New Student Loan System Cuts Costs, Time

A new streamlined student loan process that saves borrowers hundreds of dollars and hours of time is one of several government initiatives that will greet students arriving at universities and colleges next week.

The new direct-lend student loan system cuts two percentage points off the interest rate students pay. Students will repay loans at an interest rate of prime plus 0.5 per cent. Nova Scotia will have the second-lowest rate in the country.

A student with an $8,600 Nova Scotia Student Loan could pay $800 less in interest over the life of the loan.

Students attending a post-secondary institution or who began repaying loans after Nov. 1, 2007, are affected.

The new system also virtually eliminates student-loan paperwork. The change can cut processing time in half, down to two-to-three weeks. And lining up at universities with Nova Scotia loan documents in hand will be a thing of the past.

"Government's job is to provide the best supports possible to students pursuing a higher education," Education Minister Karen Casey said.

"That's why we've lowered the up-front costs of education with multi-year tuition reduction and grant programs, and made applying for, and repaying, student loans less costly and time-consuming."

New programs designed to make post-secondary education more affordable include:

• A tuition freeze for all university students that continues until 2010-11.

• A bursary that automatically lowers university tuition for all Nova Scotian students studying in Nova Scotia by $761 this year, rising to $1,283 in 2010-11.

• Two new grants for students in need, including one that converts 20 per cent of a student's provincial loan to a grant worth up to $1,560. In addition, a new program introduces supplemental loans for students in specific high-cost programs.

• A Repayment Assistance Program that provides for an affordable monthly payment for Nova Scotia student loan borrowers.

• Doubling the graduate tax credit.

Reducing debt loads, increasing grants and creating a more user-friendly loan system were identified by students as areas for improvement during public consultations held in December.

"The government has taken some very important steps to improve the accessibility to, and affordability of, a higher education in our province," said Kelly Wilson, executive director of the Alliance of Nova Scotia Student Associations, which represents more than 80 per cent of the university students in the province. "This fall, incoming students will be the beneficiaries of this progress. Students look forward to continuing to work closely with government in the months ahead."

The province began directly lending money to students on Aug. 1. Students who negotiated loans before Nov. 1, 2007, will continue to deal with a bank or financial institution.

Students will also have improved access to online information and services for Nova Scotia student loans.

The province has entered into an agreement with Resolve Corp. of Toronto to manage the disbursement and repayment of direct-lend loans. Resolve has offices in Bridgewater and Halifax and employs 500 Nova Scotians.

The province processes about 22,000 student loan applications each year.