How is a student loan payment calculated in Canada?
Canadian student loans are split into two portions: federal (Canada Student Loans) and provincial. Since April 1, 2023, the federal government permanently eliminated interest on all Canada Student Loans and Canada Apprentice Loans. This means the federal portion of your student debt is completely interest-free during repayment. The provincial portion may or may not carry interest, depending on your province.
For the interest-free federal portion, your monthly payment is simply the principal divided by the number of months in your repayment term. For the provincial portion that carries interest, the standard amortizing loan formula applies: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the principal, r is the monthly interest rate, and n is the total number of payments.
The default repayment period for Canada Student Loans is 9.5 years (114 months), though you can negotiate a shorter or longer term with the National Student Loans Service Centre (NSLSC). After you leave school, you get a 6-month non-repayment grace period before your first payment is due. During this grace period, no interest accrues on the federal portion. Provincial grace period interest rules vary by province.
This student loan repayment calculator combines both portions to show your true monthly payment, the total interest you will pay on the provincial portion, and how the balance declines over time. The average Canadian graduate leaves school with approximately $28,000 in student debt, split roughly 60% federal and 40% provincial.
What are student loan interest rates by province?
The interest rate on your student loan depends entirely on which portion you are looking at and which province issued the provincial loan. The federal portion is 0% for all borrowers, regardless of province. Provincial rates vary significantly, with six provinces now offering interest-free provincial loans and four provinces still charging interest above the prime rate.
British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island have all eliminated interest on their provincial student loans, matching the federal 0% rate. If you attended school in one of these provinces, your entire student loan (federal and provincial) is interest-free.
Alberta charges the prime rate with no additional spread. Quebec charges prime + 0.5%. Ontario (OSAP) charges prime + 1%. Saskatchewan charges prime + 2.5%. With the Bank of Canada prime rate at 4.45% as of April 2026, this means Ontario borrowers pay 5.45% on their provincial portion and Saskatchewan borrowers pay 6.95%.
The difference matters. On a $28,000 total student loan with a 60/40 federal-provincial split, an Ontario borrower paying 5.45% on the $11,200 provincial portion over 9.5 years will pay approximately $2,950 in total interest. The same borrower in British Columbia or Nova Scotia pays $0 in interest on the entire loan.
| Province | Provincial interest rate | Interest on $11,200 over 9.5 years | Effective rate on full $28,000 loan |
|---|---|---|---|
| BC, MB, NB, NL, NS, PEI | 0% (interest-free) | $0 | 0% |
| Alberta | Prime + 0% (4.45%) | $2,367 | 0.95% |
| Quebec | Prime + 0.5% (4.95%) | $2,648 | 1.06% |
| Ontario (OSAP) | Prime + 1% (5.45%) | $2,950 | 1.18% |
| Saskatchewan | Prime + 2.5% (6.95%) | $3,853 | 1.54% |
How does the 6-month grace period work?
After you graduate or leave school, you receive a 6-month non-repayment grace period before your first student loan payment is due. During this period, you are not required to make any payments on either the federal or provincial portion of your loan.
For the federal portion (Canada Student Loans), no interest accrues during the grace period. This has been the case since April 1, 2023, when the government permanently eliminated federal student loan interest. Before this change, interest accumulated during the grace period even though payments were not required.
Provincial grace period rules vary. In provinces with 0% interest (BC, MB, NB, NL, NS, PEI), no interest accrues during the grace period. In provinces that charge interest (ON, AB, QC, SK), interest on the provincial portion typically begins accruing immediately after you leave school, even during the grace period. This means your first payment may include some capitalized interest from the grace period.
If you can afford it, making voluntary payments during the grace period on the provincial portion can save you money on interest. Even small payments reduce the principal and lower your total borrowing cost. This student loan calculator includes the 6-month grace period in the payoff date calculation.
What is the Repayment Assistance Plan (RAP)?
The Repayment Assistance Plan (RAP) is a federal program that reduces your student loan payments if your income is too low to afford the standard repayment schedule. You can apply for RAP as soon as your loans enter repayment (after the 6-month grace period) and reapply every 6 months.
Under RAP Stage 1, if your gross family income falls below a threshold based on your family size, your monthly payment may be reduced to as little as $0. The government covers any interest that your reduced payment does not cover on the federal portion. If your income is slightly above the threshold, you may qualify for a reduced payment capped at no more than 20% of your income.
RAP Stage 2 begins after 60 months of RAP benefits or 10 years after you finish school (whichever comes first). In Stage 2, the government begins paying down both the principal and interest on the federal portion. The goal is to ensure your federal loan is fully repaid within 15 years of leaving school.
