North America’s Student Loan Problem and What Borrowers Can Do to be Successful

This is Tom! He is American. But we share the same financial problems here in Canada. He has a financial blog called Fired Up Millennial. He wrote this article! Enjoy. 

Student loan debt is an ever-growing problem in the United States, but it’s also an issue in Canada.

The average student graduates with around $25,000 CDN ($20,000 USD) in debt. The average American college student in 2014 finished with about $30,000 in student loans. And that number isn’t going down anytime soon.

The cost of post-secondary education is only going to continue to rise. Graduates in 2018 and beyond can expect to graduate with near-crippling amounts of debt and high monthly payments.

How Student Loan Debt is Affecting Grads

When a student graduates with that much debt, it immediately puts them behind in terms of standard ‘life milestones’. Buying a home or car, getting married, starting a family, or starting a retirement account are examples of those milestones.

In Canada, the rate of unemployment for recent graduates was 13.9%, and many of those who find work aren’t getting jobs in their chosen fields. They are often underemployed as well, earning far less than they expected—but still having to make student loan payments.

In the United States, 56% of 18 to 35-year-olds say they’re in the same boat. They’re putting off buying a home, car, or in many cases even moving out of their parents’ home. Getting married and having children is last on the list of milestones to be achieved; the vast amount of student loan debt is affecting marriage and birth rates among college graduates in North America.

Why Aren’t They Moving Forward?

The number one reason that millennials give for being unable or unwilling to take on those life milestones is their student loan payment. With well over half of graduates saying that their student loan debt projections affected their choice of career and 61% of entrepreneurs being held back by student loan payments, the debt weighing on college graduates affects not only the lives of the graduates but all facets of society.

What Millennials Can Do

It might seem hopeless but there are ways that millennials can pay down debt faster and get on with their lives. One of the more obvious options is to pay more than the minimum payments. Most loans offer an interest rate deduction if you have autopay set up. And if you can put an extra $25-50 toward your loans each month, you’ll see even more of a difference because you’ll be deducting from the amount that’s accruing interest.

Refinancing is another viable option. There is no shortage of companies that offer a number of refinancing possibilities. You could apply for a lower interest rate, which decreases the cost of the loan over time. If you end up with both a lower monthly payment and interest rate, still pay the higher amount you were paying before the refinance to pay off the loan quicker.

However, think twice about getting a refinance loan that lowers your monthly payment. If you drop your monthly payment and then start paying only the lower amount, it’ll take you much longer to pay the debt off—exactly the opposite of what you’re trying to do.

It’s Time to start budgeting – for real

One of the most important things you can do to cut your student loan debt down is to design a budget and follow it. First, budget for shelter, food, and absolutely critical things—your gym membership, Starbucks habit, and Netflix are not actually mandatory. Next, budget for your loans and any other debt. Entertainment, fun, and ‘wants’ only come after the first two categories are taken care of. The more fat you can trim from your spending, the faster you can pay down those loans and reclaim those monthly payments.

Lastly, if you come into any extra money, such as a tax refund or bonus cheque at work, use it to make an extra principal payment on your loan.


Student loan debt isn’t an American problem or a Canadian one. It’s an issue affecting all of North America, and even people who aren’t taking out student loans. Real estate, entrepreneurs and small businesses, and many other facets of society are affected by the lessened spending power and financial ability of graduates with the burden of student loan debt.

Even if you’re feeling buried by your education debt, it doesn’t need to be hopeless. There are options, and if you stick to a plan you can get your debt paid off early, and get on with living your life.

Tom blogs over at where he talks about his goal of achieving FIRE – Financial Independence/Retire Early. Tom loves exploring and talking about ways to make the best money decisions so money doesn’t ever have to be an obstacle. Follow him on Twitter @FIREdUpMillenn.


Thanks so much for the guest post Tom! If you need some more advice about budgeting, getting your own debts under control, or just getting your financial sh*t together, feel free to contact me.

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