Nova Scotia Goes Interest-Free. Will You?
I'm glad to hear Nova Scotia will stop charging interest on provincial student debt, t least for eligible students.
May Update: And it's about time, since youth unemployment and student debt are both above the national average. Grads are now leaving Nova Scotia. While most still remain, something must change when 1 in 5 Nova Scotia university grads earns less than $18,000 a year. (Source: May 3, 2014 Chronicle Herald, Halifax).
So now three neighbouring provinces have adopted this more education-friendly policy. You could say this trend has been building on Canada’s east coast (except that Newfoundland and Labrador recently stepped things up again).
Here's how this interest-free trend developed. Rest of Canada, please take note...
Prince Edward Island was the second province to go interest-free. That was in 2012.
Now, two years later, the more populous Nova Scotia is on board.
This trend is all very interesting if you're a policy wonk. But if you have Nova Scotia student loans, the question you're probably asking is "Will I qualify?
I hope so.
According to Nova Scotia Student Assistance, to be eligible you must:
1. Be a resident of Nova Scotia.
2. Have graduated from an “approved and designated” post-secondary school.
3. Hold a Nova Scotia government-sponsored “direct-lend” loan.
4. Have started repayment on your student loans by November 1, 2007 or later.
That last criteria will be painful news if you pay Nova Scotia loans but graduated too early to benefit.
If you’ve been shut out, consider working in one of the three provinces that let you claim between $20,000 to $25,000 in tax rebates, depending on the province.
If you just missed Nova Scotia’s boat by months, you might qualify in Manitoba, which is open for out-of-province people who graduated on or after January 1, 2007.
If you graduated on or after January 1, 2006, you might qualify for Saskatchewan’s Graduate Retention Program.
And if you graduated on or after January 1, 2005, you might qualify for New Brunswick’s Tuition Rebate.
If you graduated earlier than that, it seems you’re out of luck. Such is the reality of loan aid programs.
Getting back to Nova Scotia’s interest-free loans …
Q. What about the interest you’ve paid on your Nova Scotia loans after November 1, 2007?
A. Sorry, no refunds. But at least you’ll save from now on.
Q And what about your Canada Student Loans?
A. No changes there, I’m afraid.
So if you’re graduating from one of Canada’s three provinces with interest-free student loans, remember that this just covers 40% of your loan debt. A full 60% of your overall student loan debt is owed to the federal government. And you must still pay top dollar on that.
If you took out ‘floating-rate’ student loans, Canada charges you the prime bank rate plus 2.5 percent. That totals 5.5 percent at writing.
And if you have 'fixed-rate' student loans, you’re paying top dollar. Canada charges you the prime bank rate plus 5 percent. At writing, that totals 8 percent on the Canada portion of your student loans.
Despite that high rate for Canada Student Loans, the break from your provincial governments really helps average down your overall interest rate.
So if you’re one of the Nova Scotia grads who now qualify for interest-free provincial student loans, this is a serious break. You could save thousands of dollars.
This will help you get debt-free much faster so you can move on with your life. Congratulations to you!
© Jeannine Mitchell 2014