Study Finds Student Debt is on the Rise in Mississauga
Student debt is a growing problem that affects many students, even in Mississauga.
According to a study conducted by Hoyes, Michalos & Associates Inc., student debt contributes to 1 in 6 (17.6%) insolvencies.
“Nine years ago, student debt insolvencies were just under 13% of all insolvencies we filed,” says Ted Michalos, the co-founder of the company. “Today, 18% of the clients we see are struggling with student debt. It’s an epidemic.”
According to the study, the average insolvent debtor with student loans still owes $14,729 in student loans representing 32% of their unsecured debt, years after getting out of school.
In Canada, government-guaranteed student loan debt is automatically discharged in a bankruptcy or consumer proposal if the debtor has been out of school for a minimum of seven years.
Private student loan debt has no waiting period.
“The people we see coming into our offices struggling with student loans are getting younger each year,” adds Doug Hoyes the second co-founder of the company. “Today, 31% of student debt insolvencies are filed by young people under the age of 29. This rate was just 21% in 2011.”
There are many reasons for the increase, including tuition and residence costs rising, pressuring students to borrow more.
Many graduates are often working in part-time positions and minimum-wage or low paying jobs. Many don’t find employment in their field of study that pays enough to repay their student loans.
“We believe it’s time to eliminate the waiting period to have government student debt discharged through a bankruptcy or consumer proposal,” says Hoyes. “There is no such waiting period for private student loans, and there is no difference in how students use either government borrowing or private borrowing. It is inequitable to penalize a student just because they used government student loans when another student using private debt can get relief immediately.”
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