The Newfoundland and Labrador government said Thursday it is eliminating interest on student loans. (CBC)

Student leaders have enthusiastically welcomed a Newfoundland and Labrador government move to eliminate interest on student loans.

Education Minister Joan Burke said the province is the first in Canada to make such a move, with the government spending $5 million over the coming year on the program.

"We're extremely excited about this," Daniel Smith, the provincial chair of the Canadian Federation of Students said after Finance Minister Jerome Kennedy revealed the program in Thursday's budget speech.

"It's like the finance minister said — this is going to ease the burden of student debt for students of Newfoundland and Labrador. Almost 50,000 people who currently fall under the student loan portfolio here in the province are going to be in a much better situation coming out of this."

The government is also raising its student grants program from $70 to $80 per week, depending on a needs assessment. Kennedy said the move should reduce how much money students need to borrow. About 8,400 students are expected to qualify for the grants.

As well, spousal contributions have been cut to allow greater loan accessibility for students who are married.

"With these initiatives, we have made one of the best student aid packages in the country even better," Kennedy said.

The government, meanwhile, said it is extending a long-running freeze on tuition fees at Memorial University and other post-secondary institutions.