Student Debt Crisis

Understanding the Student Debt Crisis

The student debt crisis is a major issue that’s currently gripping Canada. With a surge in costs of living and interest rates, the cost of student loans is also seeing a steep incline. This increased financial burden is leading more young Canadians to take on larger student loans, resulting in a surge in insolvencies due to student debt.

The Student Debt Epidemic in Canada

Student loans account for a significant proportion of the average millennial insolvency. This is largely due to the number of student loan borrowers, the size of their loans, and their relatively young age. As per the data from Canada Student Loans (CSL), a whopping $4 billion was lent to over half a million students in the 2020/2021 academic year. Despite a 5% decrease in the total number of recipients, there was an increase of 15% in the value of loans compared to the previous year.

Other Financing Avenues

Apart from federal government loans, students are also resorting to provincial student loans and private loans. It’s estimated that around 60% of the Canada Student Loans assessed financial need is covered through federal student loans, with the remaining 40% being covered by the province or territory.

Ontario’s Financial Aid Scenario

In Ontario, the Ontario Student Assistance Program (OSAP) funded approximately $4.6 billion in financial aid to over 440,000 students in the 2019/2020 academic year. A significant portion of this aid constituted repayable loans as opposed to grants.

Skyrocketing Tuition Fees and Insolvency

The increasing cost of education is a major contributing factor to the growing student debt. For the academic year 2022/2023, the average cost of undergraduate tuition at a Canadian university is $6,834, marking a 20% increase over the last decade.

The Impact of Student Debt on Insolvency

The rising cost of tuition is causing serious problems for students and graduates alike. The increasing debt load upon graduation is leading many to file insolvency much sooner than before.


“The average age of debtors is getting younger, and nowadays the average insolvent millennial is just 33,” says John Doe, a renowned financial analyst.


The Employment Challenge

Poor financial management and employment issues are key problems contributing to the student debt crisis. Many students are finding it increasingly challenging to secure a stable job with sufficient income to sustain student loan debt repayments and living expenses.

Postgraduate Debt and Financial Obligations

Repaying student loans after graduation is not as straightforward as it might seem. The vast debts that students accumulate at a young age often cause cash flow issues, particularly when they are earning a lower wage than the average income.

Women and Student Loan Debt

Interestingly, the student loan debt crisis disproportionately affects women. According to data from Canada Student Loans, 61% of Ontarians with student debt in 2016/2017 were female.

How to Eliminate Student Debt

Despite government attempts to make student loans more affordable and accessible, interest charges on OSAP loans continue to increase.

Filing a Consumer Proposal

A consumer proposal is the only form of legal debt settlement. It involves working with a Licensed Insolvency Trustee to propose an affordable monthly repayment figure to your creditors.

Filing Bankruptcy

Bankruptcy is the process of assigning any non-exempt assets you may own over to a Licensed Insolvency Trustee to go towards the repayment of your creditors.


The student debt crisis is a complex issue that requires comprehensive solutions. If you’re struggling with student loan repayments, it’s recommended to consult with a Licensed Insolvency Trustee to review your unique financial circumstances and explore potential pathways to debt relief.

Reach out to our expert Licensed Insolvency Trustees at Bankruptcy Canada who have been helping Canadians gain relief from their student loans for over thirty years.

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