3 Common Questions About Student Loan Repayment

Over 550,000 Canadians take out student loans each year, and the average university graduate carries around $15,000 of student debt, according to the most recent analysis from Statistics Canada.

After graduation, there’s a six-month grace period before the first payment is due. If your student loans will enter repayment soon, you may have some questions about the process.

Here’s what you need to know.

1. Where do I repay my loans?

It depends on where you live.

Residents of Alberta, Nova Scotia, and Prince Edward Island repay federal loans through the National Student Loan Service Center (NSLSC) and provincial loans through their provincial student aid office.

Those living in Quebec, Nunavut, or the Northwest Territories will pay federal and provincial/territorial loans through their province or territory.

In all other provinces, you can pay both your federal and provincial loans through the NSLSC.

2. Which repayment term should I choose?

Your loan repayment term is the number of months it will take to pay off the loan completely.

You may have the option to choose between longer or shorter terms. The repayment term that’s best will depend on your income, existing financial obligations, and whether your student loans accrue interest.

You can extend your loan repayment up to a maximum of 174 months (14.5 years) to keep your payments low. A shorter term with higher monthly payments will enable you to pay your loan off faster.

Typical repayment terms for student loans in Canada

Amount Owed	Repayment Period
$0.01 to $1,365.99	18 months (1.5 yrs)
$1,366.00 to $2,975.99	42 months (3.5 yrs)
$2,976.00 to $4,375.99	66 months (5.5 yrs)
$4,376.00 to $6,985.99	90 months (7.5 yrs)
Over $6,986.00	114 months (9.5 yrs)

NSLSC Canada

Nerdy Tip: Federal student loans are no longer subject to interest, but some provincial loans are. If your loan accrues interest, extending the payment term will increase the cost of borrowing. Keep the added cost in mind when establishing a repayment timeline.

Remember, your wages will likely increase as you spend more time in the workforce. You can always bump up your payment amounts in the future to repay your loan more quickly.

If you occasionally have extra money in your budget, you can make additional lump sum payments toward your student loan balance. Any payments made during your six-month non-repayment period will go directly toward the principal balance. Outside of this period, extra payments will go toward outstanding interest first.

3. What’s the student loan tax credit?

If you paid interest on your student loan from 2018 through 2023, you may be eligible to claim the student loan tax credit to reduce your tax payable for the year. If you don’t owe any income taxes, you can carry the interest forward for up to five years.

The student loan tax credit can be claimed for loans received under:

The Canada Student Loans Act.
The Canada Student Financial Assistance Act.
The Apprentice Loans Act.
Similar provincial or territorial laws.

Complete line 31900 of your federal income tax return and line 58520 on your corresponding provincial or territorial return to claim this tax credit.

What to do if you can’t make your student loan payments

If you’re struggling to repay your student loan, don’t despair. Recent graduates often have difficulty finding work in their field immediately after graduation. You are not alone.

Fortunately, there are options you can pursue to keep your student loan account in good standing even if you’re currently unable to keep up with payments. Don’t hesitate to contact the student aid office in your province or territory for help.

Adjust your payment amount

You can change the monthly payment amount for your student loan at any time through the NSLSC or your provincial or territorial student aid office.

Request repayment assistance

Canada offers two repayment assistance programs to support borrowers who can’t keep up with their student loan payments.

Repayment Assistance Plan (RAP): Through this income-based program, you can apply for reduced or deferred student loan payments through the Government of Canada at any point during your loan repayment period. Once approved, the program will cover the outstanding interest on the federal portion of your loan. They will begin paying down outstanding interest and principal of your loan after 60 months of RAP or ten years after your graduation date. You must re-apply for RAP every six months to maintain your eligibility.

Repayment Assistance Plan for Borrowers with Disabilities (RAP-D): Borrowers with a disability recognized by the Canada Student Financial Assistance Program may qualify for reduced student loan payments through RAP-D. Similar to the RAP, assistance is granted based on income, account standing and other factors. You must reapply every six months to maintain eligibility.

Delay repayment

You may be able to delay student loan repayment if you:

Have outstanding loans but are returning to school.
Are a current student taking medical or parental leave.
Are a Canadian Forces reservist on a designated operation.

Delaying your repayment usually grants you interest-free and payment-free status until your circumstances change. The duration of your payment-free or interest-free status may depend on the reason for the delay. For instance, individuals on parental or medical leave can delay payments for up to 18 consecutive months.

A note on payment delays vs. deferments

These words may seem interchangeable, but they can have different implications concerning loan repayment. Deferments are typically for a set period (usually six months), while delays are often tied to a change in life circumstances, such as returning to school or taking parental leave. Interest may accrue during a deferment but usually will not accrue during a delayed payment plan (though most Canada student loans are now interest-free).