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Nova Scotia's Liberal government is ending the Graduate Retention Rebate. (CBC)

The Liberal government axed the graduate retention program in Thursday’s budget, but some student advocates say the money saved should be reinvested into grants.

The province will save $49.5 million this year by ending the program, which was designed to encourage graduates to remain in the province.

Finance Minister Diana Whalen pointed to the continued out-migration from Nova Scotia and said the Graduate Retention Rebate isn’t working. She's ending the rebate with the blessing of student groups.

"We support scrapping that rebate and investing it in programs that actually work for students, like 100 per cent grants," said Nick Stark, with the Canadian Federation of Students.

"Loans are why young people are leaving this province. A tax rebate isn't going to help them — neither is just scrapping that money altogether."

The province will reinvest about $7 million to forgive the interest on loans and hand wage subsidies to employers who offer jobs to graduates.