Student Loan Forgiveness in Canada: Repayment Assistance, Provincial Programs and the 7 Year Insolvency Rule
Student loan forgiveness in Canada exists in six regulated forms: the Repayment Assistance Plan, its disability version, the Severe Permanent Disability Benefit, forgiveness for doctors and nurses in rural communities, provincial forgiveness programs, and release through a consumer proposal or bankruptcy once 7 years have passed since you left school. Private student debt follows different rules.
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What Student Loan Forgiveness Means in Canada
Student loan forgiveness in Canada means one of six government programs or legal processes that reduce, pause, or cancel what you owe on a student loan, each with its own eligibility test. There is no single forgiveness application and no program that erases a loan simply because it is old or large.
Five of the six are programs you apply for through the National Student Loans Service Centre or a provincial student aid office: the Repayment Assistance Plan, the Repayment Assistance Plan for Borrowers with a Disability, the Severe Permanent Disability Benefit, profession based forgiveness for doctors and nurses, and provincial forgiveness programs. The sixth is a legal process: a consumer proposal or bankruptcy under the Bankruptcy and Insolvency Act once the 7 year rule is satisfied.
Two facts shape everything below. Since the start of the 2023 loan year, the federal portion of a Canada Student Loan no longer accrues interest, so a balance that was growing on its own has stopped. And a government student loan is one of the few debts that a proposal or bankruptcy does not release until 7 years after you stopped being a student, which is why timing matters more here than with any other debt covered on this site.
How Does the Repayment Assistance Plan Reduce Payments?
The Repayment Assistance Plan reduces a federal student loan payment to an amount the government judges affordable, which can be zero, and covers the shortfall itself for as long as you remain enrolled. It is the closest thing to broad student loan forgiveness in Canada, because after 60 months on the plan (or 10 years after leaving school, whichever comes first) the government begins paying down principal on your behalf.
Eligibility depends on gross family income and family size. A single borrower earning under about $40000 a year typically qualifies for a zero payment, and the threshold rises with each additional family member. Above the threshold, the affordable payment is capped at one tenth of gross family income, and the loan is still scheduled to be cleared within 15 years of leaving school.
Enrolment lasts 6 months at a time and must be renewed, which is where most people lose the benefit. Missing a renewal puts the loan back on the full payment schedule, and missed full payments count toward default. Apply through your National Student Loans Service Centre account, and use the Government of Canada student aid pages to confirm the current thresholds before you apply.
Provinces whose loans are integrated with the federal program, including Ontario, British Columbia and Saskatchewan, apply repayment assistance to the combined balance in one application. Provinces that run separate loans assess their own portion under their own rules, so a borrower in Alberta or Quebec may need two applications.
Student Loan Forgiveness for Borrowers With a Disability
Borrowers with a disability have two dedicated forms of student loan forgiveness: the Repayment Assistance Plan for Borrowers with a Disability, which reduces payments and starts principal reduction immediately rather than after 60 months, and the Severe Permanent Disability Benefit, which cancels the federal loan outright. The first requires a documented persistent or prolonged disability; the second requires medical evidence that the disability prevents you from working in any occupation for the foreseeable future.
Under the disability version of the plan, disability related expenses such as equipment, medication and attendant care are deducted before the affordable payment is calculated, and the loan is scheduled to be cleared within 10 years rather than 15, with the government covering whatever your affordable payment does not.
The Severe Permanent Disability Benefit is the only route on this page that cancels a federal loan completely without any waiting period. Applications go through the National Student Loans Service Centre with a physician's or nurse practitioner's assessment. Borrowers who receive provincial disability income and also carry consumer debt can read the debt relief ODSP guide for how the two problems are handled together.
Check your debt relief optionsWhich Professions Get Canada Student Loan Forgiveness?
Family doctors, family medicine residents, nurse practitioners, and nurses who work in designated rural or remote communities qualify for Canada Student Loan forgiveness of up to $60000 for doctors and up to $30000 for nurses, applied in equal yearly amounts over up to 5 years of service. The forgiveness reduces the federal portion of the loan only; a provincial portion continues on its normal schedule unless a provincial program also applies.
Service must total at least 400 hours in a 12 month period in an eligible community, which broadly means communities outside the larger census metropolitan areas and census agglomerations. The application is made after each year of service through the National Student Loans Service Centre, with an employer's confirmation of hours.
The federal government has announced expansions of this program to additional rural professions in health, education and social services. Because the eligible list and the amounts change, confirm the current version on the Government of Canada student aid site before counting on it in a repayment plan.
Provincial Student Loan Forgiveness Programs
Provincial student loan forgiveness programs cancel part of the provincial portion of a loan for graduates who meet a completion, residency, or service condition, and they vary sharply by province.
| Province | Student loan forgiveness type | Typical condition | Portion affected |
|---|---|---|---|
| British Columbia | Loan Forgiveness Program | Work in an eligible health, education or social service occupation in an underserved community | One fifth of the BC loan per year of service, up to the full balance |
| Nova Scotia | Forgiveness on completion | Complete an eligible program at a Nova Scotia institution within the standard time | Nova Scotia portion, up to a yearly cap |
| Prince Edward Island | Debt reduction grant | Graduate from an eligible program and meet residency rules | Part of the provincial loan |
| Saskatchewan | Graduate Retention Program | Live and file taxes in Saskatchewan after graduating | Tax credits rather than loan cancellation |
| Quebec | Deferred payment program | Low income after studies under the provincial aid rules | Payments paused, balance unchanged |
| Ontario, Alberta and most others | No general forgiveness program | Repayment assistance and hardship provisions only | Provincial portion repaid in full |
Programs of this kind are amended often, and several have opened, closed, or changed their caps within a few years. Treat the table as a map of what to look for, then confirm details with your provincial student aid office before relying on any of them.
