The governments of Newfoundland and Nova Scotia announced changes recently to their student financial aid programs, with Newfoundland becoming the first province pledging to eliminate loans entirely in favour of non-repayable grants by next year. Nova Scotia is eliminating its interest on student loans but at the same time is revoking a tax rebate for graduates who live and work in the province.
The Newfoundland government, in its 2014 budget released in late March, set aside $14.7 million over two years to convert outstanding student loans to grants. The measure was cheered by student groups. Starting in August, the provincial portion of a student’s loans will decrease by $20 a week and the provincial grant will increase by the same amount. Loans are expected to be completely phased out by August 2015.
With this change, Newfoundland will have “a practically utopian [student aid] model unparalleled elsewhere in North America,” said Ken Steele, co-founder of Academica Group, a higher education consulting firm based in London, Ontario. “It’s above and beyond what other provinces are doing.”
Mr. Steele noted that Newfoundland was the first province to eliminate interest on student loans in 2009 and now becomes the first to substitute provincial loans with grants. The province has one of the highest levels of per-student funding in the country and among the lowest tuition fees, he added. Tuition fees have been frozen for more than 10 years and average $2,640, the lowest of all provinces except Quebec (at $2,280 for Quebec residents). Newfoundland’s budget pledged $5.1 million to extend the freeze. Canada’s undergraduate tuition fees averaged $5,770 in 2013, according to Statistics Canada.
“Our goal is to have more students pursue a postsecondary education and encourage them to stay here where their talents and skills will play a role in this province’s future success,” said a news release for Newfoundland Minister of Advanced Education and Skills Kevin O’Brien. About 7,000 students a year are expected to receive grants, the government added.
The federal portion of student loans in Newfoundland held under the Canada Student Loans Program will remain unchanged. By eliminating provincial loans, the Newfoundland government said undergraduates at Memorial University can expect to see monthly loan payments (comprised solely of CSLP payments) decline to about $167 from $300. The average student debt in the province is expected to drop to about $14,800 by 2015-16 from $26,600 in 2003-04.
Meanwhile, the Nova Scotia government pledged to eliminate interest on the provincial portion of student loans. “We know that every dollar counts when graduates are beginning their careers and we hope this provides some relief to young people as they build their lives in Nova Scotia,” said Nova Scotia Labour and Advanced Education Minister Kelly Regan in a news release.
About 18,000 students a year could be eligible for the benefit, which will cost the province an estimated $1.6 million annually. To qualify, students must be residents of Nova Scotia and must have graduated from a postsecondary institution; they also need to have started repaying their provincial loans on or after Nov. 1, 2007. Qualifying students won’t be reimbursed for the interest they have already paid but future interest payments will be waived. The change should save students about $800 over the life of their loans.
That announcement was tempered by another a few days later that the province’s Liberal government will eliminate a provincial graduate retention tax rebate introduced by the previous NDP government. The change will take effect retroactively on Jan. 1, 2014. The rebate was to encourage young people to live and work in Nova Scotia following graduation, but the new government said the program wasn’t working. “Since the program began in 2009, the number of new graduates aged 20 to 29 leaving the province has steadily increased, peaking last year at a net loss of 2,600 people,” it said.
The rebate provided graduates of postsecondary institutions — from Nova Scotia and elsewhere — up to $2,500 a year and $15,000 over six years in tax credits. Graduates will still be eligible for the credit for the 2013 tax year.
Academica’s Mr. Steele noted that consecutive budget cuts to postsecondary institutions in Nova Scotia over the past four years have left the province with one of the lowest per-student funding rates in the country and among the highest tuition fees.
Among the Atlantic provinces, Prince Edward Island eliminated interest on its provincial student loans in 2012. New Brunswick provides a tuition rebate of up to $20,000 to those who live and work in the province after graduation and a student-loan forgiveness benefit to those who graduate within the minimum timeframe and whose federal and provincial debt exceeds $26,000.