BASSETERRE, St. Kitts - IN fulfilling one of its promises made last year in the lead-up to the General Elections, the Government has launched a new student loan initiative that will see those loans being capped at five percent over a 13-year period.
In a national address today (Apr. 6), Prime Minister and Minister of Finance, Dr. Terrance Drew confirmed that students who are pursuing tertiary education as well as those who will be doing the same will see the reduction come into effect.
“As of today, Thursday, April 6, 2023, the interest rate on student loans accessed through the Development Bank of St. Kitts and Nevis for new students has been reduced to five percent per annum. The intention is to ensure that graduates can live and plan for better lives” Dr, Drew told the nation.
The Graduate Finance Project offers five percent interest on a maximum of EC$100,000 for a grace period of four and a quarter years with a 15-year repayment term.
“It also includes an EC$15,000 credit to service the student loan during that period which eliminates the payment of interest for the four years…under this new policy students will now save up to EC$50,000 or more,” Dr. Drew said.
Prior to this initiative, students were stacked with high repayment terms of just about 10 percent, with many of them complaining that they were saddled with debt for a long period of which PM Drew made it a strong statement during the Elections campaign.
With reduced rates, the Prime Minister hopes there would be some flexibility in graduates’ ability to create wealth without the burden of longstanding and hefty student loans.
“Typically, students return from their studies with high-interest rates and terms that delay important life events such as building their own homes or purchasing a vehicle and so choose to remain at home with their parents,” added Dr. Drew.
Though qualified, some students are faced with the challenge of handling a mortgage and a student loan payments.
“Having the debt can also make it hard to qualify for a mortgage in the first place. Homeownership is one of the largest areas of wealth, so delaying the purchase of a home has a major effect on a student borrower’s ability to increase his or her wealth. Reduction of the student loan interest rate to five percent in addition to the credit offer will ease the student’s,” noted Drew.
It is hoped that by reducing the interest rates, more students will seek tertiary education to bolster the local economy.
