Student Loan Forgiveness in Canada

This generous program is specifically crafted to provide loan forgiveness for medical specialists working in under-served rural or remote communities. Qualified doctors can earn up to $40,000 in loan forgiveness ($8,000 annually). Consequently, nurses can earn up to $20,000 ($4,000 per year). However, a recent budget announcement proposed to increase these amounts to $60,000 and $30,000 respectively.

The loan forgiveness will only apply to the federal portion, not provincial or private student loans. This means you won't benefit if you refinance your federal student loans to a line of credit.

You'll receive the forgiveness after working a minimum of 400 hours across 12 months. While you can work for multiple employers, it must remain in rural communities. You can use the postal code lookup tool to determine area eligibility.

The Repayment Assistance Program (RAP) is a federal program that helps qualified low-income borrowers reduce monthly payments or remove them altogether. To qualify, you must earn an income below a threshold determined by your number of family members. For example, independents must make an annual income below $40,000, whereas you must earn below $57,480 with a family of three. These thresholds are indexed to Canadian inflation rates meaning they'll change annually. You'll also have to re-apply every six months to remain eligible.

Having an income below the threshold means you will only need to pay your student loan once you exceed the income level. During this phase, the government will cover a specific portion of your loan depending on your sub-variant.

a) RAP: The program will cover interest payments above a certain amount. This means that the government will pay for some of the interest but not any of the money that you borrowed (the principal). After 60 months of RAP or ten years after school, the government will start to pay your principal too.

b) RAP-D (Disability): The program will cover principal and interest payments while eligible.

Once you exceed the income threshold, your student loan payments will be capped at 10% of your income. This means if you're earning $5,000 monthly, your student loan payment can be at most $500.

If you go back to school, you can benefit from a federal program that pauses interest instalments on your loan. This means you'll have a reduced monthly payment because you'll only be paying off the principal portion.

Making the same monthly payment will make your student debt pay off faster. To apply, you'll need to log in to your NSLSC account and confirm that you are studying at a qualified institution.

Recent graduates working in sought-after occupations may be eligible to receive loan forgiveness through the B.C. Loan Forgiveness Program. This program forgives up to 20% of provincial B.C. debt annually for up to five years. The program only applies to B.C. provincial student debt, not federal or private.

You must demonstrate a minimum number of in-person hours worked at a publicly-funded facility to receive benefits. There are two categories of eligible occupations;

• A publicly-funded facility in an underserved community.
• Working with children throughout B.C.

The annual forgiveness percentage changes with the number of hours worked. For example, working less than 100 hours results in 0% forgiveness. Working 100-249 hours provides 10%. The amount increases up to a maximum of 20% annually for exceeding 400 hours.

The Loan Remission Program is designed to forgive 15% of a student's loan debt for completing their studies within a maximum period. The time varies with each program but typically ranges from 16 to 32 months. This means that finalizing your program within the prescribed timeframe results in loan forgiveness. Surpassing this means you won't qualify.

Applications must be submitted within three years after completion of the relevant program to qualify. In addition, the remission is taxable, meaning it will be included in your income taxes.

If you're a nurse or nurse practitioner in Saskatchewan, this program may help you forgive 20% of your student debt annually. This maximum is $4,000 annually, for a total of $20,000 after five years. As with the federal program, you must practice in an underserved rural community within the province.

You'll need to work 12 consecutive months with a minimum of 400 in-person hours to receive the forgiveness. At the end of the 12 months, you'll have a 90-day window to apply.

Prince Edward Island's Debt Reduction Grant program offers graduates an extra incentive to stay and work on the island by helping with their provincial student loan repayment. The amount of money you can receive through the grant varies depending on your yearly borrowings from the PEI Student Loan Program and can be up to $3,500 per year.

Applications are accepted four times per year. You'll have to submit a copy of your degree, diploma, certificate, or unofficial transcript. Grants will be paid directly to your provincial student balance.

For those who have studied at a Nova Scotia university, the Nova Scotia Student Loan Forgiveness Program can erase your entire provincial student loan debt. Graduates of non-professional undergraduate programs may be eligible to receive up to five years of loan forgiveness, with maximums reaching $20,400.

Assessment is done automatically when your school notifies the province about graduation. You will receive a letter detailing how much will be forgiven if you qualify.

Debt consolidation is a way to refinance existing debt to lower interest rates, reduce monthly payments, or both. If your private student loan has a high-interest rate and you have good credit, you may be eligible for a low-interest loan to pay off the original debt.

Sometimes, you may receive a lower interest rate on a debt consolidation loan than your governmental loans. However, transferring governmental student loan debt to private loans will remove your eligibility for forgiveness programs.

Financial institutions like banks generally provide these loans, but some online lenders specialize in debt consolidation. Consolidating your debt can result in a lower monthly payment and make loan repayment more manageable.

Debt settlement is negotiating with your creditors to reduce the debt you owe. When done correctly, this can lower monthly loan payments and help avoid bankruptcy.

However, it's important to note that not all creditors will accept debt settlement offers. Also, if accepted, there may be severe negative consequences, including higher interest rates on future loan applications and a damaged credit score.

Sometimes, you may not be eligible for a debt consolidation loan, or the payments may still be too high. In this case, consider filing a consumer proposal or bankruptcy. Both of these options can reduce your debt drastically and put an end to collections lawsuits.

A consumer proposal is a legally binding process where you agree to pay creditors a certain amount. This is usually less than the total amount of debt owed. Bankruptcy is more extreme, as it legally erases most unsecured debts like credit card bills and private student loans. It is not recommended unless absolutely necessary.