HALIFAX - Nova Scotia has written off $2.18 million in bad student debts, a figure student leaders say is the latest sign graduates are struggling to pay off the soaring cost of education.

The figure covers 400 loans given from 1999 to 2004 and is found in a March 26 cabinet order-in-council detailing a total of $3.7 million being written off the province's books.

Mike Tipping, president of the Dalhousie University Student Union, said in a recent interview that the figures show that graduates aren't coping with the large debts being run up to pay for tuition.

"That's a huge amount of impact on students' credit ratings, I'm sure, from these bad debts," he said.

The province's Education Department estimated last year the average debt of graduating students was about $23,000, while surveys done last year for the Maritimes Provinces Higher Education Commission say debt has grown by 10 per cent since 2003.

Tipping, chairman of the Alliance of Nova Scotia Students Associations, said an increase in bad debts is tied to a period in the late 1990s and 2000 when Nova Scotia's Tory government stopped providing student grants, and students started borrowing more to fund university educations.

"In addition ... some students resorted to borrowing on credit cards and private lines of credit at high rates of interest," he added.

Helen Langille, a 22-year-old environmental engineering student at Dalhousie University, said she currently has about $40,000 in debt from student loans, lines of credit and credit cards.

"What people don't realize is that when they amass that amount of debt, they've put part of their life on hold. ...You can't get a mortgage, you can't get a car loan," she said.

Langille said the key reform needed is lower tuition fees for students.

"The country and the province got in the business of lending people money without really thinking about it. They didn't realize how high tuitions were going in the future," she said.

Kevin Chapman, director of the Nova Scotia student assistance office, said the average amount written off was $5,500 per student - a figure representing the provincial portion of the students' debts.

He explained many of the defaults would have occurred three or four years ago after banks declared the loans in default and turned them over to the province.

Service Nova Scotia would have attempted to reach the students and negotiate a repayment over a period of several years, said Chapman.

He said the overall default rate on about the loans is currently 21 per cent.

However, the civil servant said there's been some progress over the last year, with the province agreeing to become a direct lender to students at lower interest rates starting in August. Under the previous system, the province administered loans given by banks.

The province has also introduced the enhanced repayment assistance program, which allows students to repay their loans based on financial situation.

"We believe the repayment deferral payment will allow them to manage their debt and have a quality of life that allows them to repay their loan," said Chapman of the new program.

He said the department expects to see more writeoffs by cabinet decree over the next few years.

Chapman said over the last few years Royal Bank has turned over between $10 million to $11 million worth of loans to Service Nova Scotia for recovery, and there will likely continue to be defaults from 2005 and 2006.

Leo Glavine, the Liberal party's education critic, said the heavy debts are the result of the Tory minority government's failure to restrain tuition fees for the last seven years.

The province must return to a system of providing direct assistance to students whose parents cannot assist them, he argued.

"We have to create a needs-based grants system. If there's anything that needs to be in Tuesday's budget, this is it," he said. "We shouldn't have 400 students in default. That needs to be lowered."

The province wrote off a number of other bad debts through nine other departments.

They include:

-The Department of Economic Development wrote off $163,886 for the Credit Union loan guarantee program, which provides loans to small businesses. The province backed 75 per cent of the risk for the program, which loaned a total of $20 million to 300 businesses.

-Economic Development also booked a $150,000 loss for Scotia Slate Products Ltd. The Industrial Expansion Fund provided this loan to the company in 2006 and the company went bankrupt last year.

-The Department of Agriculture wrote off a total of $389,751, while the Department of Fisheries and Aquaculture wrote off $241,804 in uncollected debts.