The Canada Student Loan (CSL) program has been permanently interest-free for federally funded student loans since April 1, 2023. Provincial student loans (Ontario OSAP, Alberta, BC, etc.) follow varying interest rules. After graduation, federal loans have a six-month non-payment grace period (interest still doesn’t accrue on the federal portion). The Repayment Assistance Plan (RAP) can reduce monthly payments to zero based on income, with the federal portion forgiven after 15 years.
Quick answer: Federal Canada Student Loans are interest-free permanently. Repayment starts 6 months after graduation. RAP lowers payments based on income; the federal portion is forgiven after 15 years on RAP. Provincial loans vary — OSAP is interest-free, BC and Alberta have small rates.
What this means: Federal student loan debt at 0% is the cheapest debt available. Don’t accelerate payoff at the expense of higher-interest debt or RRSP / TFSA contributions. Pay minimums and use the cash flow for higher-return uses.
What to do next: Calculate your monthly payment and timeline based on your CSL balance and income. Calculate student loan payments →
Federal interest-free status
The Government of Canada permanently eliminated interest on the federal portion of Canada Student Loans effective April 1, 2023. This applies to:
- All federal Canada Student Loans
- Canada Apprentice Loans
- Both in-school and post-graduation periods
The original loan principal is still owed, but it does not grow with interest. Borrowers who paid extra to accelerate payoff before April 2023 sometimes find that, in hindsight, they could have invested those dollars at 5-7% returns instead. This doesn’t change going forward — the 0% rate is permanent.
Provincial student loan interest rates
| Province / loan | 2026 interest rate |
|---|---|
| Ontario (OSAP, provincial portion) | 0% (permanently interest-free) |
| British Columbia (provincial) | Prime rate (currently ~5.95%) |
| Alberta (provincial) | Prime rate |
| Saskatchewan | Prime rate |
| Manitoba | 0% (loans no longer charge interest) |
| Quebec (Aide financière aux études) | Variable, currently ~5.5% during repayment |
| New Brunswick | Prime rate |
| Nova Scotia | 0% |
| Newfoundland and Labrador | 0% |
| PEI | 0% |
Pay down interest-bearing provincial loans (BC, AB, SK, NB, Quebec) before tackling the interest-free federal portion.
The six-month grace period
For federal Canada Student Loans, the first six months after you leave school (graduate, withdraw, or drop below 60% course load) are a non-payment period:
- No payments required
- No interest accrues (federal portion)
- Provincial portion may or may not accrue interest depending on the province
You can start repayment voluntarily before the six months are up if you want to.
Standard repayment terms
Canada Student Loans use a standard 9.5-year (114-month) repayment term, with monthly payments calculated to amortize the balance:
- Minimum monthly payment is $25
- For most balances, the calculated payment is the loan balance divided by 114
- You can pay more at any time without penalty
- You can request a shorter term (higher payments) or longer term (lower payments, max 14.5 years)
Example: $30,000 federal CSL at 0% interest over 9.5 years = $263/month. Over 14.5 years = $172/month. Both produce the same total cost ($30,000) because there’s no interest.
Repayment Assistance Plan (RAP)
RAP reduces your federal student loan payments based on income. Stages:
- Stage 1 (income-based reduction): Government covers part of your monthly payment so you pay no more than 10% of your family income above $40,000 toward CSL. Lasts up to 60 months.
- Stage 2 (principal reduction): If you’re still in financial hardship after Stage 1, the government starts paying down your principal directly while you continue to pay 10% of income above $40,000.
- 15-year forgiveness: If you’re still in RAP after 15 years of being out of school, the remaining federal portion is forgiven.
RAP requires reapplication every 6 months. Single, low-income borrowers below the threshold pay $0 in monthly payments while on RAP.
Other forgiveness programs
- Canada Student Loan forgiveness for doctors and nurses in underserved rural and remote communities. Up to $40,000 for family doctors, $20,000 for nurses, $30,000 for nurse practitioners and personal support workers in long-term care.
- Provincial student loan forgiveness in some provinces (Ontario, Quebec, others) for working in specific professions or regions.
- Disability-related loan forgiveness for permanent disability that prevents employment.
- Bankruptcy and consumer proposal: Student loans cannot be included in either until 7 years after you finished studying.
Strategy: should you pay it off early?
Because federal CSL is 0%, every extra dollar you put toward it could earn 5-7%+ elsewhere. The mathematical priority order:
- Credit card debt and any high-interest debt — pay first
- Provincial student loans with interest — pay second
- Employer pension match — max contributions to get free money
- RRSP / TFSA / FHSA contributions — long-term growth at 6-8%
- Federal CSL minimum payments — not accelerated unless all above are funded
The behavioural counterargument: paying off student debt produces a clear emotional payoff. If the loan balance is causing real stress, accelerating payoff can be the right move even at 0%, because financial peace of mind has real value.
Worked example
Priya owes $32,000 in federal CSL after graduation. Standard payment is $281/month over 114 months. She earns $58,000/year.
| Strategy | Monthly | Payoff | What happens to the extra cash |
|---|---|---|---|
| Minimum + invest difference | $281 | 9.5 years | Extra goes to TFSA growing at 7% |
| Extra $200/mo to CSL | $481 | ~5.5 years | None — loan paid first |
| Lump sum if windfall | $281 + $10K lump | ~5 years | None — loan paid faster |
Over 9.5 years at 7% TFSA returns, $200/month grows to ~$33,800. The investing-first strategy creates $33,800 in tax-free savings while still extinguishing the $32,000 loan on schedule. Both end with zero debt, but the investing path ends with a much larger net worth.
Frequently asked questions
- Do Canada Student Loans charge interest in 2026?
- No. The federal portion of Canada Student Loans is permanently interest-free as of April 1, 2023. Provincial loans (BC, Alberta, Saskatchewan, NB, Quebec) still charge interest at prime.
- When do I start repaying my student loan?
- Six months after you graduate, withdraw, or drop below 60% course load. The federal portion does not accrue interest during this grace period.
- What is the Repayment Assistance Plan?
- RAP reduces federal student loan payments to no more than 10% of family income above $40,000. After 15 years on RAP, the remaining federal balance is forgiven.
- Should I pay off my federal student loan early?
- Usually no. With 0% interest, the dollars are better deployed against high-interest debt, employer pension match, RRSP/TFSA, or FHSA contributions earning 5-7%+.
- Can I include a student loan in a consumer proposal?
- Only if it has been 7 years since you finished studying. Within that window, student loans cannot be discharged through consumer proposal or bankruptcy.
- Is OSAP interest-free?
- Yes. Both the federal Canada Student Loan portion and the Ontario provincial OSAP portion are interest-free in 2026.
- Is there forgiveness for doctors and nurses?
- Yes. Family doctors working in rural/remote communities can have up to $40,000 of federal student loans forgiven; nurses up to $20,000; nurse practitioners and PSWs in long-term care up to $30,000.