Programs Help Graduates Manage Student Loan Debt

first_img The province is paying $4.7 million in interest for students who are still in school this year. Tuition for Nova Scotia students in Nova Scotia universities is $500 lower than it was last year. Tuition is frozen at the 2006-07 level for most other students. — 2,853 students are receiving less than $4 million worth of loan forgiveness under the Debt Reduction Program in 2006-07. — This year, the government introduced a $1,000 graduate tax credit. This will increase to $2,000 in 2008.center_img University and college graduates will have more flexibility in managing their student loan debts through two new provincial government programs introduced today, Aug. 8. The Enhanced Repayment Assistance Program will reduce the payments for graduates who are having difficulty paying their provincial student loans. The Payment Deferral Program will allow graduates to postpone their provincial student loan payments until they can better afford them. “The Enhanced Repayment Assistance Program is more flexible than the program it replaces so more graduates will be eligible,” said Education Minister Karen Casey. “Payment deferral is something new for the province and would be especially attractive to graduates who must accumulate several years of on-the-job experience before they are deemed qualified for a professional designation.” Any graduate or apprentice who has a student loan in good standing can apply for the programs immediately. A graduate who is finding it difficult to pay a provincial student loan would apply to the Enhanced Repayment Assistance Program through the Department of Education’s student loans office. Staff would review the application and consider how much student loan debt the graduate has, how much they earn, how many dependents they have and other factors. If the graduate’s debt to income ratio is too high, their payments will be reduced to more affordable levels for six months. The Department of Education will pay the interest to keep the loan in good standing. The graduate can reapply to the program for additional six-month periods, up to a total of 54 months. Each renewal application would require proof of income. The provincial Income Relief Program, which the Enhanced Repayment Assistance Program replaces, had a 30-month limit. Graduates and skilled trades workers who must complete an internship or apprenticeship that lasts longer than 12 months can apply to have payments deferred for as long as it takes to qualify for their designation. Other graduates can access the Payment Deferral Program, in two six-month increments, for up to a total of 12 months. Their student loan, plus interest accumulated during the deferral, would still be paid in full but usually when their income is higher. The interest on the loan would be calculated at the rate that the government borrows money, which is a lower rate than the graduate would normally receive from a financial institution. The Department of Education has received several requests for payment deferral from graduates in long-term internship programs such as medical residents. Following consultations, the department proposed the programs being introduced today and expanded the program to include anyone involved in an internship or apprenticeship. Through these two new programs, almost any student who has a valid reason why they cannot honour their repayment commitments can avoid defaulting on their provincial student loan. Defaulting on a student loan could have serious implications when applying for a mortgage, car loan or credit card in the future. “We know that graduates want to repay their student loans and we are willing to work with those who are having difficulty in making their payments,” said Ms. Casey. Last year, about 9,600 people in Nova Scotia received a provincial student loan. The Enhanced Repayment Assistance Program and the Payment Deferral Program, which together will cost an estimated $800,000, are part of the government of Nova Scotia’s strategy to make post-secondary education more affordable. The provincial government has taken other steps to make education more affordable as well. For example: last_img

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