Here's How College and University Students Can Save on Tuition in Mississauga
The final budget from the federal Liberal government before the fall election later this year was recently delivered. Included in this budget (Budget 2019), is the government's plan regarding student loans.
Despite Canada being among the most educated countries in the world, there are still many Canadians who run into obstacles that prevent them from pursuing post-secondary studies or skilled trade programs.
If efforts to reduce some of these obstacles, such as higher tuition and living costs, the government, according to the budget document, will lower the floating interest rate -- used by 99 per cent of student borrowers -- to prime.
According to the government of Canada website, students can currently choose between a variable, or 'floating,' interest rate (it can fluctuate) and a fixed interest rate (the rate does not fluctuate during the duration of the loan).
Currently, the variable interest rate is 6.45 per cent (prime rate is + 2.5 per cent), and the fixed interest rate is 8.95 per cent (prime rate is +5 per cent).
According to the budget document, lowering interest rates on student loans will help close to one million people who are currently repaying their loans and save the average borrower around $2,000 over the lifetime of their loan.
In Budget 2019, it was also noted that the government will be making the six-month grace period after graduation interest-free. Students who temporally leave their studies due to having a child or health issues (including mental health), will also be able to take an interest-free break from paying back their loans.
These changes, which will come into effect during the 2019-20 school year, are expected to cost $1.7-billion over the next five years. The yearly cost of these changes is expected to be $375-million.
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