Average Student Loan Interest Rate in Canada

As a student in Canada, getting enough funds to support your post secondary education will most likely be a tough hurdle. The good news is that there are options available to finance your college education. According to Statistics Canada, about 50% of bachelor graduates between 2009 and 2010 leveraged on loans to finance their post-secondary education. So, if you eventually consider taking a loan, you won’t be alone.

However, when weighing several loan options, it is important to put into consideration the financial consequences of your decision most especially the interest rate you’ll pay on your student loan. Irrespective of the loan type, part of the whole cost will be interest amassed over your repayment period.

Now, here is what you should know:

Types of Interest Rates

There are two kinds of student loan interest rates you can choose from as a student borrower.

The Fixed-rate

This stays the same throughout the duration of your loan. It’s a fixed interest rate and has no changes.

Floating rate

The floating interest rate is a variable rate. It fluctuates and can change within your loan duration.

How Are Interests Charged on Canadian Student Loans?

Interest is charged on your student loan when you enter the repayment status. Usually, interest amasses daily and is estimated monthly. This implies that interest charges are applied to your loan balance on the last day of each month once your repayment period begins.

The Canada student loan interest rate is charged based on the prime rate which is posted by each of Canada’s five main banks.

Any change to the prime rate affects the interest calculations on your Canada student loan. If the prime rate surges, you will pay more interest on your student loan and vice versa.

Interests on Federal Student Loans

Most student loans in Canada are gotten from the National Student Loan Service Centre. While many students choose the federal loans, it is possible for you to access extra funding from provincial loans every year.

Federal loans allow an interest rate of 2.5% plus prime. This means that the interest on federal student loan is added to the average bank prime rate in Canada. Plus prime varies with time, although it remains at 3.95% as at January 2020. Based on this, the interest on federal students loans sum up to about 6.45%.

Interests on Provincial Loans

So far, Newfoundland and Labrador, Quebec, and Manitoba are considered the most desirable provinces for obtaining student loans in Canada. Firstly, the process of getting a financial aid is easier than most other regions. In addition to this, schools in these provinces offer some of the lowest tuition rates in the country


This province has no precise system for its student loans. All loan information and interests are generated through the National Student Loans Service Center and are the same both federally and provincially.


Alberta province uses the CIBC’s official prime rate in calculating the interest rate on student loans. Students who choose the floating rate will enjoy an interest that varies with prime, without any additional interest.

British Columbia

The British Columbia province also operates interest rates similar to Alberta, your interest fluctuates with prime and no additions.

Newfoundland and Labrador

Currently, this region offers non repayable student grants instead of provincial student loans. As a permanent resident, you can get up to $100 per week through the Newfoundland and Labrador student grant.


Quebec has one of the lowest interest rates on student loans in Canada.  The plus prime is 0.5%, which means your total interest rate is just around  4.45%. You can also get bursaries if you have excellent academic record or severe financial needs.


Manitoba offers interest free loans for student as long as they repay the loans when it is due.


Ontario also offers great loan rate for their provincial student loans, with a 1% plus prime, the total interest rate is 4.95%.

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