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Education May 28, 2007 Minister Announces More Improvements to Student Loan Program In an effort to increase accessibility to post-secondary education and training, the Williams Government will reduce the amount parents are required to pay toward the cost of college and university. The Honourable Joan Burke, Minister of Education, announced today that the Provincial Government will invest $4 million over two years, with additional funding in subsequent years, which will increase the number of students eligible for a student loan. In addition, an existing 1,700 students will receive more money in student aid.
"The goal of the Provincial Government is to make sure our young people are given every opportunity to pursue a higher education," said Minister Burke. "Education is critical to self-sufficiency and success. This is true for every individual and for Newfoundland and Labrador overall. The changes we are announcing today recognize that the current required parental contributions may make it difficult for some to access post-secondary education and the amount of student aid needed to complete a course of study." The minister noted this initiative is the latest investment by the Provincial Government to increase accessibility and help reduce student debt. A bill to amend the Student Financial Assistance Act is being debated in the House of Assembly today. The amendment will allow for the implementation of initiatives announced in Budget 2007. The Williams Government provided $14.4 million to establish non-repayable, needs-based grants and a reduction in the interest rate charged on student loans. These initiatives build on the $90 million White Paper on Post-Secondary Education, including a freeze on tuition which is 60 per cent lower than the national average. Beginning in 2007, the Provincial Government will use a new formula to calculate parental discretionary income. Discretionary income reflects the amount of money parents have at their disposal to contribute to a student�s education. Student loan program regulations will be amended to allow more students from middle income families to access the student loan program. This is consistent with a formula recently adopted by the federal government and will automatically be calculated when an individual applies for a student loan. Under the new regulations, parents with a combined family income less than $65,000 will no longer have to contribute towards the student�s post-secondary education, compared to the current level of $58,780. Furthermore, the upper limits of family income will change. Currently, families with a combined income of $104,750, or above, do not qualify for assistance. That upper limit will now change to $140,000. This means more students of middle income families will have access to the student loan program. "The beginning of the 2007 academic school year will see many new initiatives coming into effect that will make post-secondary education a more realistic option for more students and will ease the demands made on parents. Up-front, needs-based, non-repayable grants will be available to students. The interest they pay on the loans will drop by 2.5 per cent. The change to parental contribution will lessen financial restrictions some students are facing," said Minister Burke. "We are now that much closer to making sure everyone has the access, opportunity and support needed to achieve their goals and contribute to a prosperous Newfoundland and Labrador. We know that this province is a place where people want to live and work. We�re confident these kinds of investments will make a real difference to the lives of our young people and their families," the minister concluded. -30- Media contact: BACKGROUNDER Parental Contribution Reductions Examples of students borrowing the maximum federal/provincial loans in a 17-week semester:
Benefits to students as a result of the new up-front, needs-based grants Approximately 7,900 students annually are expected to receive up-front grant assistance to help them access a good post-secondary education. The average provincial student borrowing for a typical academic year will be reduced by 38 per cent, from the current $3,514 to $2,193, as demonstrated in the following table:
Reduction in Interest Rates Government is reducing the interest rates charged in student loans in repayment from prime plus 2.5 per cent to prime. 46,000 students, in the process of repaying their provincial student loans, will benefit from the reduced interest rate. A student attending College of the North Atlantic receiving the maximum provincial student loan for a two-year program will save $1,478 in interest payments over the life of the loan. A student attending Memorial University receiving the maximum provincial student loan for a five-year program will save $3,491 in interest payments over the life of the loan. 2007 05 28 10:10 a.m.
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