What is Student Loan Repayment in Canada?



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Student loan repayment is something many Canadians have to deal with. The Canadian government created the Canada student loan program to make post-secondary education easy and accessible to students with financial difficulties and disabilities.

The federal loan program is available to a wide range of Canadian students. These include both full time and part-time students, students with dependents, students from low and middle income earning families and students with permanent disabilities.

However, just like regular loans, the Canadian government student loans aren’t free. The repayment period begins at the end of the student’s studies, usually after a six month grace period.

Canada Student Loan Repayment

Student loan repayment in Canada commences when:

  • the student has rounded up his/her post-secondary education
  • A student decides to change from full-time to part-time studies or when
  • A student takes time off or leaves school for up to six months.

Non-repayment Period for Canadian Student Loans

There is a non-repayment period of six months from the time you finished schooling, and the time you must begin your student loan repayment. In most cases, interest will not be charged during these six months. However, the non-repayment period does not prohibit students from paying back their loans if they are ready.

You can begin your loan repayment as soon as you receive the loan. You do not have to wait until the end of the six months after schooling. Starting your loan repayment earlier makes the repayment process easy and comes with some benefits. If you repay your loan before rounding up your school program, you may not have to pay any interest.

Choosing Your Repayment Options

Before the end of the six months non-repayment period, you will be notified to log into your National Student Loan Service Center (NSLSC) account. This is where you will find your loan repayment details and be able to choose:

  • your interest rate
  • the day of the month your payments should be withdrawn
  • the payment frequency and
  • the account from which payments should be withdrawn.

Once the time for your loan repayment is due, it is advised that you choose the student loan repayment plan that is flexible enough for you. Your choice of repayment plan determines how affordable your payment would be.

Student Loan Repayment Plans

Although at the beginning of your student loan repayment, you may be assigned to a default loan repayment plan or be given options to choose from. These plans can be changed at any time and for free. Before contacting your loan servicer to discuss your repayment plan, you can use your Canada student loan repayment calculator to check through different repayment scenarios.  This will help you to find out an affordable amount and plan for you.

Note that the faster you repay your student loan, the less you will have to pay generally in terms of the loan interest.

If your student loan repayment is high compared to your income, you may want to apply for a repayment plan that will not leave a huge dent in your paycheck.

On default, every federal government student loan borrower is placed on a standard repayment plan. This is usually ten years of the fixed monthly payment. What this means is that you will pay the same amount your first year out of school (not minding your income) as what you pay ten years later. This student loan repayment plan could work for graduates who immediately find a job with a substantial starting salary.

However, students who are not lucky enough to get a high paying job or even find a job at all have to look for a repayment plan that balances their income, cost of living and family size.

Canada Student Loan Repayment Assistance

There are situations where graduates cannot make repayment of their student loan after the six months non-repayment period. This may be due to having a low income, a lack of income or a result of permanent disability.

Whatever the case, there are several student loan repayment assistance programs offered by the Canadian government. Once you begin to face challenges and realize you cannot fund your repayment, you should start a student loan repayment application. Here are some of the repayment assistance programs based on province or region:

BC Student Loan Assistance

The province of British Columbus has a couple of student loan repayment assistance for graduate students who have difficulties repaying their student loans or need a break for a while. A few of the student loan repayment assistance options offered by the British Columbus include;

  • Interest Relief
  • Extended Amortization
  • Principal Deferment and
  • Loan Forgiveness

Access it at Student Aid BC

Nova Scotia Student Loan Assistance

This is made available to assist students in managing their loan repayment after leaving school by offering advice and loan repayment options that best suits you as you transition from being a student to a worker.

Options offered to students by the Nova Scotia student loan assistance are:

  • Repayment assistance plan
  • Payment deferral program
  • Payment disability benefits program
  • Revision of payment terms
  • Interest-only payment
  • Interest capitalization
  • Medical benefits (this covers doctors and nurses working in remote or rural areas) and
  • Reservist benefits.

All these are offered in partnership with the Canada student loan program.

Access it at Nova Scotia Canada

National Students Loan Service Center (NSLSC)

The National Student Loan Service Center and your provincial or territorial student financial aid office can be of great help with your student loan repayment assistance. Graduates who cannot make repayment of their loans or who have defaulted in their student loan repayment can explore these options made available by the Canadian government through the NSLSC.

  • Repayment assistance plan (RAP) – through this program, you may qualify for a subsidized or no monthly payment.
  • Repayment assistance plan for borrowers with permanent disability (RAP-PD) – if you are found to be eligible for this program, you may get a subsidized or no monthly fee and also receive financial aid with expenses related to your disability.
  • Server permanent disability benefit – this plan offers total student loan forgiveness to graduates with severe permanent disability
  • Canada student loan rehabilitation – this is for students whose loans are in collections.
  • Canada student loans forgiveness for family doctors and nurses – this option assists those serving as residence doctors, residence in family medicine, nurses or nurse practitioners in an underdeveloped or rural area.

Access it at NSLSC

As a student loan borrower, one of the greatest mistakes you can make is to lie or present a false document to get loan repayment assistance or reduced loan payment. In some cases, some student loan borrowers lie about their family size or low income. Such practice is fraudulent and is punishable by law in Canada.

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Kareena Maya

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Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.

Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.