The federal and provincial governments announced last week both will make good on election campaign promises by permanently eliminating the interest accumulated on student loans.
According to a news release, the Government of New Brunswick said on Oct. 31 that the move would take effect on Nov. 1, but added that interest accumulated prior to the date remains payable.
“Eliminating the interest on student loans is something student representatives have asked for and it has always been our intention to do so,” said Post-Secondary Education, Training and Labour Minister Trevor Holder in the news release.
‟This will make post-secondary education more attractive by reducing the borrowing costs for students.”
The province says the initiative will benefit around 65,000 existing borrowers as well as future post-secondary students. It added that borrowers would save about $4,500 on an average student loan of $15,000 paid over 10 years, based on interest rates by the Bank of Canada.
Meanwhile, Ottawa announced during its fall fiscal update on Nov. 3 that it plans to permanently eliminate interest on all federal student loans and apprentice loans, including loans currently being repaid.
It comes after the Trudeau government first suspended the accumulation of interest on student loans in 2021 due to the effects of the COVID-19 pandemic. That motion was expected to expire in March 2023.
“Data shows that young people are among the people struggling the most right now and among the people the most worried about their future,” said Deputy Prime Minister and Finance Minister Chrystia Freeland during a press conference.
“Eliminating that interest is really going to help them. It’s a source of huge anxiety if you’ve ever been in that situation.”
Ottawa said the elimination of interest will begin on April 1, 2023, and would save the average student loan borrower roughly $410 per year.