Nelson-Creston MLA Michelle Mungall wants the B.C. government to do away with interest fees on student loans that she says “treat students as a cash cow.”
The NDP critic for advanced education says the government is profiting from its student loan program because there’s a 3.5 per cent difference between what the government borrows its loan money for and what it charges students — the highest interest rate in Canada.
Mungall says the government gave out $200 million in loans in the last fiscal year, at a cost of $4 million. The rate charged to students, on the other hand, will cost them about $11 million.
“That’s a $7 million mark-up, no small amount,” she says. “It is a cash grab. And it’s wrong to treat students as a cash cow.”
Mungall says Advanced Education Minister Naomi Yamomoto told her money made by the program goes into general revenue, not towards specific student services. However, Yamomoto told the Star the money does eventually fund student aid programs, and “students that are low income and in need and need some loan assistance may be some of those students that benefit from the interest students pay.”
Regardless of where the funds end up, Mungall would like to see interest on student loans scrapped altogether.
“There’s a very specific reason: post-secondary education is an investment in the province,” she says.
“Part of a good economic strategy is making sure you have a labour force ready to go, and we don’t. One of the reasons is post-secondary education is not affordable. We need it to be. One part of that puzzle is eliminating interest on student loans.”
Yamomoto says lowering or doing away with interest might be possible “when [B.C.’s] fiscal situation improves.” But even without the change she argues amount of money available to students through the loan program makes it “probably one of the best in Canada.”
“Frankly, if we keep the HST that’ll help us,” she adds. “Then all those options are open, and I’m always looking at options to ease the burden on students.”
— With files from Greg Nesteroff