Federal loans are now at 0% interest. What about your provincial loans?
One of the most significant changes to Canadian student finance in recent years is the elimination of interest on federal Canada Student Loans. Since April 1, 2023, federal student loans have been interest-free — permanently. But provincial loans are a different story. This guide breaks down what you're actually paying.
The federal government eliminated interest on Canada Student Loans in the 2023 federal budget. This means:
This is a massive benefit for Canadian graduates. On a $30,000 loan with the previous prime + 1% interest rate, borrowers would have paid $5,000–$8,000+ in interest over a 10-year repayment. That is now $0.
Provincial student loans are separate from federal loans and may still charge interest. Rates vary by province:
| Province | Provincial Interest Rate | Notes |
|---|---|---|
| Ontario | 0% (as of 2019) | Ontario eliminated provincial interest on OSAP loans |
| BC | Prime rate | Check StudentAid BC for current rate |
| Alberta | Prime rate or fixed | Check Alberta Student Aid for current rate |
| Saskatchewan | Prime + margin | Contact Saskatchewan Student Aid |
| Manitoba | Prime + margin | Contact Manitoba Student Aid |
| Nova Scotia | 0% | Nova Scotia eliminated provincial interest |
| New Brunswick | 0% | New Brunswick eliminated provincial interest |
| PEI | 0% | PEI eliminated provincial interest |
| Newfoundland | 0% | Newfoundland eliminated provincial interest |
| Quebec (AFE) | Varies (prime-based) | Quebec manages its own system entirely |
Several Atlantic provinces and Ontario have followed the federal lead and eliminated provincial interest on student loans. If you're in BC or Alberta, you still pay interest on the provincial portion of your loan.
Most students who applied through a provincial program (OSAP, StudentAid BC, etc.) have a split loan:
Both are managed through NSLSC (National Student Loans Service Centre) after graduation — you make one combined monthly payment. But the interest calculation is separate: 0% on the federal portion, and your province's rate on the provincial portion.
| Loan Type | Interest During School | Interest During Grace Period |
|---|---|---|
| Canada Student Loan | 0% | 0% |
| Ontario Provincial (OSAP) | 0% | 0% |
| BC Student Loan | 0% (in school) | Interest begins after grace period |
| Alberta Student Loan | 0% (in school) | Interest begins after grace period |
| Quebec AFE Loan | Interest varies | Interest begins after grace period |
With federal loans at 0% interest, the math on early repayment changes significantly:
Prior to April 1, 2023, Canada Student Loans charged either:
At its peak in 2022–2023, with the Bank of Canada prime rate at 7.2%, borrowers were paying 8.2% or 9.2% on their federal student loans. The elimination of interest saved the average borrower hundreds of dollars per year.
With federal loans now at 0% interest, it often makes more financial sense to invest in a TFSA rather than rush to repay your Canada Student Loan. For example:
See our guide to TFSA for Students in Canada for how to start investing early.
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Open KOHO Free — No Fees — Code 45ET55JSYAThe federal government's elimination of Canada Student Loan interest in 2023 is a landmark change that saves the average borrower thousands of dollars. Know whether your provincial loan still charges interest, and prioritize repaying the interest-bearing portion first. With federal loans at 0%, consider investing your surplus cash rather than rushing to pay off debt that isn't costing you anything.