Vancouver: Students at the University of British Columbia (UBC) are celebrating the Budget 2019 announcement to eliminate interest from B.C. government student loans, resulting in debt relief for about 200,000 people.
As of Feb. 19, all B.C. student loans stopped accumulating interest.
Melanie Mark, Minister of Advanced Education, Skills and Training, was joined by students and Santa Ono, president of UBC, at the student union building, The Nest, to mark the historic announcement.
“Post-secondary education and skills training should be opening doors for people, not making it harder to get ahead,” Mark said. “Students spoke, and our government listened. For too long, students graduating from post-secondary institutions have been saddled with high levels of debt. Our government is committed to making life more affordable. That’s why Budget 2019 eliminates interest on all B.C. student loans going forward.”
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.
“The elimination of interest on B.C. student loans has had an immediate impact on students who are burdened by debt,” said Cristina Ilnitchi, vice-president of external affairs, Alma Mater Society. “Students have been asking government to reduce the interest on provincial loans for years. We welcome the fact that the provincial government has recognized that action was needed to alleviate the difficult financial situations students face during their studies and after they leave their studies.”
There are about 200,000 B.C. student loans outstanding, representing $1.24 billion in principal. Borrowers will collectively save about $22 million in interest payments on these loans in 2019-20.
“This budget has good news for post-secondary students,” Ono said. “Post-secondary education and opportunities go hand in hand. Eliminating interest on B.C. student loans and continued investments in additional tech-related spaces is welcome news for many UBC students.”
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 the impact will be felt by borrowers who are still paying off their student loans and accruing 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 the 10-year repayment period.
- The announcement in Budget 2019 to eliminate interest on B.C. government 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.
- The Alma Mater Society (AMS) of the University of British Columbia is a non-profit student society that works to improve the quality of the educational, social and personal lives of the students of UBC. Representing over 56,000 undergraduate and graduate students at UBC’s Vancouver campuses, the AMS advocates to the university and all levels of government for issues that are in the interest of students. The AMS also administers a student health and dental plan, provides essential support services, operates the Sexual Assault Support Centre and organizes social events.
- 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.