On March 19, Finance Minister Bill Morneau revealed the federal Liberal government’s final budget ahead of the federal election this fall.
Here’s a breakdown from the Charlatan for where the government is spending your dollars.
Lowering interest rates on federal student loans
According to the budget, about one million people are repaying student loans.
Morneau announced in his budget plans to lower the interest rate on federal student loans.
When students pay back their loans they can choose between two options: paying a floating interest rate, which can fluctuate, or a fixed rate.
This year’s budget proposes to lower the floating interest rate known as the “prime” for those borrowing from the Canada Student Loans Program, which oversees student loans at the federal level.
The current floating interest rate is prime plus 2.5 per cent, which will be gone by the 2019-2020 school year. Students will only need to pay the prime.
On the other hand, students who choose the fixed interest rate repayment will see their current interest rate of prime plus five per cent lowered to prime plus two per cent.
The budget also proposed that students have a six-month grace period where loans will remain interest-free after graduation.
Increased accessibility of loans for students in vulnerable situations
The Liberals’ budget proposed increasing the eligibility for loan rehabilitation after a borrower defaults on their loans.
A default is when a person is unable to pay back their student loans.
According to the government, this allows vulnerable borrowers in default to access support such as the Repayment Assistance Plan and begin making “affordable payments on their outstanding debt again.”
The budget also proposed to implement interest-free and payment-free leave in six-month stackable periods, for a maximum of 18 months, for borrowers taking temporary leave from their studies for medical or parental reasons, including mental health leave.
According to the budget, the government wants to increase compensation to provinces and territories—partners in the Canada Student Loans Program—by $20 million over the next five years starting in the fall, with $4 million per annually ongoing.
“This increased funding will compensate provinces and territories for their costs stemming from Budget 2019’s proposed changes to improve the accessibility of student financial assistance,” budget documents said.
Accessible loans for students with disabilities
The budget proposes to invest $15 million over five years starting in 2019-2020 to “modernize the Canada Student Loans Program.”
For students with disabilities, the government proposed increasing the cap on the Canada Student Grant Services and Equipment for Students with Permanent Disabilities from $8,000 to $20,000 per year.
Additionally, the Liberals want to expand the eligibility for the Severe Permanent Disability Benefit so that more student borrowers with permanent disabilities can quality for loan forgiveness.
The government also wants to “make it easier for students with permanent disabilities to return to school after a long absence.”
Under current legislation, after having been out of study for five years, students with permanent disabilities can’t receive further loans until the ones they’ve already taken out have been paid in full.
But, starting in 2020-2021, the Liberals want to remove the restriction allowing students to take out loans.
Indigenous post-secondary education
Indigenous peoples are among the youngest and fastest-growing demographic of Canada, yet continue to face barriers when it comes to post-secondary schools, according to the budget.
The budget proposes an investment of about $328 million over five years to renew and expand funding for the Post-Secondary Student Support Program, which is a program that “ aims to improve the employability of First Nations and eligible Inuit students by providing them with funding to access education and skills development opportunities at the post-secondary level,” according to the government’s website.
Morneau also proposed an Inuit-led post-secondary strategy through spending about $126 million over 10 years, and close $22 million per year ongoing.
He’s also proposed a $362 million over 10 years and $40 million per year ongoing for a Métis Nation-led post-secondary education strategy consisting of financial assistance for Métis Nations students.
The federal election will take place in October 2019.
