Student Loan Debt Canada — Complete Repayment Guide

Canadian student loan debt is manageable with the right repayment strategy. Here's everything you need to know about federal and provincial loans, assistance programs, and paying them off faster.

The Canadian Student Loan System — Federal and Provincial

Canadian student loans come from two streams:

• Federal loans: Canada Student Loans, administered by the National Student Loans Service Centre (NSLSC) on behalf of Employment and Social Development Canada (ESDC)
• Provincial loans: Each province has its own student loan program (OSAP in Ontario, StudentAid BC, Alberta Student Aid, etc.). Provincial loans are managed separately from federal loans.

Since April 1, 2023, the federal portion of Canada Student Loans is permanently interest-free. This is a major policy change — federal loans no longer accumulate interest during repayment. Provincial loans still carry interest at rates set by each province.

Standard Repayment — What Happens Automatically

After graduating or leaving school, you have a 6-month non-repayment period (grace period) before payments begin. During this period (federal loans), no interest accrues and no payments are due. After 6 months, repayment begins automatically on a 10-year standard schedule.

Example: $30,000 in federal Canada Student Loans at 0% interest over 10 years = approximately $250/month. At 0% interest, the full $30,000 repays as $30,000 — no interest cost on the federal portion.

Repayment Assistance Plan (RAP) — Help for Low Incomes

The Repayment Assistance Plan (RAP) is the federal program for borrowers who can't afford their standard payments. Under RAP:

• Your payment is capped at a percentage of your family income (payments are affordable — some borrowers pay $0)
• The government covers any interest not covered by your reduced payment (though federal loans are now 0% interest)
• After 10 years on RAP, the remaining federal loan balance may be forgiven
• After 15 years of repayment (any combination), remaining balance is forgiven

RAP is applied for every 6 months through the NSLSC. Income thresholds are adjusted for family size. A single person earning under approximately $25,000 qualifies for $0 monthly payments under RAP.

Provincial Loan Repayment Assistance

Each province has its own assistance program alongside federal RAP. Ontario's OSAP repayment assistance mirrors the federal RAP structure. BC, Alberta, and other provinces have similar programs. Key point: you must apply for each province's program separately — federal RAP does not automatically cover provincial loans.

Student Loans and Bankruptcy — The 7-Year Rule

Student loans are one of the few debts that cannot be discharged in bankruptcy until 7 years after you ceased to be a student. After 7 years as a former student, student loan debt can be included in a bankruptcy or consumer proposal. If genuine financial hardship exists, a court can reduce this to 5 years in special circumstances.

This 7-year rule is why student loans appear in insolvency proceedings differently from credit card debt — the timing of when you stopped studying matters significantly.

Prioritizing Student Loan Repayment

Since federal Canada Student Loans are now 0% interest, there is no financial urgency to pay them ahead of schedule — money saved can earn more in a TFSA (4–5% in a high-interest savings account) than it saves in interest on a 0% loan. Provincial loans at 5–8% interest should be prioritized over federal loans.

Loan Type	Interest Rate	Priority
Federal Canada Student Loan	0% (since Apr 2023)	Pay minimums; invest the rest
Ontario OSAP (provincial portion)	Prime + 1% (variable)	Pay aggressively
BC StudentAid (provincial)	Prime + 2.5%	Pay aggressively
Credit card debt (if any)	19.99%+	Pay first — far higher rate

The Student Loan Interest Tax Credit — Gone But History Matters

The federal student loan interest tax credit was eliminated effective 2023 (as interest was simultaneously made 0%). If you paid student loan interest in prior years, review whether you have carryforward amounts you haven't yet claimed.