“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.”
Students and their families will finally feel some relief following yesterday’s provincial budget. After years of rising tuition fees and record levels of student debt, Budget 2017 announces a reduction in interest charged on student loans.
“Students are pleased that the government listen to their call, and has taken this important step towards mitigating student debt,” said Jenelle Davies, Secretary-Treasurer 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.”
Budget 2017 limits interest charged on student loans to the prime rate of interest; the existing interest rate ranges from prime plus 2.5% to prime plus 5%. Currently BC charges the highest rate of interest on student loans, and this change will move the province to closer to the national average. Government estimates suggest this change will produce annual savings to students and families of $17 million a year.
Though students are pleased with the government’s action on interest rates, the move falls short of what is needed. The BCFS’ Squash the Squeeze campaign has sought student debt relief since its launch in 2014, focusing on the elimination of interest on student loans, and the creation of needs-based grants.
“In 2015, Newfoundland and Labrador replaced their entire student loan system with non-repayable grants. That is the kind of decisive and meaningful action we need in BC,” said Davies. “If Newfoundland and Labrador can afford grants instead of loans, surely we can have that system in British Columbia.”
The BC Federation of Students is composed of more than 150,000 post-secondary students from 14 universities and colleges in every region in BC. Students in BC have been represented by the BCFS and its predecessor organizations since 1966.