The Scariest Thing Of All: Students Loans And Debt

If I could dress up as the scariest thing I can think of for Halloween it would be my student loan. I thought about what I could wear to represent the terror of a student loan. But then I decided to think more realistically, I’ll just dress up as an over stressed and under paid millennial and ask for spare change. Oh wait… 

According to the Canadian University Survey Consortium, the average Canadian student will leave their post-secondary education with approximately $27,000 of debt. 

The Canada Student Loan program claims that most graduates take about 10 years to pay their loans. 

When recent American graduate Chad Haag realized he had to somehow make payments of $300 a month on his $20,000 loan with a job that doesn’t pay a living wage, he moved to Uchakkada, a small village in India. His student loan wisdom is, “if a tree falls in the woods and no one hears it, does it really exist?”. 

Brian Karimzad, co-founder of a financial analysis service, MagnifyMoney, says their studies indicate that the most meaningful difference between students graduating with student loans or without is that students with debt end up with half the amount of retirement savings than those without debt. Although being in debt doesn’t seem to affect the ability to buy a home, it does affect the value of the purchase. Those with loans purchase homes valued at 5% less than those without debt. Karimzad also reports that the majority of people who have loans rely on credit-card debt to finance their month to month living expenses. Maybe we’re just falling back on familiarity, I know it makes me suspicious when my bank account balance is not in the negatives. 

Student loans also mess with your ability to be an entrepreneur. According to finance professor Karthik Krishnan, people with student loans over $30,000 are 11% less likely to start a business than a graduate who is debt free. He also found that businesses started by people with debt don’t grow as fast as businesses started by people without. He postulates a gradual deterioration in economic mobility and start-up companies. 

A paper published by the Roosevelt Institute concludes that the amount of debt a student is in does not have significant relationship with their income. In other words, the amount you pay for your degree does not have a bearing on its financial return. With the cost of Canadian universities being significantly smaller than the United States, student loans are slightly less daunting, but the horror is the same: before you’re old enough to rent a car, you must make financial decisions that will affect the rest of your life. 

But maybe, if you wait long enough the government might just… forget about it. The federal government has recently announced plans to write over nearly $344-million worth of student loans that is not expected to be recouped from loan recipients. Loans may be deemed uncollectible when people file for bankruptcy, cannot be physically located, or the loan passes the legal limit on collection. Within the last two years, the federal government has written off about $3-billion in student loans. Any of the tips regarding paying off loans faster sound like living with a continuation of university life – minus the fun stuff. Work a side job, put any extra money toward repayment, get a roommate. Might as well stay in school, the institutions will own us anyway.