It's time to change the rules around student debt relief
KITCHENER, ON, Aug. 12, 2019 /CNW/ - Student debt contributes to 1 in 6 (17.6%) insolvencies, a record rate according to a study conducted by Licensed Insolvency Trustees Hoyes, Michalos & Associates Inc.
"Nine years ago, student debt insolvencies were just under 13% of all insolvencies we filed," says Ted Michalos. "Today, 18% of the clients we see are struggling with student debt. It's an epidemic."
The average insolvent debtor with student loans still owes $14,729 in student loans representing 32% of their unsecured debt, years after getting out of school. In Canada, government-guaranteed student loan debt is automatically discharged in a bankruptcy or consumer proposal if the debtor has been out of school for a minimum of seven years. Private student loan debt has no waiting period.
"The people we see coming into our offices struggling with student loans are getting younger each year," adds Doug Hoyes. "Today, 31% of student debt insolvencies are filed by young people under the age of 29. This rate was just 21% in 2011."
There are a lot of reasons for the increase – tuition and residence costs have risen pressuring students to borrow more. After completing their studies, graduates are often working in part-time positions and minimum-wage or low paying jobs. Many are not finding employment in their field of study that pays enough to repay their student loans.
"We believe it's time to eliminate the waiting period to have government student debt discharged through a bankruptcy or consumer proposal," says Doug Hoyes. "There is no such waiting period for private student loans, and there is no difference in how students use either government borrowing or private borrowing. It is inequitable to penalize a student just because they used government student loans when another student using private debt can get relief immediately."
About Hoyes, Michalos & Associates, Inc.
Hoyes, Michalos & Associates Inc., a Licensed Insolvency Trustee firm co-founded by Doug Hoyes and Ted Michalos in 1999, has established itself as the leading voice on personal debt issues in Ontario. Hoyes Michalos provides real debt management solutions to help Ontarians climb out of debt, including consumer proposals and personal bankruptcy, with offices throughout Ontario. Further information is available at www.hoyes.com
SOURCE Hoyes, Michalos & Associates Inc.