Student Loan Forgiveness in Canada

  1. Home
  2. /
  3. Saving
  4. /
  5. Student Loan Forgiveness in Canada

Get The Personal Loan You Need

We Love Loans Canada, Here’s Why;

  • Compare lenders in one place
  • Get loans directly from the best lender in the country
  • Learn how to get out of debt faster and stay out of debt

We believe Loans Canada has your best interests in mind, visit them today to learn more about this amazing service.

loans-canada logo

Eligible Family Doctors, Family Medicine Residents, Nurse Practitioners, and Nurse Practitioners may be able to obtain Canadian student loan forgiveness from the Federal Government. Do not worry, as Canada has several loan forgiveness programs you can apply to, including the ones listed below.

Suppose you are holding an Ontario student loan. In that case, the other option is to fully utilize your six-month deferral period (not charged interest) and immediately begin paying off student loan debt. After the grace period ends, you will start making monthly payments on the government-issued student loan until you pay off the balance in full. With a government loan, you are given a six-month grace period once you have graduated, completed your studies, or stopped being a full-time student.

The government loan and the student credit line require no payments to the principal as long as you are enrolled in school. In addition, the interest rates for student lines of credit are typically lower than those for a government loan since they are based on a prime interest rate that fluctuates. Student lines of credit usually require that you pay the loan interest only when you are enrolled in school, with some turning into a regular loans when you graduate.

How Do Student Loan Repayments Work?

Borrowers are responsible for making monthly payments, which rise depending on the loan’s interest rate. You would first use the affordable monthly payments to repay your loan’s principal, and if it is high enough, You will use the rest to cover monthly interest payments. You will have lower payments for 12 months, but the commitment to repaying the principal does not disappear. For six months after RAP stage 2 approval, you will either have no payments at all or affordable monthly payments, depending on your income and household size.

The bad news is that you are ineligible until you enroll in a RAP program and pay either 60 months or ten years after school ends, whichever comes first. If accepted into the program, you are not liable to make payments of more than 20% of your income, and sometimes no payments during this time. If you received provincial funding after August 1, 2015, you would automatically be assessed on the non-refundable NL Student Income Benefit.

At the same time, Student Aid will also verify if you can claim debt limit benefits on any Nova Scotia student loans you received in the academic year from August 2011 through July 2015. If you believe you should be eligible for loan forgiveness but did not receive the letter, contact us using the Ask Us A Question function on MyPATH to request reconsideration.

Under Quebec’s loan forgiveness program, you may be able to get up to 15% of your provincial student loans forgiven if you complete your studies within a specific timeframe or if you received a grant through the Student Loans and Grants program during each year you studied. The Nova Scotia Student Loan Forgiveness Program can help you pay back the provincial portion of your loan for up to 5 years with $20,400 in forgiveness. Most student loans in Canada have a federal and a provincial component, with each amount charged at its student loan interest rate (although you only have to make a single payment while you are paying it off). Your loans usually default to a fixed interest rate, but if you would instead your Canadian student loan interest rates to be variable, you can call your loan servicer to make the switch.

To compare the costs of choosing float rates versus fixed rates, use the Canada government’s loan repayment calculator. Personal loan interest rates can vary greatly depending on your financial circumstances, so it is essential to thoroughly assess if you can afford the monthly payments during school.

When you miss nine months of payments, the federal portion of your loan is sent to the Canada Revenue Agency (CRA) for collection. Like a standard RAP, the federal government makes an equity contribution towards your loan payments, helping to lower or eliminate your repayment liability. Under the RAP-PD, you may also be able to reduce your loan payments by using costs related to your permanent disability. Canada’s RAP program makes it easier to manage student loans, either reducing how much you must pay each month or eliminating them.

Can I apply for Student Loan Forgiveness?

Suppose you can show repaying the loans would hurt your finances significantly, like impacting your ability to meet basic living expenses. In that case, a judge will take this into account. However, the court may shorten that period to five years if paying back your loan would cause an undue hardship.

Once you have completed the five years of eligible employment, some percentage of (perhaps all) of the student loans are forgiven, and interest earned in each year you were in the program. If you graduated before August 1, 2017, and took five or more years to earn a bachelor’s degree, the loan forgiveness will apply to your first four years of studying toward that degree. Your five-year period of service in a remote or underserved rural area does not need to occur consecutively, and you may receive 5-year Loan Forgiveness as long as you are carrying a student loan balance at the end of each year. Suppose you started school before August 1, 2018. In that case, you might qualify for a $2,000 loan reduction subsidy for each year you studied that you can apply directly toward the outstanding balance on your provincial student loan.

The Canadian government covers any monthly interest and principal amounts not covered by your payments. Your debt is eliminated over 15 years after leaving school or ten years if you are permanently disabled. For this Stage 2 approved condition, the Government of Canada and the Province of Ontario Canada will contribute $250 a month to the principal amount of your Canadian-Ontario integrated student loan and $150 monthly interest. All this is to say, if you begin paying back a Government Loan or student credit line in the Grace Period, you would significantly reduce the total amount you have to pay over the loan(s).

Also, check out online tutoring jobs for students.

Cited Sources

EnglishFrenchChinese (Simplified)GermanSpanish