The Nova Scotia government plans to cap student debt, which was announced in the 2011-12 budget tabled on Tuesday.
In addition to spending $30 million on student bursaries, the government wants to implement a maximum debt cap of $28,560. That means any money borrowed over that amount during a four-year degree program will be forgiven.
The program is only available to Nova Scotia students and they are eligible even if they are studying outside the province. Students from outside Nova Scotia who are studying in the province are not covered.
It's an initiative the government says will cost $8.1 million in the first year of the program.
"The cap is comparable to those in other jurisdictions and will be a powerful incentive to graduates to stay and build a life in Nova Scotia," Finance Minister Graham Steele said Tuesday.
Here's how it works:
The cap only applies to undergraduate students and is based on a four-year university program. Students can qualify only once.
The cap is set at $28,560, which is the maximum amount a student can get in federal loans.
The full effect of the cap won't be felt for four years. That means students who start university or college in September would be the first to benefit fully from the cap.
The province is prorating the amount. So for those already in school, the following caps apply:
- 1 year left in school — $40,800
- 2 years left in school — $36,700
- 3 years left in school — $32,600
Students who complete a four-year program and max out on their loans will save $15,232.
At the same time, the provincial government is increasing the grant portion. It's now worth 20 per cent, but that will increase to 30 per cent in September.
That's a $2,448 benefit over four years — over and above what's now available.
Students who work while attending university can also keep more of that money without having it clawed back from their loans. It's now $50 a week, but that's climbing to $100 a week in September.
So a student will be able to pocket $3,400 a year instead of only $1,700.
The cap is the third most generous in the country. New Brunswick's cap is $26,000, while Ontario's is $28,000.