In recent years, higher education tuition fees have been on the rise and so has been the amount of student debt in Canada. Even though Canadian students can receive grants and loans from the Canada Student Financial Assistance Program, many are forced to use student credit cards, student lines of credit, and personal bank loans to cover the rising cost of fees and living.
Student Debt Statistics for Canadians
- The amount owned in government backed funding surpassed $22.3 billion in July 2020.
- The average tuition fee in 2021-2022 for undergraduate programs was up by 1.7% compared to the previous academic year.
- Students in the medical field have the highest tuition fees at the undergraduate level, while masters of business administration programs have the highest fees at the graduate level.
- Over 1.7 million Canadians have student loans.
- 42% of students receiving a loan from the Canada Student Financial Assistance Program in the 2018/19 academic year were aged between 20 and 24. 60% of the loans were given to women.
- 60% of the loans in the 2018/19 academic year were given to students entering undergraduate programs.
- In the 2016/17 academic year, 91% of the students who took out a federal student loan studied in their home province or territory.
- The average undergraduate student will have to pay back just over $3,000 in interest, while graduate students pay nearly $4,000 in interest on their federal student loans. The real cost of loans and credit is expected to be a lot higher because many students will also have private loans or student credit cards.
- 70% of high school graduates say they are not pursuing post-secondary education because of financial reasons.
Federal grants and loans
In Canada, students can apply for grants and loans to help them pay for their post-secondary education through the Canada Student Financial Assistance Program. The support is available for both full-time and part-time students. The application is done through the student’s province or territory of residence. There is no need to pay back grants and the loans become payable after finishing in post-secondary education.
How much a student can get depends on various factors which include family income, the cost of tuition fees and expenses, whether the student has dependants, and the province or territory where the students is resident at the time of application. In addition, students can receive grants and loans from the province or territory.
According to the Canadian Federation of Students, the amount owed surpassed $22.3 billion in July 2020. And that is not the full figure, as it only includes the amount owed on government-backed loans. The real debt, including money loaned from other sources, is higher.
Increased cost of tuition fees
According to Statistics Canada, full-time students enrolled in undergraduate programs paid $6,693 in tuition fees in the 2021-2022 academic year. The average fees were up 1.7% from the previous year. The average cost of graduate programs rose by 1.5% to $7,472.
The fees did not change in Ontario or in Newfoundland and Labrador, but rose in other provinces and territories. Increases in undergraduate tuition fees ranged from 1.1% in Prince Edward Island to Alberta’s 7.5%. The large increase in Alberta was because of the restructuring of tuition fees in the whole province.
Which programmes of study have the highest tuition fees?
There are huge variations in the cost of undergraduate tuition fees depending on the field of study, with degrees in the medical field being the most expensive. The highest tuition fees in 2021/22 were for dentistry $22,731, medicine $14,604, and veterinary medicine $14,374. However, graduates from these programs are likely to have a higher median employment income two years after graduating compared to other fields of study.
In comparison, undergraduate tuition fees in business, management and public administration were on average $6,991 and $5,754 for those studying humanities.
On the graduate level, the Master’s of business administration (MBA) remains the most expensive programme. A regular MBA in 2021/22 cost on average $29,286 while an executive MBA cost $51,295 on average. However, there are significant differences between the provinces offering the programs.
For example, in Quebec, the average tuition fee for an executive MBA program was $13,719, a fraction of the $93,985 average in Ontario. There are similarly large differences between the cost of regular MBA programs, which range from $2,564 in Newfoundland and Labrador to $42,707 in Ontario.
How many students receive student loans?
In the 2018/19 academic year, just over 625,000 students received loans from the Canadian government totalling $3.6 billion. The number of recipients went up by 6% and the value of the loans by 7% compared to the previous academic year. It is estimated that over 1.7 million Canadians currently have student loans.
Which provinces and territories have the most and the least student loan recipients?
Since the number of residents and the number of higher education institutes varies between provinces and territories, it is to be expected that the number of recipients for federal student loans varies as well.
Ontario, with 416,939 people receiving student loans in the 2018/19 academic year, represents by far the largest proportion of the total 625,135 recipients. This is almost 67% of the students with federal loans.
The provinces behind Ontario are Alberta, with 82,382 student loan recipients and British Columbia, with 55,228. Yukon has the least number of recipients, only 187.
Transferring those figures into dollars means that students in Ontario received $2,301.5 million in student loans, Albertan students received $503.3 million and in British Columbia the total was $344.2 million. Students in Yukon only received a $1.2 million share of the $3,575.4 total given out in student loans in 2018/19.
There has been little change in the student demographics receiving loans from the federal government over the years. In the academic year 2018/19, women made up 60% of the students approved for new student loans.
The majority of students receiving loans were between 20-24 years old with 293,982 (42%) of the total. The second biggest group was the 25-29-year-olds with 14 percent, and people 50 years or older represented just one percent of the new loans.
60% of the loans were given to undergraduate students, 34% to certificate or diploma level studies, 4% for masters, and 1% for doctorate level students. Most of the students (58%) who received a new loan attended university. College students represented 31% of the recipients and 12% were in private education.
