On April 1, 2023, the federal government permanently eliminated interest on Canada Student Loans. This was one of the most significant changes to Canada's student financial aid system in decades — and it affects every Canadian who has federal student loans, whether they borrowed last year or years ago.
If you have Canada Student Loans and are confused about what this means for you, this guide explains exactly what changed, what is different now, and what still carries interest.
Before April 1, 2023, Canada Student Loans charged interest during the repayment period. Borrowers had two options when entering repayment:
With prime rates hitting 7.2% in 2023, students on the floating rate were paying 8.2% on their federal student loans — among the highest rates since the program existed. The elimination of interest came at a moment when the financial relief was significant.
Starting April 1, 2023:
This change applies to all federal Canada Student Loans — it is not a temporary measure, an income-tested benefit, or a program you need to apply for. It is simply how federal student loans now work.
Yes. The interest elimination applies to all Canada Student Loans regardless of when they were taken out. If you graduated in 2019 and have been paying interest on your federal loans since 2020, you stopped paying interest on April 1, 2023. Any interest that accrued before that date is still owed (it was added to your balance), but no new interest has accrued since.
The savings depend on your balance and how many years of repayment remain. Here are some examples:
These are substantial savings — real money that stays in graduates' pockets.
The 2023 change only covers the federal Canada Student Loan. Provincial student loans are separate programs and remain interest-bearing in most provinces.
For most Canadian graduates outside of BC and Manitoba, the provincial loan portion still accrues interest. This means while your federal debt is frozen at the amount you borrowed, your provincial balance can still grow if you only make minimum payments.
The interest elimination does not apply to private student loans or student lines of credit from banks. If you borrowed through a professional student line of credit from TD, BMO, RBC, Scotia, or CIBC, those loans still carry interest — typically at prime rate or prime + 1%.
These bank-issued lines of credit are commercial products, not government programs, and they are not subject to government interest policy changes.
The elimination of federal student loan interest changes optimal repayment strategy in a meaningful way:
It made mathematical sense to pay off federal loans as fast as possible to minimize interest costs. Paying extra on a 7% loan generated a guaranteed 7% return on that extra payment.
Federal loans no longer accumulate interest, so there is no financial benefit to paying them down faster than the standard schedule. Your money is better used to:
The combination of interest-free federal loans and RAP is particularly powerful. Under the old system, a graduate on RAP with $0 required payments would still see their federal loan balance grow because interest kept accruing. Under the new system, a graduate on RAP with $0 required payments sees their federal balance stay flat — it never grows beyond the original borrowed amount.
This makes RAP much more effective than it was before 2023. The 15-year forgiveness backstop remains unchanged.
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Open KOHO Free — No Fees — Code 45ET55JSYANo. The change was automatic. All Canada Student Loans stopped accruing interest on April 1, 2023, with no action required from borrowers.
Canada Student Loans do not accrue interest during the in-school period regardless — that was always the case. The 2023 change applies to the repayment period after school.
No. The change is not retroactive for loans already repaid. It only benefits loans that were still outstanding on April 1, 2023.
Ontario provincial student loans still carry interest at the prime rate plus 1% (floating) or prime rate plus 2% (fixed). As of 2025, with Bank of Canada rates having declined from their 2023 peak, check your NSLSC account for your current exact rate.