Updated: April 2025  |  bremo.io financial guides

Student Loan Repayment in Canada — Full Guide 2025

Graduating with student debt is a reality for hundreds of thousands of Canadians every year. The good news is that Canada's student loan repayment system has significant protections built in — especially since 2023, when the federal government eliminated interest on Canada Student Loans entirely.

This guide covers everything you need to know about repaying your Canadian student loans — from the grace period after graduation to repayment assistance programs and strategies to get out of debt faster.

The 6-Month Non-Repayment Period

When you leave school — whether you graduate, withdraw, or reduce to below a 60% course load — you automatically enter a 6-month non-repayment period. During this time:

• No payments are required
• No interest accumulates on your federal Canada Student Loan
• You can make voluntary payments without penalty

After 6 months, your loan enters standard repayment. The NSLSC will contact you with your repayment schedule.

How Your Monthly Payment Is Calculated

Your monthly payment is determined by your total outstanding balance and your chosen repayment term. The standard repayment period is up to 10 years (120 months). Longer terms mean smaller monthly payments, but you'll pay slightly more overall if your provincial loan carries interest.

For example, if you owe $28,000 on a 10-year schedule, your monthly payment would be approximately $233. If that's manageable, stick with the standard schedule and pay it off efficiently.

Federal vs. Provincial Loans

Most students have two loan components:

• Canada Student Loan (federal): Zero interest since April 2023. Managed through NSLSC.
• Provincial student loan: Interest rate and terms vary by province. Some provinces (BC, Manitoba, PEI, Nova Scotia, Newfoundland) have also eliminated provincial interest. Others still charge interest.

Always check with your provincial student aid office for the specific interest terms on your provincial loan portion.

Repayment Assistance Plan (RAP)

If you can't afford your monthly payments, the Repayment Assistance Plan is Canada's income-based repayment option. Under RAP:

• Your payments are capped at 20% of your family income
• If your income is very low, your required payment may be $0
• After 10 years on RAP, any remaining federal loan balance is forgiven
• You must reapply for RAP every 6 months

RAP is available for Canada Student Loans. Many provinces have similar provincial repayment assistance programs alongside the federal plan.

Revision of Terms

If you don't qualify for RAP but still need some flexibility, you can apply for a Revision of Terms — this extends your repayment period (up to 15 years), which reduces your monthly payment. It's not ideal since you'll pay more interest on provincial loans over time, but it can provide breathing room.

Repayment Strategies

For Federal Loans (Interest-Free)

Since federal loans carry no interest, there's no urgency to pay them off faster than your schedule requires. Your money might serve you better in a TFSA or FHSA. That said, eliminating the debt entirely has psychological benefits and frees up cash flow.

For Provincial Loans (With Interest)

If your provincial loan charges interest, focus extra payments here first. Even small additional payments each month reduce your principal and the amount of future interest.

What Happens If You Miss Payments?

Missing payments on your student loan has serious consequences:

• Your credit score will drop significantly
• Your loan goes into collection after 270 days of non-payment
• The government can withhold income tax refunds
• Your loan becomes ineligible for RAP once in default (you'd need to rehabilitate it first)

If you're struggling, contact the NSLSC before missing a payment. Apply for RAP or request a payment deferral — don't wait until you default.

Making Extra Payments

You can make lump-sum or extra monthly payments at any time with no penalties. Log into your NSLSC account to make additional payments. Any extra amount reduces your principal directly, shortening your repayment period.

Staying on Top of Your Loan

• Keep your NSLSC profile updated with your current address and banking information
• Set up auto-debit through NSLSC to never miss a payment
• Check your balance annually and reassess your repayment timeline
• Claim the student loan interest tax credit (for any provincial interest paid) on your annual tax return