Paying Off Student Loans


Warren Clark


Statistics Canada




Many students expect that postsecondary education will
result in better employment and higher earnings.
However, to acquire this education, students must
find the necessary financial resources. In Canada, paying for postsecondary education has always been a responsibility shared by society through tax dollars, and by parents and
children through personal savings. Since 1980, tuition fees have grown by 115%, while average family income has risen by only 1% (after adjusting for inflation). The result is increased pressure on families to find ways to pay for postsecondary
education. Government student loans provide one way for young people to invest in their future.

Although student loans provide essential financial help for many, they are not without risk. Much concern has been expressed about student debt levels and whether the growing
dependence on loans is creating serious problems for borrowers and for society. Are students defaulting on loans, particularly if they are unable to find well-paying jobs after
graduation? Do prospects of heavy debt discourage some students from enrolling in postsecondary programs or cause them to drop out before they reach their educational goals? Another concern is how a high debt load may affect students’ post-graduation plans. Do they modify future
educational plans, or decisions about buying a home or a car, or starting a family. Using data from the National Graduates
Survey of 1995 Graduates (NGS), this article examines the extent of indebtedness, the repayment record and the
impact of high debt on postsecondary graduates who used government loans to help finance their studies.

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Source: Consumer Policy Research Database

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