British Columbia

B.C. budget eases interest on student loans while debt continues to soar

Decreased interest rates for B.C. student loans a 'good first step' for struggling students, says advocates

Decreased interest rates for B.C. student loans a 'good first step' for struggling students, say advocates

The Federation of Post-Secondary Educators says B.C. students graduate post-secondary with an average of $35,000 in debt. (CBC)

Interest rates for student loans will be cut in half come summer, a move that's being praised by advocates as a good first step towards solving B.C.'s crippling student debt problem.

As part of its 2017 budget, the Liberal government announced that student loans will be reduced from prime plus 2.5 per cent — the highest rate in the country — to just the prime rate starting in August 2017.

While average student debt after a four year program has climbed upwards of $30,000 dollars in the province, advocates are welcoming the latest measure to ease the financial burden on students, but admit that more needs to be done.

"We think this is a good first step in dealing with he student debt problem in this province because its actually going  both students currently in the system, and also those struggling now to repay their loan after they've left the system," said Janelle Davies with the B.C. Federation of Students.

However, Davies says there's still more to be done in order to reduce the loans that many low-income students struggle to pay off.

"We'd like to see moving towards a complete elimination on the interest of student loans, because it really is a tax on the poor — only people who have a need for the funding can get a student loan."

The federation would eventually like to see the replacement of loans with non-repayable grants, a system currently employed in Newfoundland and Labrador.

Student debt soars

Meanwhile student debt in B.C. continues to soar.

According to the Federation of Post-Secondary Educators, tuition revenues across the province have gone up 350 per cent since 2002.

The organization's president George Davison says drastic cuts from government funding towards institutions has lead to rising tuition costs

"It's costing [students] more to get into courses, they're having to take on part-time jobs and delay raising families." he said.

He says the rising cost of living in B.C. is making matters even more difficult for students.

"[They're] coming out with a $35,000 debt — which is an average," he said. "[It's] an anchor around somebody's neck at the beginning of their career."

With files from CBC's B.C. Almanac