PEI Gets Interest-Free Student Loans!

Wow.

It’s front-page news here at Student Finance 101 when any province drops the interest charges on its student loans.

The last time that happened was back in August, 2009.

That’s when Newfoundland & Labrador became Canada’s first province to stop charging students interest.

Three years later – August 3, to be exact – PEI’s Premier, Robert Ghiz, announced the same break for students in his province.

Starting October 1, 2012, the interest rate will vanish from Prince Edward Island Student Loans.

That was a great day for Prince Edward Island students and recent grads. The average student will now save thousands of dollars!

Only something substantial, like a motor vehicle accident, could have kept me from reporting that for a full month. Which in fact, is what happened.

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But now I’m back to writing. So here’s our Student Finance 101-style practical info, which the mainstream media probably skipped when reporting this good news:

1. The new zero-percent policy applies to every PEI loan issued after January 1, 2001 – as long as it’s not defaulted.

In other words, you must still be paying the Prince Edward Island Student Financial Assistance Corporation, not a collection agency.

2. If you defaulted on a PEI loan issued after January 1,2001, I encourage you to ask PEI’s Student Financial Services what it would take to get your loan back to good standing and obtain interest-free status.

3. Remember that your Canada Student loans will not be interest-free.

At writing, with current prime rates and premiums, Canada loans cost 5.5% (floating rate loans) or 8% (fixed-rate loans). Older fixed-rate loans could be much higher, perhaps 10 or 12 percent.

4. Feel like moving to PEI? You can get more details on requirements from the province’s Student Financial Services, but here are the basics:

Prince Edward Island student loans are available for most residents with financial need who are enrolled in a degree, diploma or certificate program of at least 12 weeks in length at a designated post-secondary educational institution.

To be a Prince Edward Island resident you must be a Canadian citizen, permanent resident (landed immigrant), or Protected Person of Canada who has lived in Prince Edward Island for the last 12 consecutive months before your study period. This 12-month period must not include time spent in post-secondary studies.

As in other provinces, you must pass a credit check if you’re aged 22 years or older and seeking a student loan for the first time.

P.S. If you’re wondering how much you’d save with an interest-free provincial loan, see my next blog.

Congratulations, Prince Edward Island!!!