Student Loan Forgiveness in Canada

This Page's Content Was Last Updated: February 15, 2023
WOWA Trusted and Transparent

What You Should Know

  • There are three types of student loans; federal, provincial, and private.
  • Federal student loan forgiveness is available to eligible doctors and nurses. However, there are additional programs such as RAP and interest-free studying.
  • Provincial student loan forgiveness programs exist in British Columbia, Quebec, Saskatchewan, PEI, and Nova Scotia.
  • Private student loan forgiveness can include debt consolidation, debt settlement, or consumer proposal and bankruptcy.
TierProgram NameOverview
FederalLoan Forgiveness for Family Doctors & Nurses
  • Up to $40,000 in loan forgiveness for doctors ($8,000 annually).
  • Up to $20,000 in loan forgiveness for nurses ($4,000 per year).
  • Proposed to increase to $60,000 and $30,000 respectively.
Repayment Assistance Program (RAP)
  • Qualified low-income borrowers can reduce monthly payments or remove them altogether.
Interest-Free Studying
  • Benefit from reduced monthly payments while studying.
ProvincialBritish Columbia Student Loan Forgiveness
  • Annual reduction of up to 20% of provincial debt for up to five years.
Quebec Loan Remission Program
  • 15% forgiveness for completing studies within a maximum period.
Saskatchewan Loan Forgiveness for Nurses and Nurse Practitioners
  • Annual 20% forgiveness in provincial student debt. $4,000 annual maximum for a total of $20,000 though five years.
PEI Debt Reduction Grant Program
  • Up to $3,500 annually in forgiveness.
Nova Scotia Student Loan Forgiveness Program
  • Up to $20,400 in total loan forgiveness across five years.
PrivateDebt Consolidation Loan
  • Refinance into lower interest rates.
Debt Settlement
  • Negotiate with your creditors to reduce your total debt.
Consumer Proposal and Bankruptcy
  • Legally binding processes to reduce, or erase your debt.
  • Not recommended unless absolutely necessary.
Student loans image

Canadian student loans are broken into two categories; governmental and private. Furthermore, governmental loans can be dissected into federal and provincial loans. This results in three types of student loans. Private student loans generally don't offer student loan forgiveness programs because they are profit-oriented lenders. On the other hand, your government want to incentivize economic growth and education through targeted student loan forgiveness programs.

These governmental forgiveness programs happen on the federal and provincial levels. They are typically incentives for qualified professionals to relocate to areas where they're needed. For example, the federal government offers loan forgiveness for family doctors and nurses. The catch is that they must relocate to rural areas where healthcare systems are overwhelmed.

In addition to incentive-based student loan forgiveness, many programs are offered to low-income borrowers. For example, the federal repayment assistance program (RAP) helps qualified low-income borrowers remove or cap their monthly loan payments at a 10% maximum of their income.

Some provinces also offer additional programs on top of federal options. This article will walk you through each program and its eligibility requirements. Furthermore, it will explain how to apply to the programs and the top alternatives. Continue reading to find the top ways to reduce your student debt.

Federal Student Loan Forgiveness

Federal student loans begin six months after graduation or leaving school. This grace period is designed to provide former students with the opportunity to seek out employment.

Unlike private student loans, federal student loans have strict bankruptcy prevention. For example, you can’t declare bankruptcy on federal student loans until seven years have passed since you left school. This contrasts private loans which are more flexible with bankruptcies and consumer proposals. For federal student loans, you’ll need to seek a student loan forgiveness program while you wait for the seven years to pass. This section will walk you through the federal options available.

Loan Forgiveness for Family Doctors & Nurses
[object Object]

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.

Eligibility Requirements

You must meet the following eligibility criteria to receive loan forgiveness. In addition, you must re-apply every year.

  • Practice as an eligible medical professional (Family doctor, Family medicine resident, Registered nurse, Registered psychiatric nurse, Registered practical nurse, Licensed practical nurse, or Nurse practitioner).
  • Be employed for 12 consecutive months in an underserved community.
  • Provide at least 400 hours of in-person services.
  • Have a federal student loan in good standing.
  • Be a Canadian citizen or permanent resident.
Repayment Assistance Program (RAP)
[object Object]

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.

