DBSKN Student Loan Rates Reduced To 5%; Government Acts On Financial Relief Promise

Prime Minister Dr. Terrance Drew announced the implementation of the ‘The Graduate Finance Project’, effective today, April 6, under the theme “Removing Financial Barriers to Education”. Two hallmarks of this new initiative are the reduction of student loan rates to 5% and the receipt of a $15,000 credit by all student loan holders, on their loan at the Development Bank of St. Kitts and Nevis (DBSKN).

Prime Minister Drew stated that the objective of the project is to offer financial relief to graduates and to make it easier for them to pursue their life goals. He also indicated that it was a fulfillment of one of his party’s campaign pledges, leading up to the 2022 general election.

The first phase of the GFP offers 5% interest on student loans, to new students within the Federation, on a maximum of EC$100,000.00 for a grace period of four and a quarter years (4 years, 3 months), with a fifteen (15) year repayment term. It includes an EC$15,000.00 credit to service the student loan during that period, which eliminates the payment of interest for the 4 years, 3-month period. The 5% interest takes effect after the 4 years, 3-month period.
 
A lower interest rate reduces the monthly payments for our students required to cover the principal and interest. With an interest rate of 5% at 10 years and 9 months, which is the remaining period after deducting the 4 years and 3 months from the 15-year repayment term, graduates’ payments will range from EC$1,000.00 to EC$1,500.00 per month.

Under this new policy, students will now save up to EC$50,000.00 or more over the period of the loan.
  
“The reduction of the student loan interest rate to five percent, in addition to the credit offer will ease the student finance complex. We understand the financial strain that resulted from the COVID-19 pandemic and therefore, it is our aim to ensure that students who desire to pursue higher education receive the necessary financial support they need”, the Prime Minister, who is also Minister of Finance, said.
 
“Students return from their studies to 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 to help ease the financial strain they have acquired. It can be challenging for someone to handle both a mortgage payment and a student loan payment. Having the debt can also make it hard to qualify for a mortgage in the first place. Homeownership is one of the largest builders of wealth, so delaying the purchase of a home can have a major effect on a student borrower’s ability to increase his or her wealth,” Dr. Drew continued.
 
A lower interest rate reduces the lifetime costs of university studies.