The BC government’s 2019 Budget has students celebrating as it spells the end to interest charged on BC student loans. After years of urging for this change in the name of fairness and economic growth, the announcement will bring welcome relief to thousands of British Columbians.
“Students are very happy that the government has listened to our call, and has taken this important step towards mitigating student debt,” said Aran Armutlu, Chairperson of the BC Federation of Students (BCFS).“This announcement will not only help current and future students, but also those who have completed their studies and are struggling to make loan payments.”
Education-related costs such as tuition fees, textbooks, and other expenses continue to increase rapidly, forcing half of all students to take on debt in order to access post-secondary education. Based on the current prime rate of 3.95% interest charged on a student loan of $25,000 adds to an additional $8,000 during a 10-year repayment; those with $40,000 of debt upon graduation could expect to pay an additional $12,700 in interest.
Student debt in BC has risen 88% since 1999, and the average student loan balance upon graduation is over $30,000. A recent study showed that student debt holds young people back not only professionally, but also in other important ways: because of rising debt, recent graduates in Canada are delaying major life events like getting married, buying a home, or starting a family.
“With tuition fees at an all-time high, student debt inBC continues to grow as students and their families struggle to afford the education they need to enter the workforce,” said Armutlu. “Eliminating interest on student loans relieves some of the pressure faced by those who have to borrow to access education.”
Through the BCFS, students have long sought student debt relief, focusing on the elimination of interest on student loans and the creation of needs-based grants. In August 2017 the BC government reduced the interest rate on student loans by 2.5%, limiting it to prime. The change announced today will help young British Columbians as they complete their studies and join the workforce.