Kootenay-Columbia MP Wayne Stetski is calling on the federal government to eliminate interest on federal student lonas in the 2019 budget.
Stetski’s call for action follows in the footsteps of the provincial government, which announced it is not collecting interest on provincil student loans last month.
He made the request in a letter to the federal finance and labour ministers.
Federal student lonas make up a larger portion of debt and carry relatively high interest rates, according to Stetski.
The MP says the interest formula for student loans hasn’t changed in nearly 20 years and that the federal government interest rate charges more than some banks do for student lines of credit, in some cases.
The interest rate is either variable at prime + 2.5% (currently 6.45%) or fixed at prime + 5% per cent (currently 8.95%).
The interest charges are “a penalty on low and middle-income students who cannot pay for their education outright,” said Stetski, in a press release.
MP Stetski says interest relief is needed at the federal level because young Canadians are graduating with record educational debt in a time of stagnant wages and soaring housing costs.
Removing the interest on federal student loans could help towards reaching other financial goals like home ownership or saving for their children’s education or retirement, he continued.