RAP applies only to the federal portion of your student loan. Some provinces offer their own repayment assistance programs for the provincial portion. Ontario, for example, has the Ontario Student Loan Rehabilitation Program. Contact your provincial student aid office for details.
This calculator provides a RAP eligibility estimate based on your gross monthly income and family size. The actual thresholds are updated periodically by Employment and Social Development Canada (ESDC). Visit the NSLSC website to apply or check your eligibility.
- ✓Apply as soon as repayment begins and reapply every 6 months
- ✓Payments reduced to $0 if income falls below thresholds
- ✓Payments capped at 20% of income for partial eligibility
- ✓Government covers unpaid interest on federal portion
- ✓After 60 months of RAP, government pays down principal too
- ✓Federal loans fully forgiven after 15 years of leaving school under RAP
How does the student loan interest tax credit work?
You can claim a non-refundable tax credit on the interest you pay on your government student loans. The credit is claimed on Line 31900 of your federal tax return and provides a 15% federal credit on the interest paid. Most provinces also offer a matching provincial credit, which varies by province.
Only interest paid on loans under the Canada Student Loans Act, the Canada Student Financial Assistance Act, or equivalent provincial legislation qualifies. Interest on private student loans, bank lines of credit, or consolidated debts does not qualify for the credit.
Since federal student loans are now interest-free (0%), the tax credit effectively applies only to the provincial portion of your student loan in provinces that charge interest (Ontario, Alberta, Quebec, Saskatchewan). If your entire loan is interest-free, there is no interest to claim.
You can carry forward unused student loan interest for up to 5 years. This is useful if your income is too low to benefit from the credit in the year you paid the interest. Only the student (the borrower) can claim the credit, even if someone else made the payments on your behalf.
For example, if you paid $500 in provincial student loan interest in 2026, you would receive a $75 federal tax credit (15% of $500) plus the applicable provincial credit. Combined, the effective tax savings typically range from 20% to 25% of the interest paid.
Student loan forgiveness programs in Canada
Canada offers student loan forgiveness for graduates who work in specific occupations in underserved communities. As of December 31, 2025, the program expanded to include doctors, nurses, nurse practitioners, dentists, dental hygienists, pharmacists, midwives, teachers, social workers, physiotherapists, psychologists, early childhood educators, and personal support workers.
To qualify, you must work full-time and provide in-person services in an eligible community, defined as a population centre of 30,000 or fewer people or a rural area. The forgiveness is applied to the federal portion of your Canada Student Loan only.
Forgiveness amounts are up to $30,000 for most eligible professions (nurse practitioners, registered nurses, practical nurses, psychiatric nurses, midwives, teachers, social workers, physiotherapists) and up to $15,000 for early childhood educators. The forgiveness is distributed over a 5-year period of eligible employment.
Applications opened through the NSLSC on March 16, 2026. Your loan forgiveness period must have started on or after January 1, 2025 to qualify under the expanded occupations. Existing eligible professions (doctors, nurses) can claim earlier periods.
RAP also provides a form of forgiveness: if you have been on RAP for 15 years after leaving school, the remaining federal balance is forgiven. This is separate from the occupation-based forgiveness program and is based purely on financial hardship.
Worked example: Ontario graduate with $28,000 in student debt
Consider a typical Ontario graduate with $28,000 in total student loans, split 60% federal ($16,800) and 40% provincial OSAP ($11,200). The federal portion carries 0% interest. The provincial OSAP portion carries prime + 1% = 5.45%.
With the standard 9.5-year (114-month) repayment term, the federal portion payment is $16,800 / 114 = $147/month. The provincial portion payment, calculated using the amortization formula at 5.45%, is $122/month. Total monthly payment: $269/month.
Over the full repayment period, you pay $16,800 on the federal portion (no interest) plus $13,908 on the provincial portion ($11,200 principal + $2,708 interest). Total cost: $30,708. The interest tax credit at 15% returns approximately $406 in federal tax savings.
If you add $50/month in extra payments directed to the provincial portion, you reduce the provincial repayment to about 7.5 years and save approximately $580 in interest. The student loan calculator on this page generates the exact figures for your specific situation.
Student loan repayment strategies
Focus extra payments on the provincial portion. Since the federal portion carries 0% interest, there is no financial benefit to paying it off faster than required. Any extra money should go toward the provincial portion first, where it reduces the principal and saves you interest.
Consider a shorter repayment term if your budget allows it. The standard 9.5-year term keeps payments manageable, but shortening to 5 years significantly reduces total interest on the provincial portion. Use this calculator to compare different terms and see the trade-off between monthly payment and total cost.
Apply for RAP if your income drops. There is no penalty for applying, and it protects your credit rating by converting missed payments into officially reduced payments. Many graduates do not realize they qualify. The income thresholds are generous for single individuals earning less than $25,000 per year.
