With college and university tuition costs as high as they are, many Canadian students depend on loans to cover these expenses. While the Canada student loan interest rate is low, it’s still leaving them with tens of thousands of dollars in student debt.
In fact, the average student debt in Canada right now is a whopping $28,000 for a bachelor’s degree and $15,300 for a college diploma. What’s more, it takes most students about 10 years to pay off their debt.
Luckily, the Canadian government is taking steps to alleviate this financial burden by eliminating the interest rate portion of Canada Student Loans.
Has The Government Of Canada Eliminated The Canada Student Loan Interest Rate?
As of April 1st, 2023, the Canadian government dropped the interest on federal Canada Student Loans and Canada Apprentice Loans. However, students must still pay interest that accrued on their student loans before April 1st, 2023.
The elimination of interest on federally-backed student loans will help alleviate the financial burden placed on students, especially given the sky-high cost of post-secondary education tuition fees. In turn, quality education will be more easily accessible to more Canadians.
Will The Elimination of The Canada Student Loan Interest Rate Affect Provincial Loans?
If you have both federal and provincial components to your student loan, you may be curious as to how the recent elimination of interest will affect student loans in certain provinces.
Canada-Ontario Integrated Student Loan
If you have a Canada-Ontario Integrated Student Loan, you won’t be charged interest on your Canada Student Loan. However, a floating interest of Prime Rate plus 1% will be charged against the provincial portion of the loan.
Ontario Student Loan Resources
| How To Apply For The Ontario Student Assistance Program (OSAP) | Learn More |
| How To Qualify For Ontario Student Assistance Program (OSAP) | Learn More |
| Extra Funding For OSAP Students In Special Circumstances | Learn More |
| How To Repay OSAP | Learn More |
Canada-Saskatchewan Integrated Student Loan
For Canada-Saskatchewan Integrated Student Loans, interest will no longer be charged on Canada Student Loans. Instead, a floating interest rate of Prime Rate will be charged for the provincial component of the loan.
Are There Any Provincial Student Loans That Won’t Accrue Interest?
- Canada-Newfoundland and Labrador Integrated Student Loan – Those with a Canada-Newfoundland and Labrador Integrated Student Loan will no longer be charged interest on their Canada Student Loans.
- Canada-British Columbia Integrated Student Loan – Interest won’t be charged on Canada-British Columbia Integrated Student Loans anymore.
- Canada-Manitoba Integrated Student Loan – If you have a Canada-Manitoba Integrated Student Loan, you won’t be charged interest on your loan.
- New Brunswick Government-Issued Student Loans – If you have a Canada-New Brunswick Integrated Student Loan, there will be no interest charged on the loan.
Find More Student Loan Resources And Guides
| Student Loan Programs For Canadians | Learn More |
| Where To Find Student Discounts In Canada | Learn More |
| How To Build Credit As A College Student? | Learn More |
| Student Loan Forgiveness In Canada | Learn More |
| Refinancing Your Student Loan | Learn More |
Are There Any Other Changes To The Canada Student Loan?
Recently, the federal government announced it’s Budget 2023, which includes a variety of components that promise to make life more affordable for Canadians. This includes targeting funding for students by expanding loans and grants.
Loan amount expansion. The 2023 federal budget will set aside over $800 million to expand student loans and grants for the 2023-2024 school year.
Double grants. There is currently a temporary measure in place that doubled grants from $3,000 to $6,000, though this will expire in the summer of 2023. For the upcoming school year, the federal government plans to increase the maximum grants to $4,200.
Loan limit increase. The loan limit will be increased from $210 to $300 per week of study.
RESP withdrawal limit. The Canadian government also plans to increase the withdrawal limit on RESPs from $5,000 to $8,000 for full-time students, and from $2,000 to $4,000 for part-time students.
How Will These Changes Help Canadians?
The latest changes to Canada Student Loans will have a couple of significant impacts on Canadians with student loan debt.
Lower Cost
With the elimination of interest on Canada Student Loans, the average student can save about $410 every year, according to data from the government’s fiscal update. That adds up to $1,640 over a 4-year degree.
Save Money While Using RAP
The federal government will continue to let graduating students use the Repayment Assistance Plan (RAP), which helps make monthly loan payments more affordable. Grads will be able to pause their loan repayments until they’re earning at least $40,000 annually. They will also be able to lower their loan payments if they earn just over this $40,000 threshold.
Final Thoughts
Interest payments add up to thousands of dollars over the life of a student loan. By eliminating interest on Canada Student Loans, students can save a lot of money and ease the financial burden of paying for post-secondary education tuition.