Where do the students attend post-secondary education?
Data from the Government of Canada shows that most students receiving loans from Canada Student Financial Assistance Program stay in their home province or territory when they enter post-secondary education. Only about 9% of the recipients chose to study outside their home province or territory or went abroad to study in the 2016/17 academic year.
They also found that students who were from the larger provinces were less likely to leave their home province to study. On the other hand, students from smaller provinces and territories with a less choice in higher education institutes within their home province or territory were more likely to move elsewhere to study.
In the 2016/17 academic year, 78% of students originally from Yukon and 43% of those originally from Prince Edward Island chose institutions outside their home jurisdictions. In contrast, less than 5% of students from Ontario chose to study outside their province.
During the same academic year, almost 11,700 students representing 2% of the Canada Student Loan recipients, studied outside Canada. Half of those students studied in the United States with the other half entering higher education in other countries.
Support for part-time students
The government data shows that most of the students receiving loans from Canada Student Financial Assistance Program are in full-time education. Full-time students represent $2.6 million in loans compared to $19.2 million for part-time students.
In the 2016/17 loan year, 11,800 part-time students applied and received a federal student loan. The number of part-time students was down by 20% compared to the previous year because there was a 50% increase in non-repayable part-time grants given out.
66% of the part-time students who took out a government student loan that year were 25 years or younger, and the average loan was $1,631. Part-time students attending private higher education institutions had the highest loan average at $4,324.
Historical statistics on student debt
The first year the federal government gave out loans to support students in post-secondary education was in 1964, when 42,113 students got a student loan. Already then, Ontario was the province with the most recipients, with 21,920 students taking out a loan.
By the mid-70s, the number of students receiving loans had risen by over hundred thousand people to 144,893 and at the start of the millennia there were 343,588 students who took out a government student loan.
How much interest are students paying on federal student loans?
The interest rate for student loans is low, currently at 2.45% (as of August 2022) and the amount a person will pay back in interest will depend on the size of the loan and the number of years it takes to pay it back.
Below are some examples of the cost of interest from Knockout Interest, an organisation with the aim of eliminating interest on federal student loans. The calculations are based on students paying the loan back over the allotted ten years.
- An undergraduate student with an average loan of $13,367 will pay $3,048.34 in interest in 114 monthly installments of $143.99.
- A graduate student loan averages at $17,200, which means 114 monthly payments of $185.28 and a total of $3922.45 interest paid.
Many students pay back a lot more in interest as these figures are based on government loans only. The exact amount of student debt on top of federal loans is not known. However, studies by BMP and RBC have indicated that the average student debt is over $26,000 and the interest on private loans and credit cards is likely to be higher than on the federal student loans.
Potential consequences of debt acquired as students
Students who leave higher education with large debts and struggle to pay them off may end up with a poor credit score, making it harder to access other credit such as a mortgage. This can lead them to delay important events in life such as buying a home, getting married, having children or saving for the retirement.
It may even affect their career development. Ex-students with large loan payments may focus on the financial side of jobs rather than finding work which better matches their interests and offers the best long-term career development opportunities.
More people are filing for insolvency over student debt
According to Hoyes, the number of people filing for insolvency in order to deal with their student debt was around 22,000 ex-students in 2018. In Ontario, this meant that unpaid student debt contributed to over one in six cases of insolvencies in the same year.
A graduate survey by Statistics Canada from over ten years ago found that just under half (48%) of the graduates had relied solely on the money from the federal loans. 27% of the graduates had non-government loans only while a quarter of the students had both.
There have not been more recent surveys published on the topic, but with the rising living cost and higher tuition fees, it is likely that the percentage of students needing to supplement the federal loan has risen.
The idea of debt is putting off potential students
Debt aversion is one of the main reasons for high-school graduates for not enter post-secondary education. Seventy per cent say they are not pursuing a degree because of financial reasons and one in four in that group said they were most worried about accumulating debt.
People from low-income backgrounds, marginalized communities and single-parent families are most likely to name debt aversion as the reason for not entering post-secondary education.
Support with payments
Students who are struggling to pay off the federal student loan can apply to have their monthly payments reduced or for a Repayment Assistance Plan (RAP). People can apply for RAP as soon as it is time to start repaying the student loan. Those accepted to RAP will not be required to make payments that exceed their income by 20%, or any payment at all. More details on RAP can be found on the Government of Canada website.
Frequently Asked Questions
Over 1.7 million Canadians have student loans.
The average undergraduate student will have to pay back just over $3,000 in interest, while graduate students pay nearly $4,000 in interest on their federal student loans. The real cost of loans and credit is expected to be a lot higher because many students will also have private loans or student credit cards.
60% of the loans in the 2018/19 academic year were given to students entering undergraduate programs.
Students in the medical field have the highest tuition fees at the undergraduate level, while masters of business administration programs have the highest fees at the graduate level.
In the 2016/17 academic year, 91% of the students who took out a federal student loan studied in their home province or territory.