Claim the interest tax credit every year. Even if your tax payable is too low to use the full credit this year, you can carry it forward for up to 5 years. Keep records of all interest paid on your provincial student loan.
Do not consolidate government student loans into a private loan or line of credit. You lose access to RAP, the interest tax credit, the 0% federal rate, and potential loan forgiveness. The only scenario where consolidation makes sense is if your private rate would be lower than your provincial rate and you are confident you will never need RAP.
- ✓Direct extra payments to the provincial portion (has interest)
- ✓Shorten the repayment term to reduce total interest cost
- ✓Apply for RAP immediately if your income is low
- ✓Claim the Line 31900 tax credit every year you pay interest
- ✓Never consolidate government loans into private debt
Frequently asked questions
Is there interest on Canada Student Loans?
No. Since April 1, 2023, the Government of Canada permanently eliminated interest on all Canada Student Loans and Canada Apprentice Loans. The federal portion of your student loan is completely interest-free during repayment. However, the provincial portion may carry interest depending on your province. Six provinces (BC, MB, NB, NL, NS, PEI) also offer 0% interest on provincial loans. Ontario, Alberta, Quebec, and Saskatchewan still charge interest on the provincial portion.
How much is the average student loan in Canada?
The average Canadian post-secondary graduate leaves school with approximately $28,000 in student debt. This is typically split between a federal Canada Student Loan (about 60%) and a provincial student loan (about 40%). The exact split depends on your province, program, and financial need. Some graduates owe significantly more, particularly those who completed professional programs like law, medicine, or dentistry.
What is the OSAP interest rate in 2026?
The Ontario (OSAP) provincial student loan interest rate is prime + 1%, which equals 5.45% as of April 2026 (with the Bank of Canada prime rate at 4.45%). This rate applies only to the provincial portion of your OSAP loan. The federal portion of your OSAP loan carries 0% interest. Ontario pays the interest on provincial loans while you are in school, but interest begins accruing once you enter repayment.
What happens during the 6-month grace period?
After you graduate or leave school, you have a 6-month grace period before your first student loan payment is due. During this time, no interest accrues on the federal portion (0% rate). For the provincial portion in interest-charging provinces (ON, AB, QC, SK), interest typically begins accruing immediately, even though no payments are required. Making voluntary payments during the grace period on the provincial portion can save you money.
How do I qualify for the Repayment Assistance Plan (RAP)?
You can apply for RAP through the National Student Loans Service Centre (NSLSC) as soon as your loans enter repayment. Eligibility is based on your gross family income and family size. Single individuals earning less than approximately $25,000 per year typically qualify for $0 payments. Those earning more may qualify for reduced payments capped at 20% of income. You must reapply every 6 months. RAP applies to the federal portion of your loan.
Can I claim student loan interest on my taxes?
Yes. You can claim a non-refundable tax credit on Line 31900 for interest paid on government student loans. The credit provides 15% of the interest paid back as a federal tax saving, plus a matching provincial credit in most provinces. Since federal loans are now interest-free, the credit effectively applies only to provincial loan interest. You can carry forward unused interest amounts for up to 5 years.
Should I pay off my student loan early?
It depends on which portion carries interest. There is no financial benefit to paying off the federal portion early since it is interest-free. Focus extra payments on the provincial portion in provinces that charge interest (ON, AB, QC, SK). There are no prepayment penalties on Canadian government student loans. If your provincial portion is also interest-free, there is no urgency to pay early beyond freeing up monthly cash flow.
What is student loan forgiveness in Canada?
Canada offers student loan forgiveness for graduates who work in eligible occupations (doctors, nurses, teachers, social workers, and others) in underserved communities with populations of 30,000 or fewer. Forgiveness amounts are up to $30,000 for most eligible professions over 5 years. Additionally, if you are on RAP for 15 years after leaving school, the remaining federal balance is forgiven. Applications for the expanded forgiveness program opened on March 16, 2026.
Should I consolidate my student loans?
Generally, no. Consolidating government student loans into a private loan or line of credit means you lose access to the 0% federal interest rate, the Repayment Assistance Plan, the student loan interest tax credit, and potential loan forgiveness. The only scenario where consolidation might make sense is if your private rate is lower than your provincial rate and you are certain you will never need RAP or forgiveness benefits.
How long does it take to pay off a student loan in Canada?
The standard repayment period is 9.5 years (114 months). You can negotiate a shorter or longer term with the NSLSC. With the federal portion at 0% interest, the main cost driver is the provincial interest rate and term length. Using this calculator, you can compare different repayment terms to find the balance between affordable monthly payments and total interest cost.