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Why Paying Off Student Debt Will Take Longer Than You Expect

Aug. 27, 2014
3 mins
A young professional works on her laptop outside of a student campus

When Stephanie Churma decided to study fashion arts at Humber College a decade ago, like many students she knew debt would be a part of the equation. A $9,000 loan from the province’s token student moneybag – the Ontario Student Assistance Program – covered tuition, books and the inhabitation of a closet-esque dorm room. While Churma was happy to have the OSAP support at the time, the concept of student debt was still foreign to her college newbie mind.

“I didn't realize how much money that actually was,” says the 28-year-old astrologer and blogger behind The Daily Minx. Despite the disconnect, Churma says she was disciplined with her OSAP money. 

“I didn't go crazy the week I received it and panicked mid-semester because my food card was on empty,” she says.

Underestimating the impact of debt

However, Churma’s $9,000 OSAP loan is on point with students’ expectations about debt.

A recent survey by CIBC found that 51% of Canadian post-secondary students have or will need to borrow money to pay for their education and nearly three quarters (73%) expect to owe more than $10,000. Forty per cent dream bigger, expecting to be on the hook for $25,000 or more.

Churma paid off her OSAP debt two years ago after inheriting some money but suspects she'd still be forking over the funds for the last grand or two had she stuck to her original schedule.

“What I would have done differently would be pay as much as I could as quick as I could,” she says. “I should have been able to pay it off sooner, but I dawdled and would often make the minimum payments in order to (go on) all-inclusive vacation for example.”

Reassessing the repayment deadline

Two-thirds of those polled by CIBC expect to pay down that debt in five years or less. Although some will, it’ll take some strategy according to Christina Kramer, executive vice president or retail and business banking at CIBC.

“While their intentions are admirable, they may not be realistic,” she said in a release accompanying the survey results. “As students graduate and look to start their careers, they will likely be moving out on their own, saving for a car or a down payment on a home, or even starting a family – that's why it's important for students to manage the amount of debt they take on, develop a budget that helps them carefully manage their spending while in school, and have a plan to pay off debt once they graduate."

The key to managing student debt

Getting a handle on paying back that stack of someone else’s cash centres around setting out a clear strategy from the get go. Although it may not be all that fun, you should create a payback plan for yourself before you even cash the first loan cheque. Here are some ideas:

Talk to an advisor: A good first step is chatting with an advisor to help come up with a budget, some sort of system to keep on track. “Set up automatic payments that come out without you having to think about it,” says Churma.

Set a budget: Plan out a budget to ration off the funds and make sure you’re not burning through it too quickly. “Take OSAP seriously! Use it properly. It’s not a lotto ticket and it will run out sooner than you think,” says Churma. “Debt is annoying, but ill-fitting credit scores are worse – don't assume that life won't get in the way – you'll be up in money, and you'll struggle for a while as well but having a messy credit rating will only haunt you for years to come.”

Stay in contact with your loan provider: “If you are having a rough go, call them! Talk to someone and explain your situation, they will – nine times out of 10 – re-asses your payments, and if you are in a serious bind they will also give you a break, either three, six, or nine months according to how serious your situation,” says Churma mentioning she used a similar system when a family emergency prevented her from being able to work.

Ultimately, the key to paying down debt is to start early and stick to a plan.

“Good luck, and don't stress – use OSAP responsibly, set up pre-authorized payments, be consistent, and call them if you are in a crisis,” adds Churman.

Andrew Seale

Andrew Seale is a freelance writer with an absurdly hyperactive mind and predilection towards the obscure and eclectic. He frequently shares his personal finance experiences and mishaps with TheDot readers but has also been known to profile business leaders ranging from financial savants to bootstrapped entrepreneurs. His work has appeared in the Globe and Mail, Yahoo Canada Finance and News, Profit Magazine, The Toronto Star, Enroute Magazine, and on the back of napkins sometimes tucked into the pockets of strangers. He can be found at

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