Today, higher education has become synonymous with higher income and job stability. As a result, the number of students pursuing higher education has increased exponentially since the 1960s. Unfortunately, the cost of education has also increased significantly while income has remained quite stagnant in the last 20 years. Consequently, many students have been forced to take on an excessive amount of both government and non-government student loans to cover the cost. According to the Canadian Federation of Students (CFS),  this, in turn, has made student debt one of the most significant problems young adults face.

How Student Loan Debt is Currently Affected Canadians

To help paint a picture of what student debt looks like in Canada, here are a few statistical trends we’ve seen according to Statistics Canada.

  • 50% of students with bachelor degrees have government and/or non-government student debt after graduation.
  • Students in Ontario and the Maritimes have higher student debts than the average Canadians, averaging at $28,000.
  • Students with a Doctorate have on average three times more student debt than that of a college graduate.
  • In Ontario, student debt contributed to 1 in 6 insolvencies in 2018 (According to

Financial Literacy and Student Debt

As students graduate from high school to post-secondary education, they will often have new financial responsibilities like student loans, rent, phone bills, credit card bills, and more. As such, it is imperative that they learn and develop core financial skills in order to live a financially healthy lifestyle. Improving your financial literacy is one way you can better understand and manage your student debt and personal finances in general. Learning how to better save, spend, and borrow are key factors in obtaining a higher level of financial literacy.


Tuition, books, room and board, and transportation are some of the major expenses you’ll have as a student. While some students may be able to cover these costs with the help of their student loans or through their parents, some may not have that luxury. To avoid taking on too much debt, building an emergency fund is one of the best things you can do, as it provides security in case of financial emergencies or large expenses such as these. Starting an emergency fund can be hard work and often requires time, planning, and firm hand over your spending. Learning how to save money will not only help you graduate without a huge amount of debt but it will also teach you how to save for your future financial goals.


As a student, nights out with friends will be plenty and often hard to resist. Unfortunately, a night out can easily cost you a hundred dollars or more, which you could have put toward paying off your student debt or some other prying expense. If you find yourself habitually relying on your credit cards or missing your payments, a budget can help you control your spending and help you manage your finances better. Learning to reign in your spendings and prioritize your financial obligations is key to building your financial literacy and meeting your savings goals.


If you have a student loan, you’ll want to understand how it works. The more you know about it, the better you’ll be able to manage your student debt and maintain a healthy financial profile. Understanding how much interest you’re paying on your student loan, how your payments affect the principal and interest, how lump sum payments affect your principal, will affect your ability to repay your student loan efficiently. Moreover, mishandling your student debt can negatively impact your credit score, which has the potential to negatively affect your future. A credit score is a number between 300 and 900 that is assigned to you based on a number of factors including how much debt you have and how often you make your payments on-time and in full. Your credit score affects your ability to obtain credit products like credit cards and non-government student loans, as well as rent an apartment and take out a car loan in the future.

Tips on Paying off Your Student Debt

While student debt can be distressing, there are a few things you can do to pay off your student debt faster and gain control of your finances.

Create a Plan

For one, understanding how your student loan works and what payment options you have can help you create an action plan that will lead to better debt management. To start, you should know:

  • What is the principal amount owed
  • What is the interest rate charged (and how much interest will you have to pay over your repayment term)
  • How long will it take you to repay your debt
  • How much will you have to pay each month

Once you have an overview of your obligations, you can create a budget that accommodates your student debt along with your current expenses. This will help keep your spending in control while helping you climb out of debt.

Higher Payments

If your student debt only requires a payment of $300 a month, but you can comfortably afford to pay $500, put down $500. The extra $200 will directly go to your principal amount which will help reduce your debt faster.  While smaller payments may seem more affordable, it will not only take you longer to pay off your student loans but you’ll end up paying a lot more in interest as well.

Lump-Sum Payments

Speaking of additional payments, making lump-sum payments while you’re in school or during the 6 month grace period will directly pay down your principal amount which will save you a ton on interest and pay down your debt quickly.

Seek Financial Advice

Speaking to your parents and other financially responsible adults in your life will also help improve your financial literacy, which leads to better financial decisions. According to the 2019 Canadian Financial Capability Survey conducted by the Financial Consumer Agency of Canada those who develop a more robust understanding of their personal finances through advice and education are better able to “manage money and debt wisely, helping them plan and save for the future”.

Financial Assistance Programs

If you’re having trouble paying off your student debt, you can always check out your provincial student aid office to see if they have any financial assistance programs available. You can also check if you qualify the government’s Repayment Assistance Plan. If you are approved, you’ll be able to pay off your loan gradually through contributions from yourself and the government.

How Loans Canada is Students Conquer Their Debt

Loans Canada understands the importance of financial literacy and debt management. We believe financial literacy is a lifelong relationship that you must actively work on to ensure a healthy connection. As such, we are empowering students to take control of their financial situation by offering a $750 scholarship to one lucky student every semester. All you need to do is tell us how financial literacy has played an important role in your life.