Canada’s Provincial Student Loan Systems, Ranked from OK to God-Awful

There are some provinces where you should count your blessings, and there are others where you should count your pennies.

Oct 26 2015, 7:39pm

If only, am I right? Photo via Flickr user Michael Fleshman

All across the country, students are taking loans. Loans to pay for school, living expenses, food, and credit card bills filled with bar tabs. Regardless of which province you live in and how frugal you are, the cost of living as a post-secondary student can be a real struggle on your own.

According to the Canadian Student Loans Program's (CSLP) look at the 2012-2013 school year, 472,167 students across Canada took on full-time student loans, with the exception of Quebec, Northwest Territories and Nunavut, all of which run separate loan programs from the federal-province system.

With each student taking on about $8,000 in debt per year, the average owing amount upon graduation for somebody who borrows all four years is around $27,000, which can add up to about $40,000 after ten years due to interest payments. Overall, the collective student debt across Canada in 2012 clocked in at an absurd $28.2 billion.

Currently, the split between provincial and federal loans is about 60 and 40 percent respectively, with both levels of government providing a six-month grace period after graduation/leaving school before asking students to start paying back their debt, according to the Canadian Federation of Students (CFS).

Where the issue of student debt gets tricky is when you compare how each provincial government deals out the dough. Some provinces, such as Newfoundland and Labrador, have completely eliminated repayable loans in favour of non-repayable grant systems. Other provinces, like Ontario, are still absolutely brutal with their interest rates and loan-to-grant ratios.

This past election, the issue of student loans became an important issue among the running parties. Out of the three main parties that contended for power, only the NDP and Liberals proposed initiatives for student debt relief (although the Conservative did propose a weird, non-effective increase to low and mid-income RESP funding).

The NDP's approach involved slashing federal interest rates to zero and investing $250 million over the next four years into federal education grants, but they didn't win, so that's out the window. The newly-elected Liberals plan for student debt involves $3.3 billion in grant funding over the next five years and a freeze on interest until the graduated student is making at least $25,000 a year—which is a pretty low threshold. Considering this is just marginally higher than what the average minimum-wage worker makes at 40 hours a week, the $25,000 a year figure basically just ensures the person has a job before having to pay back their debt.

To clear up the confusion that surrounds this whole ordeal, we broke down the best and the worst of loan systems across the country (except for the Yukon, Nunavut and Northwest Territories, due to lack of data).

The OK: Newfoundland and Labrador, Quebec and Manitoba

Truly the Holy Trinity of places from which to get a loan, the systems in these three provinces are easily some of the best for students to finance their education from.

Starting in Newfoundland and Labrador, the province not only holds the lowest tuition rate in the country, they were also the first province to completely eliminate their loan system to replace it with non-repayable grants. This means that students taking money from the Newfoundland government only end up paying back (plus interest) on the federal portion of things, which can save students thousands of dollars of debt, depending on how much was taken in the first place.

With the next lowest tuition rate of $2,774, Quebec also has a pretty sweet deal going on for students taking out loans. With an interest rate of only 0.5 per cent plus of the prime bank rate, it's the next best province beside Newfoundland and Labrador to borrow money from, although it should be noted that the current loan climate probably has something to do with the fact that students have led giant protests anytime the government has attempted to fuck with the system.

Finally, Manitoba swings by with a higher average tuition fee of $3,729, but makes up for it with a zero percent interest rate on loans that was implemented just this year.

Imagine this, but just, like, so many more of these. And they all go from your bank account to the loan sharks who helped you get an education. Photo via Flickr user Sara Long

The Not Quite OK: Nova Scotia and Prince Edward Island

While Nova Scotia and PEI haven't eliminated loans just yet, they were some of the first provinces to drop provincial loan interest to zero. Tuition in the provinces is still pretty high, coming in at an average of $5,934 and $5,470 respectively, but it's arguably better than having to pay interest on top of a slightly-cheaper tuition.The two provinces only accounted for roughly 19,000 students out of the 472,167 that borrowed money in 2012-2013, so they're not the biggest offenders in this category.

The Bad: Saskatchewan, New Brunswick, and Alberta

Alberta comes in with having the third-most students borrowing at 49,114. They also have some of the higher tuition rates in the country—$5,883 per year (although the province's NDP has froze rates for the next two years)—which is just below their neighbour Saskatchewan's average tuition of $6,017. New Brunswick sits snugly between the two tuition rates with the average being $5,917. Similar to British Columbia, all three of the provinces require their students to pay back a prime interest rate of 2.5 percent. These are not places you want to take loans at.

The God-Awful: Ontario and British Columbia

Out on the west coast, British Columbia currently hands out the second-most students loans in the country, with 60,158 given out in 2012-2013. They also require students to pay back with one of the highest interest rates per province, sitting at an annual rate of 2.5 percent on top of the bank prime.

On average, BC students pay $5,015 per year for their tuition, which pegs them as having the fourth-cheapest education costs among the 10 provinces and one territory included on Statistics Canada's most recent data from 2013. Despite this, BC students expect to graduate with the highest debt of any province at nearly $35,000.

Finally, at the centre of the world, Ontario comes in with the most heinous numbers in any place across the country. Not only does Ontario account for the most students borrowing a year at 302,355 in 2013, but they also have an average tuition of $7,180—over $1,000 higher than the next highest in Saskatchewan. Their repayable interest is slightly lower than the other two aforementioned, with a slightly-relaxed 1 percent prime (meaning minimum allowable) rate.

It also should be mentioned that, in cities like Toronto (where over 35 per cent of all Ontario students go to school) and Vancouver (also housing almost half of the province's student population), living costs are the highest in the country. It was found recently that the average price of a house in Toronto now tops over $1 million and that the city ranks as one of the worst in the world for overall cost of living, with rental costs being around upwards of $1300 a month for a bachelor apartment in the downtown core, and Vancouver is similarly expensive, clocking in at around $1200 for the same deal.

The Worstest: Federal Loans

The federal loan system, which is distributed by the National Student Loan Service Centre (NSLSC), runs on a slightly-different system than the provincial ones do. As stated above, federal loans make up about 60 per cent of all loan programs and, according to CFS national chairperson Bilan Arte, are responsible for roughly $17 billion dollars of the collective student loan debt in Canada. The federal and provincial loans both also give a grace period to students borrowing money, meaning that those who take a loan don't have to start paying it back until six months after graduation/leaving school.

The main differentiator between the two systems is that the federal loan program allows students to choose between a fixed interest rate of five percent on top of the bank prime (note: this is absurdly high) or a floating interest rate of 2.5 percent on top of the bank prime (currently 5.20 in total). For example, a student with $25,000 of loan debt will end up paying around an additional $8000 on top due to the 5.2 percent interest rate at the end of ten years, while a student repaying at the fixed interest rate of 7.5 per cent will end up with an additional $14,250 within the same period of time.

Either way, both interest rates are significantly higher than flat mortgage rates you can get from most banks (which are meant for working adults who can, y'know, afford homes), and the last major report published on student loans by the government projected the net amount being paid back in interest to be $443 million by the 2015-2016 academic year.

Yup, Canadians are paying nearly half a billion in interest so they can find a good job and pay the government taxes.

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