By Matt Fetinko

Knock out interest, pay more taxes?

Eliminating federal interest on student loans could prove costly in other ways

Nov 21, 2020 | 3:40 PM

PRINCE GEORGE — The Knock-Out Interest Campaign aims to knock out federal interest on student loans. It’s an initiative by the BC Federation of Students and follows the 2019 elimination of provincial interest on BC student loans. The campaign argues interest is essentially a tax on low- and middle-income students and that other industries offer zero percent interest loan options, so why not for education?

“If students have this interest on their student loans, then they pay more than the students who are going to pay their loans upfront. So, basically, they are paying more for their education than the other students,” argued Sharanjit Kaur, Chairperson for the CNC Student Union.

But like with most cost-cutting or cost-saving measures, there is a bit of a catch. If the interest is removed that means dollars are not coming in through one source, which could throw the federal budget off balance. That means dollars will have to be found in other sources.

Omenica Arts Centre

Last week to submit art for the Indigenous Arts exhibition

4h ago

Wildlife policy

Town halls to put spotlight on wildlife policy

4h ago

Housing Market

Real Estate experts say housing market "very affordable," but not everyone's convinced

15h ago

“We either reduce services or we do more deficit spending which, with all of the COVID-19 programming and spending going on today, I don’t know if deficit spending is the way we want to go,” explained Derek Dougherty, Senior Manager of Tax at KPMG. “It could lead to higher taxes overall so for the long term, probably more paying.”

That balancing act is where things get sticky. Because of COVID, especially now with cases in BC ramping up and more restrictions being placed, students who may have been reliant on a part-time job may not have the same prior access. Ultimately that could mean vetoing a year of schooling altogether.

Dougherty acknowledges there can be difficulties with schooling paired with work – but adds there are other options available like the Federal Student Loan Credit, which is a tax credit available to anyone who has interest paid on an interest loan program. And to contact a financial planner who can help students figure out other options that may be available.