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Student loan regret
How do Canadians feel about their decision to pursue higher learning?
Going to college or university is meant to be a momentous occasion that sets you on a path for a better life. Sadly, this is becoming less and less the case, with roughly 14% of Canadians regretting their decision to participate in post-secondary education and of those who have second-guessed these choices, many are getting younger and younger, according to a study conducted by Finder.
We asked Canadians about their college experience with student loans, with the term “college” representing any type of post-secondary education whether university, community college or technical school.
How many Canadians have post-secondary education?
In 2020, approximately 73% of Canadians said they attended a post-secondary institution at some point, according to the Finder survey, and of those that furthered their education, roughly 45% took out a student loan. This is roughly 13.6 million Canadian adults, which if we look at the average cost for university tuition since 1965, could equate to as much as $48 billion in student loan debt.
Do Canadians regret taking out a student loan?
An overwhelming 81% of Canadians have some form of remorse in regards to furthering their education. These regrets range from wishing they’d paid their debts down quicker (29%) all the way to wishing they’d not gone to college or university at all (14%).
Men were slightly more likely to say they wished they had done things differently, with 83% of men saying they’d handle the situation in another way in hindsight versus 80% of women. The most common cause of remorse for the sexes was paying off their debt earlier, women (33%) are much more likely to say this than men (25%).
Generation Z and millennials are almost in lockstep with their regrets, with 86% of generation Z and 85% of millennials saying they’d have done things differently in hindsight, with generation X at 79% and the boomers way behind at 61%. The most common complaint for both millennials (28%) and generation Z (45%) was wishing they’d paid down their debt sooner, while for generation X, it was the wish that they’d chosen a different degree (25%). For baby boomers, 17% said they would either not attend or go to a trade school or community college instead, apply for more scholarships or focus on paying off their student loan faster.
Those who hail from the Atlantic Provinces have the most regrets about their post-secondary education, with 88% saying they’d do things differently. Roughly 85% of those from the Prairie Provinces had some regrets, 80% from Central Canada and 75% of West Coast students. Focusing on paying off their student loan faster was the number one regret in all four regions.
Student loans force over half of Canadians with debt to delay their lives in other areas
A whopping 56% of Canadians who took out a loan to go to university or college say that choice delayed other financial and lifestyle decisions. Most profoundly, 24% said that post-secondary education forced them to delay saving for their retirement. The next most common grievance for Canadians is putting off buying a home and delaying a holiday at 20%.
Men were 6 percentage points more likely to have had their lives impacted by student debt, with 59% saying they’d delayed something because of a student loan compared to 53% of women.
Saving for retirement was the most common issue cited by men (24%), whereas women reported that their emergency funds (23%) were the most commonly affected by the need to pay back a student loan.
One of the most striking findings of the survey revolves around not only the prevalence of people taking out student loans by generation but how those loans impacted their general financial wellbeing.
Only about 24% of boomers and 43% of generation X said they took out a loan in order to attend college or university, compared to 63% of millennials and a whopping 69% of generation Z, no doubt due to the rising cost of post-secondary education. And it’s the follow-on effects of having to finance your further education where we see the ongoing financial impacts most profoundly affecting millennials and generation Z.
Many generation Z who said they took out a loan to finance their studies (69%) said that their decision had forced them to cut back in other areas (69%), with putting off buying a home (33%) being the most common delayed decision. Millennials similarly (66%) said that their decision to take out a loan for university meant delaying other financial choices, with saving for retirement being the decision hurt the most (26%).
At the other end of the spectrum, less than half of generation X (49%) said taking out a loan for university meant delaying another financial decision, chiefly impacting saving for retirement (21%). Only 34% of baby boomers who took out a loan for university also said that it impacted their finances in other ways, with saving for retirement (19%) once again being the most cited financial impact of taking on student loan debt.
Those from the Prairie Provinces were most affected by taking out a student loan, with almost two-thirds (68%) saying they delayed other decisions because of their debt. Those in Central Canada were also hard hit by their student loans, with 57% saying they put off other decisions because of the debt, as did just over half of those from the West Coast (52%). The Atlantic Provinces were by far the least affected by student loan debt, with less than a third (29%) saying their choice to get an education had led to cutting back in other areas.
Almost a third (32%) of those from the Prairie Provinces said that going to college or university forced them to delay buying a home. On the West Coast, the major impact was delaying buying a car (28%); in Central Canada, it was saving for retirement (23%) and in the Atlantic Provinces, both saving for an emergency and going on a holiday (18%) were the most common financial choices delayed by student debt.
Within these regions, the largest discrepancy existed in the Prairie Provinces where over three-quarters (76%) of those from Saskatchewan and almost two-thirds (71%) of those from Alberta who’d taken out a loan said their financial lives had been impacted in others ways because of their student debt versus just over a third (36%) of those from Manitoba.
How long does it take the average Canadian to pay down their student debt?
Of the roughly 13.6 million Canadians with student loan debt, approximately 58% pay off or think they’ll pay off their debt within 5 years, with the majority (77%) having their debt paid off within a decade of leaving college or university.
Women are slightly better than men at paying down their debt early, with 59% saying they’ll have their debt paid within the first five years of taking out their loan versus 56% of men.
However, the roles reverse for those who think they will or who have paid down their debt within a decade, with 79% of men taking less than 10 years to close their loan file compared to 75% of women.
One of the more interesting findings is on how quickly different generations either paid back or expect to pay back their student loans. Generation Z leads the way with 69% expecting to clear their debt in 5 years or under and 85% expecting to be free of student debt within 10 years of leaving college or university.
These figures may be overly ambitious if we look at how quickly previous generations have paid back their student loans. The next most ambitious at paying off their debt is millennials with 60% expecting to pay back their debt within 5 years and 82% saying within a decade. However, just as with generation Z, many millennials are conceivably still in school or are projecting a much glossier picture of when they’ll have paid off their loan.
To get a more accurate picture of how quickly Canadians clear their student debt, we’re probably better off looking at those whose college days are long behind them: enter generation X and baby boomers.
Generation X reported the lowest percentage of people paying off their debt early, with less than half (49%) saying they paid down their debt in under 5 years, while for boomers that figure was 56%. However, these two generations trade places in regards to which had the highest percentage clearing their loans in under a decade, with 72% of generation X paying off their debt in under 10 years versus 66% of baby boomers.
Those living on the West Coast were best at paying off their debt in under 5 years, with 61% reporting they’d done just that. The Prairie Provinces closely followed at 60%, then Central Canadians (58%) and those in the Atlantic Provinces (46%).
But it’s those from the Prairie Provinces that are best at paying off their student loans in under a decade, with 83% saying they were free of student debt in less than 10 years following their studies. The West Coast is next best at paying off their debt, with 78% doing so in less than a decade. Central Canada is in third at 76%, with the Atlantic Provinces once again rounding out the list in last place with 68%.
However, within these regions, some provinces are better at paying off their debt. For example, while 58% of those in Central Canada report that they clear their student debt in under 5 years, those from Ontario are slightly above average at paying off their loans with 59% paying down their debt in under 5 years, while those in Quebec are slightly below average, with 57% reporting that they paid their debt down in less than half a decade.
Quebecers were also slightly below average at paying off their debt in under 10 years, with 75% saying that they paid off their loans in under 10 years, while Ontarians did so at a rate of 76%.
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