The crippling effect of student debt

We need to take a hard look at the debt load students are incurring to get a postsecondary education. It ends up being a negative to everyone in society, not just to the students.

The crippling effect of student debt by Nancy Knowlton

I paid my way through 8 years of university through a variety of means. I worked summers for a well-known company for the 5 years of my 2 undergraduate degrees, and that provided me with a good base of income. I applied for and received a student loan and a bursary from the Quebec government for all my undergraduate and graduate studies. Then when I could, I worked a variety of jobs both on- and off-campus during the school year for much of my college career. While it definitely was a struggle to pull together the necessary funds from so many sources, I prided myself on not relying on or asking for money from my parents.

At the end of the 8 years of study, I had a lot to show for my time and effort – namely, 3 degrees. Two of my degrees were in business, and I thought that they would set me up well for a business career. I learned the basics about a lot of things in my undergraduate degree. I took as many courses as I could possibly manage, and that meant that I essentially majored in almost everything. My MBA took everything up a notch and gave me an even greater perspective from a strategy and high-level perspective. I was ready to take on the world.

A mountain of debt

I also had a mountain of debt – at least it seemed like that as I saw what lay ahead – the prospect of having to repay it along with acquiring all of the normal things for establishing and building a life. In hindsight, it was minor relative to the debt load that many students today shoulder, but at the time it looked like a lot considering my income. I was heading to work as an articling student with an almost subsistence level compensation package and with continuing costs for the CA studies and time off without pay. From my starting point, paying off my debt seemed a long way off.

I still remember opening the letter from my bank in Quebec that told me that my student debt had been paid in full some 17 years after I started my payments. Attached to the form letter was a personal note from one of the tellers. She said that she and the other tellers had paid attention to me during my time in Quebec (they knew I was an athlete), noting the growing student loan. Then to their surprise the loan increased over 3 further years at another university. The teller concluded by saying that I had the largest student loan that that branch had ever had, and everyone was so happy that I had been able to steadily pay it off.

Over the 17-year period, I had a relatively modest monthly payment taken from my bank account each and every month. At the start, it represented a sizable portion of my cash flow, something that I noticed as I struggled to balance outflows with my inflows. As time marched on, it became a smaller percentage of my income, and its automatic removal from my account caused me less concern. In the end, I paid well more than double the original loan balance.

That experience paying off my student loan helped to formulate a strongly held perspective – student debt is a crippler. I had no choice but to incur the debt if I wanted what it could pay for. I could only get the means to repay the debt through a good job, something that I thought I could only get with a good education. It was a catch-22.

My student debt also did some good things for me. It hindered my ability to get a mortgage, and I understand why it should have. I had to save a greater down payment to apply to the purchase of a home, and saving turned out to be a good thing. I also had to save for a car when no loan was available. I learned to live on my compensation level from two years prior, an excellent piece of advice from a mentor in the CA firm. I lived within very modest means for quite some time.

Student debt today

Today things are different for many students. The cost of tuition, books and living have become so expensive that many students who graduate from university have either severely impacted their family’s finances (some parents still expect to pay virtually the full cost of university for their children) or have piled up their own mountain of debt that is almost impossible to manage along with all of the other costs of getting started in adult life.

It is not unusual to see students protesting or rioting around the world against tuition hikes. While we may argue that somehow we managed or that their tuition really is not that expensive, this is a very real dilemma for some, namely the poor who see education as their way out of poverty and a way up the ladder to middle class.

Ivy League school tuition

It is also hard to accept the tuition levels of some of the Ivy League and other schools that are sitting on endowments of billions of dollars, yet charge sky-high tuition. Something is wrong with an equation that allows institutions to hoard their cash while bringing in even more through tax-deductible donations and tax-free earnings on investments.

Some students and parents are under the impression that the name and cachet of the institution matters for meeting the right people, making the right friends, gaining a spouse and getting a job – not necessarily in that order. For that opportunity they are willing to pay a high price that will impact their family for years. They might be surprised to learn that graduates from lesser known schools build successful lives and careers.


One of the things that may be different today is that young people in many countries, states and regions cannot find work, even with the vaunted university degree in their hand. I can’t yet tell if this is simply a cycle that just happens to be negative now or a long-term trend to jobs that will simply never be available. For some, this means graduating and then living at home as they have no means of supporting an independent life. This is not just momentarily discouraging – it is a long-term loss to the individuals and the economy.

Complete re-think needed

My sense at this time is that the whole system of funding and financing a postsecondary education needs a complete re-think. It means getting all involved to understand the dynamics and not to just take the same old approach. Education is at the core of a civilized society and a healthy and vibrant economic engine. Students are the feedstock that we must all care for. It does us collectively no good to have them burdened with crippling debt as they start into adult life.

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Nancy Knowlton
Nancy Knowlton is co-founder and CEO of Nureva Inc. and previously the co-founder and CEO of SMART Technologies. She writes about education, entrepreneurship, business management, technology, innovation and other passions.