Debt Reduction for Students, Funding for Universities

More than $11 million for post-secondary education will bring debt relief for students and help universities keep tuition increases to a minimum.

A new $5.1-million student debt reduction program will help students with Nova Scotia Student Loans pay off their debt when they graduate. Students will also benefit from an extra $6 million for university operating funds.

"Our goal is to help the greatest number of students possible with the resources we have," said Education Minister Angus MacIsaac.

About 9,800 students receive Nova Scotia Student Loans each year, which is the first eligibility requirement for the new program. "These are the students who have the greatest need for financial assistance," said Mr. MacIsaac. "Our new debt reduction program has been designed to grow so we can help more students as more funds become available."

Mr. MacIsaac met with student leaders today, March 26, to explain the new program. The amount of debt reduction each student receives will depend on many variables.

All students who receive Nova Scotia Student Loans in the academic year beginning Aug. 1, 2003, who study in Canada and successfully complete full-time course loads will be eligible for debt reduction.

Students can get loans for each year of their programs, plus one extra year. For example, a student can get a maximum of five years of loans for a four-year university degree.

She will receive 15 per cent of debt reduction for the first year, 25 per cent for the second, 35 per cent for the third and 45 per cent for the fourth. If she studies for another year and has a loan, she will get 15 per cent for that fifth year.

Community college and private career college students will also be eligible for assistance.

Incentives have been built into the program to encourage graduates to work in Nova Scotia and to repay their loans in a timely fashion. Students who work in Nova Scotia for 50 weeks within three years of graduation will be eligible for a bonus of 25 per cent of their debt reduction. Students who make 12 loan payments within three years of graduation will get an extra 10 per cent.

"This debt reduction program will encourage students to complete their programs and contribute to Nova Scotia's economy and society," said Mr. MacIsaac.

The extra $6 million for university operating funds is from the 2002-03 fiscal year. It will become part of the universities' base funding in 2004-05.

"This investment in our universities gives us confidence that government is committed to post-secondary education in Nova Scotia," said Sean Riley, chair of the Council of Nova Scotia University Presidents. "We look forward to working with the minister and department staff on multi-year funding, which will help universities plan for several years at a time."

Mr. MacIsaac said that government recognizes the financial pressures universities are facing, including rising salaries, fuel costs and deferred maintenance. He will be seeking multi- year funding agreements with university presidents so they can better address these issues.

Administrative changes in the loan program made for the 2002-03 academic year mean that students are getting more money for books through their student loans. They now receive up to $1,000 for books, up from $800. Students can also keep more of their earnings while studying.

More information is available on the Department of Education Web site at http://studentloans.ednet.ns.ca .

Following are details of the Student Debt Reduction Program:

• Provincial government is investing $5.1 million in a new Student Debt Reduction Program to help more students with higher debt loads.

• The program is available to university, community college and private career college students who meet eligibility criteria.

• About 18,000 students receive Canada Student Loans each year. About 9,800 of these students also receive Nova Scotia Student Loans, which is the first eligibility requirement for the new program.

• All students who receive Nova Scotia Student Loans in the academic year beginning Aug. 1, 2003, who study in Canada and successfully complete full-time course loads can apply for debt reduction when they graduate.

• Students will apply within three months after they've graduated.

• The money will be paid directly to the bank and applied to the student's debt.

• Students can get loans for each year of their programs, plus one extra year. For example, a student can get a maximum of five years of loans for a four-year university degree.

• The amount of debt relief will change with each year of loan. For example, a student graduating from a four-year university degree will receive 15 per cent of debt reduction for the first year, 25 per cent for the second, 35 per cent for the third and 45 per cent for the fourth. If she studies for another year and has a loan, she will get 15 per cent for that fifth year.

• The loan years need not be consecutive, but they must be within a certain time period for students to get the full benefit of the program. For example, debt reduction will only be given for loans within the seven-year period immediately preceding graduation from a four-year university degree.

• Bonuses will encourage students to stay and work in Nova Scotia and repay their loans in a timely fashion. They are based on the student's original debt reduction.

• Students who work in Nova Scotia full-time for 50 weeks within three years of graduation will receive a 25 per cent bonus. Full- time work is defined as a minimum of 30 hours per week.

• Students who make 12 loan payments within three years of graduation will receive a 10 per cent bonus.

• Students will apply for bonuses after they have achieved the requirements for them. They must be able to prove that they have met the requirements.

• The maximum debt reduction paid to the bank will not exceed the amount of Nova Scotia Student Loan owing.

• Other criteria have been developed for special circumstances, such as transferring from one program to another.

• The new Student Debt Reduction Program is included in the Department of Education's Learning for Life strategy.

More information is available on the Web site at http://studentloans.ednet.ns.ca .