An increase in the number of students who turn to loans to pay school fees

03 September 2013 - Which Way To Pay

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Canadian students turn to loans to pay school fees

Canadian post-secondary students are relying on loans to pay for their school fees as less and less are using college savings or their parents. The average Canadian student expects to graduate with $26,297 worth of debt. Is this because they don't have savings? Their parents refuse to pay up? Or maybe their parents can't afford it? Either way, students are turning to lenders to help them with their students and taking out hefty loans to help them on their way.

According to a survey conducted by the Bank of Montreal, in 2012 52% of students were getting money from their parents. This then dropped to 43% in 2013. While 62% relied on their own savings in 2012, it is now 58% in 2013. A whopping 55% are now turning to loans. Students in B.C anticipate graduating with the most debt, an average of $34,886 followed by Atlantic Canadians at $30,725.

How long does it take to pay of these loans?

Students expect to pay off their debts within 6.4 years of graduating, however, the Canada Student loan Program says most take nearly a decade and some as much as 14.5 years.

"It's prudent to think about your repayment plan before you graduate, as it can be easy to underestimate the amount of debt you will accumulate or how long it will take to pay it off," BMO vice-president Janet Peddigrew said. Pollara conducted the online survey of 602 post-secondary students July 19-26. It has a margin of error of four percentage points, 19 times out of 20.

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