Canada Wants To Eliminate Federal Student Loan Interest & One Province Is Going Even Further
Students could save a lot of money! 💸
University of New Brunswick building. Right: Canadian money.
The federal government is planning to get rid of interest on student loans but one Canadian province is going a step further and students could save so much money!
For post-secondary students in New Brunswick, the provincial portion of student loan interest has been eliminated by the provincial government as of November 1, 2022.
Though, any interest that was accrued before November 1 on loans for post-secondary education will still need to be repaid.
This new initiative is expected to benefit 65,000 existing borrowers, according to the provincial government.
Also, every single future post-secondary student in New Brunswick will benefit from the provincial portion of student loan interest being scrapped.
"This will make post-secondary education more attractive by reducing the borrowing costs for students," said Trevor Holder, the province's post-secondary education, training and labour minister.
Based on the latest interest rates set by the Bank of Canada, the provincial government said someone who is repaying a student loan that's $15,000 over 10 years will now save about $4,500.
Is there interest on student loans in Canada?
On November 3, the federal government announced a plan to scrap interest on all new Canada Student Loans and Canada Apprentice Loans, along with all existing loans that are already being repaid.
The proposed changes will be effective as of April 1, 2023, if this becomes law.
With interest being waived, the average student borrower in 2023 will be able to save $410 a year.
For current and former post-secondary students in New Brunswick, those savings are on top of what they'll save by not having to pay provincial interest on their loans.
When do you have to pay back student loans in Canada?
Changes to federal student loan repayments were introduced by the federal government that went into effect on November 1.
Now, Canada Student Loans and Canada Apprentice Loans won't have to be repaid until borrowers make $40,000 a year, which is up from the previous $25,000.
Do Canadian student loans get forgiven?
While the U.S. federal government has announced a plan for student loan forgiveness of up to $20,000, Canada's federal government has not introduced student loan forgiveness.
According to a 2019 report from the Parliamentary Budget Officer, scrapping tuition fees and forgiving student loan debt for graduates earning under $70,000 a year would cost billions.
It would cost around $16.4 billion in the first year and $12.5 billion in the second year. Then, the cost would be under $10 billion each year after that.
When it comes to provincial student loans, Nova Scotia announced in 2020 that eligible people can have all of their provincial loan debt wiped away!