Falling into financial difficulty can be difficult at any point in life but it can be especially stressful when you’re trying to balance your college education and pay your debt.
But student debt can have an impact on more than just your bank balance.
The government may have suspended the accumulation of interest on student loans until 2023, it’s important not to lose sight of how this could impact you in the future.
Interest rates for student loans can be as high as 8.95%, meaning that you will repay a much higher amount than you originally borrowed.
According to the National Student Loan Centre, it takes an average of nine years for Canadian students to clear their student debt. Managing student loan debt, as well as the cost of day-to-day life, isn’t always easy and can lead to many student loan borrowers turning to other debt just to get by.
Given that most graduates won’t immediately get jobs in their chosen field, and many are forced to take on lower-paid roles when they leave higher education, it’s important to make sure you have a stringent budget in place to make sure you always make your student loan payments.
If you’re unable to repay what you owe and miss a monthly payment, it can impact your credit score. Details of any missed payments are sent to the Canada Revenue Agency (CRA) for collection. The CRA can then seize the money from your Goods and Services Tax (GST), your tax refunds and even garnish it from your wages.
The link between debt and mental health is undeniable but throw in the pressure to graduate college and get a good job and the pressure is greater than ever.
Industry figures show 44% of Canadians believe their financial situation impacts their mental health while 75% of first-time mental health diagnoses occur between the ages of 16 and 25, according to the Mental Health Commission of Canada.
If you’re concerned that student loan debt, or any other debt, is affecting your mental health it’s important to seek professional support.
It is well documented that financial strain is a major cause of divorce, according to an article published by CNBC 1 in 8 divorces are actually caused by student loans. This is mostly because the burden of the debt can often impact new couples’ ability to buy their first home, getting married or having children. If you are reported to a credit bureau for defaulting on the loans your credit rating will be affected, this could then have an effect on your professional life as it can prevent you from getting a job, which ultimately can impact your career.