What Is It?
As of April 1, 2023, the federal government eliminated interest on Canada Student Loans. All federally managed student loans — both new and existing — no longer accrue interest. This is a significant change that applies permanently going forward, not just as a COVID-era measure.
Important: Provincial student loans are separate and may still carry interest. If you have a mix of federal and provincial loans (common in most provinces), only the federal portion is now interest-free.
How to Tell if Your Loan Is Federal
Your federal Canada Student Loan is managed by the National Student Loans Service Centre (NSLSC) at canada.ca/student-loans. If your loan is managed by NSLSC, it is federal and interest-free.
Some provinces (notably Quebec, Northwest Territories, and Nunavut) do not participate in the federal Canada Student Loan program and instead have their own provincial loan programs — these may still carry interest.
The Repayment Assistance Plan (RAP)
RAP is a federal program that reduces monthly payments based on income. Payments are capped at 20% of gross income, and for very low incomes, the payment may be $0.
RAP calculation example:
- Annual gross income: $30,000
- Maximum monthly RAP payment: $30,000 × 20% ÷ 12 = $500/month
- If the calculated payment doesn’t cover interest (there’s now no interest), the government pays the difference
- Any remaining balance after 10 years of RAP participation is forgiven
Eligibility:
- Must have been out of school for at least 6 months
- Must be repaying a Canada Student Loan
- Income must demonstrate financial difficulty
Application: Apply every 6 months through NSLSC. Approval is not permanent — reapply each term.
RAP Stage 2 — After 10 Years (or 5 Years of Disability)
After 10 years of making RAP payments (or 15 years of repayment in total), any remaining balance on your Canada Student Loan is forgiven. For borrowers with permanent disability, forgiveness can occur after 5 years of RAP participation.
This makes RAP particularly powerful for graduates with high debt and modest incomes — the combination of no interest and eventual forgiveness means total lifetime repayment is capped at affordable levels.
What Most People Don’t Know
- You should apply for RAP even if you can technically afford standard payments. If your income is below the threshold, RAP may result in $0 payments while the clock ticks toward forgiveness. This is not taking advantage — it’s using the program as designed.
- RAP counts as repayment for forgiveness purposes. Even $0 months on RAP count toward the 10-year forgiveness clock. Standard non-payment (default) does not count.
- Interest-free doesn’t mean you should delay repayment if you can afford it. If your income is good, paying off the principal faster reduces the total debt regardless of interest savings. The interest-free change helps those with lower incomes or extended repayment timelines most.
- Provincial loans are separate. In Ontario, the Ontario Student Assistance Program (OSAP) provincial portion is managed by the National Student Loans Service Centre after 2017, but some older provincial loans may have different terms. Check your loan statement to distinguish federal and provincial balances.
Frequently Asked Questions
My loan statement still shows an interest amount. Is my loan really interest-free?
If your loan is a Canada Student Loan managed by NSLSC, it is interest-free as of April 1, 2023. Contact NSLSC if your statement appears to show accruing interest — there may be a billing or system issue. Any interest charged after April 1, 2023 was an error.
I defaulted on my student loan before 2023. Can I still benefit from the interest-free change?
Defaulted loans are managed differently and may have been transferred to a collection agency or the Canada Revenue Agency. The interest-free change applies to loans managed by NSLSC. If your loan is in collections, you may need to rehabilitate the loan first through the RAP or by negotiating a repayment arrangement.
I finished school 8 years ago and have been making minimal payments. How close am I to forgiveness?
The 10-year RAP clock runs from the date you first enrolled in RAP (or 15 years of total repayment). If you’ve been enrolled in RAP for several years, you may be approaching forgiveness. Log into your NSLSC account to check your RAP history and remaining months.
I work in a designated rural or remote community as a doctor/nurse. Are there additional forgiveness programs?
Yes — the Canada Student Loan Forgiveness for Family Doctors and Nurses program forgives up to $60,000 for family doctors and $30,000 for nurses who work in designated rural or remote communities. Apply through NSLSC.