Federal Budget Promises Some Relief for Students

The 2019 Federal Budget announcement on March 19 holds some relief for student loan holders. Budget 2019 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%. Additionally, it removes interest charged on student loans during the six-month grace period following the end of studies. Government estimates suggest this change will save borrowers an average of $2,000 over the loan repayment period.

Selkirk College Students’ Union Chairperson Santanna Hernandez its pleased to hear about the steps taken for students in the federal budget.

“Upon hearing about the reduction of the interest on students loans to prime it is a great first step, I’m thankful to know I will be able to put those thousands of dollars in savings into supporting my children and hopefully buying my first home.

This is good news for the SCSU and the BC Federation of Students who had launched the Knock Out Interest on Student Loans campaign on March 5, which received over 150 signatories in the first two hours.

The online campaign seeks to impact students far beyond British Columbia as nearly 500,000 Canadian students turn to student loans to help cover the cost of their education. Charging interest on student loans forces those who need student loans to pay more for their education than someone who could afford to pay tuition fees up front, disproportionately affecting low and middle-income students and families.

Wayne Stetski, MP for Kootenay-Columbia and recently appointed BC NDP Caucus Chair, had already taken up the call in writing the Minister of Finance and the Minister of Employment, Workforce Development and Labour, hoping to see the elimination of federal student loan interest be included in the 2019 Federal Budget.

Hernandez appreciates the stand undertaken by Stetski on behalf of students stating, “at the SCSU we are really privileged to have a good long standing relationship with our local representatives such as MP Wayne Stetski, by having the opportunity for open dialogue we are able to collaborate on working towards meaningful change. As students you can feel disregarded in some political settings, so when you feel heard, respected and see our partners advocating for us we have the chance to believe our future matters.”

Over the course of a decade, he recognizes that students relying on loans end up paying thousands of dollars more for their education. He adds that this is even worse considering that many young Canadians are “graduating with record educational debt in a time of stagnant wages, precarious work, and soaring housing costs.”

Hernandez hopes that federal interest rates will follow the same process seen at the provincial level in BC, with reduction to prime followed by the recent announcement of elimination, taking steps to level the playing field for low-income students across the country.

There are other pieces of the budget that will affect students and their communities outside of costs directly related to tuition, which will be analyzed over the coming days.