Eligibility Requirements

You'll have to re-apply to RAP every six months and meet these eligibility requirements;

  • A resident of Canada.
  • Have an income below monthly limits.
  • At least six months have passed since departing school.
  • Are up-to-date with loan payments.
  • (RAP-D Only): Have a disability recognized by the Canada Student Financial Assistance Program.
Interest-Free Studying
[object Object]

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.

Provincial Student Loan Forgiveness

In addition to federal programs, some provinces offer loan forgiveness for qualified borrowers. Generally, these programs provide a certain amount of loan forgiveness depending on your income and years of study in the province. For example, B.C. offers an annual 20% loan reduction for certain professionals who remain in the province.

It is essential to research the programs available in your province before deciding which option is best for you. Additionally, remember that each program has its own set of eligibility criteria that must be met to qualify. Be sure to familiarize yourself with these before applying. This section will provide a broad overview of each program and direct you to the resources to learn more.

Student Loan Forgiveness BC
[object Object]

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.

Eligibility Requirements
  • Be a resident of British Columbia.
  • Provide 0 to 400 hours of in-person services.
  • Have a B.C. student loan balance in good standing.
  • Work in an underserved community with an eligible occupation (Nursing, Physician, Midwifery, Medical laboratory technologist, Diagnostic medical sonographer, Speech-language pathologist, Audiologist, Occupational therapist, Physiotherapist, Respiratory therapist, Polysomnographer).
  • Or, work anywhere in B.C. with children and an eligible occupation (Speech-language pathologist, Occupational therapist, Audiologist, Physiotherapist, School psychologist, Technology educator, Teacher of the deaf/hard of hearing or the visually impaired).
Quebec Loan Remission Program
[object Object]

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.

Eligibility Requirements
  • Have graduated at most three years ago.
  • Have completed your program within the prescribed period.
  • Have received a student loan every year while studying in the program.
Saskatchewan Loan Forgiveness for Nurses and Nurse Practitioners
[object Object]

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.

Eligibility Requirements
  • Applied within the 90-day window.
  • A Saskatchewan student loan in good standing.
  • Provide at least 400 hours of in-person services.
  • Be employed for 12 consecutive months in an underserved community with a population below 10,000.
  • Valid license to practice the following in Saskatchewan (Registered nurse, Registered psychiatric nurse, Licensed practical nurse, Nurse practitioner, Registered practical nurse).
PEI Debt Reduction Grant Program
[object Object]

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.

Eligibility Requirements
  • A resident of PEI.
  • Have graduated at most three years ago.
  • Borrowed from PEI Student Loan Program.
Nova Scotia Student Loan Forgiveness Program
[object Object]

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.

Eligibility Requirements
  • Graduate from a non-professional certificate or diploma program from a Nova Scotia institution.
  • It must be your first time eligible for the program.
  • The certificate must be completed within four years of starting it.

Private Student Loan Forgiveness

As mentioned, private student loans generally don't have loan forgiveness programs because for-profit lenders provide them. However, there are many consumer protection laws to protect you from private student loans that don't apply to governmental options.

Mainly this includes consumer proposals, debt settlement, and personal bankruptcy. For example, declaring bankruptcy will not discharge your governmental debt if you are within seven years of graduating. This is not the case with private student loans.

While these options can reduce your private student loan, they have long term effects. This includes lower credit scores, increased interest rates on future loan applications, and potential collections lawsuits. Before considering the latter alternatives, begin with a debt consolidation loan.

Debt Consolidation Loan
[object Object]

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.

Eligibility Requirements
  • Must have a good credit score.
  • Have existing private student loan debt.
  • Must be able to afford the new monthly payments.
  • Must meet the bank's minimum income requirements.
Debt Settlement
[object Object]

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.

Eligibility Requirements
  • Must have existing debt.
  • Must be unable to pay debts.
  • Must be able to make reduced monthly payments.
  • Must negotiate directly with creditors or hire a debt settlement company.
Consumer Proposal and Bankruptcy
[object Object]

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.

Eligibility Requirements
  • Must complete a credit counselling course.
  • Must submit financial documents for review.
  • Must provide proof of income and expenses.
  • Must be insolvent, meaning unable to pay debts.
The calculators and content on this page are provided for general information purposes only. WOWA does not guarantee the accuracy of information shown and is not responsible for any consequences of the use of the calculator.