Students at the University of Victoria (UVic) are celebrating the Province’s Budget 2019 decision to eliminate interest from B.C. government-issued student loans, providing relief for about 200,000 people and making education more accessible for all.
As of Feb. 19, 2019, all B.C. government-issued student loans stopped accumulating interest.
Rob Fleming, Minister of Education, was joined by students at UVic to mark the historic announcement.
“Post-secondary education is meant to open doors for people, not create a barrier to getting ahead,” Fleming said. “By eliminating interest on B.C. student loans, we’re helping young people get off to a good start in their lives and careers. Budget 2019 is about making life better for British Columbians, and access to education plays such a big role in helping people reach their full potential.”
Students have advocated for interest-free loans in B.C. for many years. Instead of worrying about growing debt, students can focus on learning and graduates can put their energy into their next steps in life.
“Students have been advocating for the elimination of interest on student loans for a very long time,” said Ainsley Kerr, director of campaigns and community relations, University of Victoria Students’ Society. “Budget 2019’s move to increase the accessibility of education is long overdue and will help level the playing field by ensuring more people can access the opportunities they need for their future. We welcome the B.C. government’s decision and thank them for listening to student voices.”
There are about 200,000 B.C. student loans representing $1.24 billion in principal outstanding. Borrowers will collectively save about $22 million in interest payments on these loans in 2019-20.
“The provincial government’s continued investment in students allows them to develop the skills, abilities and attributes necessary to achieve their academic and personal goals, while contributing effectively in their communities,” said Jim Dunsdon, associate vice-president of student affairs, UVic.
The elimination of interest on student loans means that low- to middle-income students are not paying thousands of dollars more for their education than their peers who can pay up front.
Not only will eliminating interest on provincial student loans benefit current and future students, but also the impact will be felt by borrowers who are still paying off their student debt.
A typical undergraduate borrower has $11,200 in B.C. student loan debt, and $28,000 in total student loan debt, including both federal and provincial loans. Eliminating interest on the provincial debt will save this borrower $2,300 over a 10-year repayment period.
- The announcement in Budget 2019 to eliminate interest on B.C. government-issued student loans comes after years of advocacy by student groups throughout the province including the BC Alliance of Students and the BC Federation of Students.
- StudentAid BC delivers the Canada-British Columbia integrated student financial assistance program. The federal government sets the interest rate for the federal component. Interest on the federal loan remains prime plus 2.5%. Integrated loans are based on a 60/40 split between federal and provincial funding respectively.
- The 200,000 B.C. student loans include about 55,000 people in study, about 120,000 people in repayment and about 25,000 people in default.
- The student loan interest rate in B.C. had been prime plus 2.5% since 1996-97. Government first reduced interest from prime plus 2.5% to prime on Aug. 1, 2017.
B.C. Budget 2019: www.bcbudget.gov.bc.ca/2019/