Students at Coast Mountain College joined in celebrating a provincial announcement to eliminate any future interest accumulated on student loans.
More than 200,000 people with existing provincial student loans will no longer have to pay interest effective Feb. 19. The B.C. government announced this in their 2019 budget presentation.
Ravi Kahlon, BC’s Parliamentary Secretary for Sport & Multiculturalism, stopped by CMTN in Terrace on March 14. He met with alumni, staff and students to discuss the announcement in a round-table discussion on what this means locally.
“It’s affecting families, not only students. Our hope is that more people will now see education as a path for them in their future, and financial barriers will become less, so people can achieve their dreams,” Kahlon says.
These 200,000 outstanding loans represent $1.24 billion in revenue. Borrowers will collectively save about $22 million in interest payments over the next year, according to a provincial press release.
This write-off does not include existing interest payments but does stop further accumulation.
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, according to the press release. Eliminating interest on the provincial debt would save this borrower $2,300 over the 10-year repayment period.
“All interest on student loans is a tax on working and lower-income people who are dependent on education in order to achieve higher paying jobs. If they can’t pay off their loans, how can they afford to start a family, to buy a home, or a car?” says Lenda Girard, student union organizer for CMTN.
Students have been advocating for interest-free loans in B.C. for years to make their education more affordable, Girard says. The stress and mental hardship of only being able to afford to pay the interest rate on a loan can be insurmountable.
“By the time you pay it off in 10-15 years, you’ve now paid another $30,000, when your loan was $20,000,” Girard says.
Communications director Sarah Zimmerman agrees, remembering when she had student loans after university.
“I know how expensive it is to pay it back, and knowing that the payments you’re making are going to your principle instead of paying interest is a huge relief for students,” Zimmerman says.
Mitigating the rising costs of student loans was one of the first goals of B.C.’s NDP government when they came into power, an issue Premier John Horgan campaigned on in the 2017 election.
BC Liberal opposition leader Andrew Wilkson denounced the B.C. government’s decision to forgive future interest accumulated on student loans entirely, saying it may encourage students to get “carried away” with how much they’re borrowing.
“If there’s no interest whatsoever, then students are likely to borrow more,” Wilkinson said. Facing immediate backlash, he later clarified in a tweet that interest-free student loans should be supported with credit counselling.
This story is just plain wrong. I’m not calling for the re-instatement of interest on student loans. I am suggesting that interest free student loans should be supported with credit counselling. Any suggestion otherwise is a complete falsehood. #bcpoli https://t.co/dYP447WC90
— Andrew Wilkinson (@Wilkinson4BC) March 7, 2019
Kahlon called Wilkinson’s comments “insensitive and out-of-touch” with the economic problems students face today.
“They should come and talk to students here at this college, and they’ll hear from them how much this impacts their lives,” he says. “Obviously we need to do more, and we’re going to continue to do more.”
Girard says she found Wilkinson’s remarks about students not being able to manage their own debt “ironic and hurtful” given his previous experience as the minister of advanced education.
“The only way they can have a student loan is to budget how they spend their money, because that’s all that they have in order to live,” she says.
CMTN’s student union is now organizing a secondary campaign where people can email the Prime Minister directly to ask for the elimination of interest on federal loans entirely.
“Almost half the provinces in the country don’t charge interest on student loans now — why can’t the federal side also eliminate interest?” Girard says.
In February, the federal government announced it will write off more than $200 million in outstanding student loan payments from more than 30,000 students, this marking the third write-off in the last four years. The Liberals have also increased the minimum annual income students have to make before they’re required to pay.