which accounts for factors such as payback period and interest rate.

How much debt does the average Canadian student have?

The average debt across all educational levels is $26,075. Keep in mind that the average might not be too representative, as a small number of big debtors is enough to increase the average drastically. The median debt for government loans is from $10,000 to $25,000

How bad is student debt in Canada?

As long as the government guarantees most student loans and offers debt relief, the situation will be under control. We’ve also seen fast actions coming from the government in response to the COVID-19 pandemic, which postponed student debt repayment for many students. 

What percent of students have student debt?

50% of all students have some form of a government loan. But the actual percentage is most certainly higher since there are also private bank loans and “friends and family” options. However, these are somewhat tricky to combine with official government data. 

How long does it take to pay off student loans in Canada?

It’s not unusual for Canadian students to be repaying their debts 15 years after graduating. According to new student debt in Canada statistics, loan payback time is increasing, as is the percentage of students who are unable to return the money they have borrowed. 

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