Alberta reducing student loan interest rate, doubling grace period, capping tuition hikes

The Alberta government will cap post-secondary education tuition hikes at two per cent starting in 2024-25. 

The cap, alongside other measures announced Tuesday, are meant to make education more affordable, government officials said. 

This year, Alberta will also: 

• Reduce student loan interest rates to the prime rate, from the prime rate plus one per cent;
• Double the student loan interest-free grace period to 12 months;
• Increase the income threshold for Alberta's Repayment Assistance Plan from $25,000 to $40,000; and
• Increase Alberta Student Grant monthly payments from $250 to $475. 

Students will not have to apply to benefit from any of the changes, all of which will take effect July 1 except for the Alberta Student Grant top-up. Those in the program were told to expect to receive the extra money in March after being contacted by Alberta Student Aid. 

"We tried to take a look at the different subsets of students and see if there's ways in which we can provide some supports to meet students where they're at," Advanced Education Minister Demetrios Nicolaides told CTV News Edmonton in an interview. 

"For student loan borrowers, is there something we can do to help them? For low income students that are receiving the Alberta Student Grant, is there something that can be done to assist them. And then for anybody else that's not caught in those measures, what can be done to assist them?" 

The changes to the grace period, interest rate and Repayment Assistance Plan are permanent. 

The Alberta Student Grant top-up is only being provided for the 2022-23 academic year at a total cost of $18 million and will be provided retroactively to Aug. 1, 2022. 

While the grace period will double on July 1, any borrowers who completed their studies on or after Dec. 1, 2022, will be eligible. According to the minister, the only other province with a grace period this long is Prince Edward Island. 

STUDENTS WELCOME CAP, WANT MORE INVESTMENT 

Nicolaides said his department looked at other provincial tuition caps and the historical rate of inflation before landing on the two-per cent figure, which he called "adequate enough" to help institutions deal with inflating costs. 

He also called a tuition cap the "number one ask" from students for the past three years. 

This was echoed by student leaders, including the vice chair of the Council of Alberta's University Students, Matt Yanish. 

Citing higher use of the campus food bank, he commented: "Nobody in a province as rich as ours should be skipping meals or relying on food banks to survive, just as nobody in Alberta should be denied access to education."

"Right now, we're fighting 5.5-per cent increases," added Christian Fotang, the U of A's students union VP external, referring to tuition deliberations for the 2023-24 academic year. "If tuition's going up at that price again, it's that $200, $300 difference between am I paying rent? Can I buy my textbook? Can I fill up gas? Can I get groceries?" 

The proposal for a 5.5-per cent domestic tuition hike has gone through consultations and will be decided upon in March, according to a U of A spokesperson. 

Fotang wants to see more dollars put toward the advanced education budget in Alberta's next budget at the end of February. 

At the end of January, the University of Calgary approved a 5.5-per cent tuition increase for all domestic undergraduate students, except those studying nursing, who will see an eight-per cent fee hike. Students protested the meeting where the decision was made. 

And in 2022, the Alberta government gave special approval for tuition hikes in several programs at both schools.

When asked what he would say to students who feel action on rising tuition is needed sooner than 2024, Nicolaides said, "That's why these other measures are being put on the table: to have some immediate effect." 

Tuition was frozen under the Alison Redford and Rachel Notely governments until 2020-21. During the next three years, the Alberta Tuition Framework limited fee increases to seven per cent. For the 2023-24 academic year, Alberta returned to using the Consumer Price Index to cap tuition increases. 

"Of course, as we're seeing now, that can result in some wide swings and because inflation is so high, it's allowed universities and colleges to be able to increase tuition by a maximum of 5.5 per cent," Nicolaides commented. 

"Changing that and setting it at a flat two per cent gives students and parents and families predictability and consistency regardless of what's happening at a macroeconomic level." 

The cap does not apply to international tuition, as that is not regulated by provincial legislation. 

THE NDP'S PROMISES 

Alberta is four months away from an election. 

Notley, vying to earn back the premier's seat with the Alberta NDP, had also promised to implement a tuition cap if re-elected. 

But her party coloured the Thursday announcement as hypocritical and manipulative after the UCP government cut post-secondary spending in previous provincial budgets and allowed tuition increases to continue in 2020-21. 

Yanish said the cost of getting his degree has risen about 30 per cent since he first started at MacEwan University. 

"Is it enough?" he said of the measures announced Thursday. "No. But is it a step in the right direction? Absolutely. And is it a reflection of what we've asked for as student leaders? Absolutely it is."

Of Nicolaides, the NDP's advanced education critic, David Eggan, said, "Reversing himself immediately before an election is obviously dishonest and shows Albertans that the UCP simply can’t be trusted."

Re-investing in post-secondary schools is one of the things the party has promised to do if re-elected.

Nicolaides said his government's action would benefit all of Alberta's estimated 260,000 post-secondary students, either through the tuition cap or from one of the other measures. 

About 164,000 of Alberta post-secondary students are loan borrowers who will benefit from the reduced interest rate. Another 10,000 are low-income students who are aided by the Alberta Student Grant. The government estimates the increase to the Repayment Assistance Plan threshold will open it up to about 16,000 more loan borrowers.