The Nova Scotia government is going to start lending money directly to college and university students saving them hundreds of dollars in interest payments.
A direct-lending initiative introduced Tuesday by Education Minister Karen Casey will shave two percentage points off the interest rate students would have paid under the existing program. Loans under the current system are administered through a bank.
“This change is a big win for students,” Casey told a news conference at the Dartmouth campus of the Nova Scotia Community College. “Lower interest rates will result in significant savings to students and any government savings will be reinvested into the student assistance program.”
Nova Scotia student loans are currently administered by a bank but starting this summer, the province will obtain money through routine treasury operations and lend it directly to students. The new initiative is expected to increase provincial borrowing by about $120 million for the 2008-09 fiscal year. The province issues about 9,000 student loans annually worth about $40 million.
Students enrolled in school or who began paying off student loans after Oct. 31, 2007 will be the first to benefit from the program.
The news was greeted with applause by the Alliance of Nova Scotia Student Associations saying they will now have one of the lowest interest rates in the country.
“This is a very progressive move by the Government of Nova Scotia,” said Chair Mike Tipping in a release. “We hope to see a program of needs-based grants to help those students who face the highest financial burdens,” he said.
Nova Scotia Student Loans will be administered by Resolve Corp., a Toronto-based business-process outsourcing company, which has offices in Bridgewater and Halifax.
With a report from Canadian Press