What Is the 7 Year Rule for Student Loans in Bankruptcy?
The 7 year rule means a government student loan is not released by a bankruptcy or consumer proposal unless you file at least 7 years after the date you ceased to be a full time or part time student, under section 178(1)(g) of the Bankruptcy and Insolvency Act. File earlier and every other unsecured debt is discharged while the student loan survives the process intact.
A hardship application under section 178(1.1) shortens the wait to 5 years. You ask the court, after your discharge, to release the student loan on the grounds that you acted in good faith and will continue to face financial difficulty. Courts grant it case by case, and trustees can tell you from experience how the local court views such applications. The 7 year rule is the insolvency form of student loan forgiveness, and it is the only one that also clears your other debts at the same time.
| Date you last ceased to be a student | Hardship application possible from | Full release in a filing from |
|---|---|---|
| June 2019 | June 2024 | June 2026 |
| March 2021 | March 2026 | March 2028 |
| December 2022 | December 2027 | December 2029 |
| August 2024 | August 2029 | August 2031 |
The clock runs from your last day as a student, not from the loan's date, so returning to school for a semester restarts it. Filing inside the window still triggers the stay of proceedings, so collection on the loan pauses during the bankruptcy or proposal, but the balance is waiting when the process ends. Read section 178 of the Act for the exact wording, and the bankruptcy section of the main guide for how a filing works.
Does Student Loan Forgiveness Cover Bank Student Lines of Credit?
Student loan forgiveness rules under the 7 year clock apply only to government student loans; a student line of credit from a bank, a credit card used for tuition, or a private loan is ordinary unsecured debt that a consumer proposal or bankruptcy releases at any time. Many graduates carry both kinds, and the split matters when choosing a route.
A common pattern: $18000 of federal and provincial loans, plus $22000 on a bank student line of credit and cards. A consumer proposal filed 4 years after graduation would reduce the $22000 to a fraction while leaving the $18000 in place on repayment assistance, which for a low income graduate is often the right outcome, because the government loan carries no interest and has its own relief. The credit card debt forgiveness guide covers the consumer side in detail.
Bank student lines of credit also have no repayment assistance equivalent. Once the grace period ends, the bank expects the contractual payment, and the only relief available is a hardship arrangement with the bank or one of the formal programs.
What Happens When a Student Loan Goes Into Default?
A Canada Student Loan goes into default after 270 days without payment, at which point the file transfers from the service centre to the Canada Revenue Agency for collection. The agency can keep your income tax refunds and benefit credits to pay the loan and may take legal action to garnish wages, and the default is reported to the credit bureaus.
Default also locks you out of every student loan forgiveness program above until the loan is brought back into good standing, which the service centre calls rehabilitation and which usually requires paying a set number of missed payments and any provincial interest owing. Getting out of default is therefore the first step for anyone who wants repayment assistance.
A 6 year limitation period applies to court action on a defaulted federal loan, restarting on any payment or written acknowledgment, but administrative set-off of refunds continues regardless. Tax debts and student loans that the agency collects together are covered in the CRA debt forgiveness guide.
Which Student Loan Forgiveness Route Fits Your Situation?
The right student loan forgiveness route depends on three facts: how long since you left school, whether your income or health qualifies for a government program, and how much non-student debt sits alongside the loan. The table matches common situations to the route that usually fits.
| Situation | Best student loan forgiveness route | What it does |
|---|---|---|
| Low income, loan in good standing | Repayment Assistance Plan | Payment reduced, possibly to zero; principal reduction after 60 months |
| Documented disability, able to work | Repayment Assistance Plan for Borrowers with a Disability | Reduced payments, principal reduction from the start, 10 year cap |
| Severe permanent disability, unable to work | Severe Permanent Disability Benefit | Federal loan cancelled |
| Doctor or nurse in a rural community | Profession based forgiveness | Up to $60000 or $30000 over 5 years |
| Left school 7 or more years ago, other debts too | Consumer proposal or bankruptcy | Student loan and other unsecured debt released together |
| Left school under 7 years ago, mostly private debt | Proposal on the private debt, repayment assistance on the government loan | Private debt reduced, government loan managed |
If total unsecured debt, student loans included, sits above $5000 and the payments are not fitting, the free check on this page sorts the numbers and connects you with a Licensed Insolvency Trustee or non-profit counsellor who works with student debt daily. Consultations are free, and the debt forgiveness guide explains the wider set of routes for non-student debt.
See which route fits your numbersStudent Loan Forgiveness FAQ
Is student loan forgiveness automatic after 7 years?
No. The 7 years only make a government student loan eligible for release inside a bankruptcy or consumer proposal. If you never file, the loan remains owing, and the service centre or the Canada Revenue Agency continues to collect it.
Does a consumer proposal include student loans?
Only if you file 7 or more years after last being a student. Filed earlier, the proposal covers your other unsecured debts and pauses collection on the student loan during the term, but the loan survives when the proposal is completed.
Can I get repayment assistance if my loan is in default?
Not until the loan is rehabilitated. That usually means paying a set number of missed payments and any provincial interest owing, after which the loan returns to the service centre and you can apply for the plan.
Do Canada Student Loans still charge interest?
No. Interest on the federal portion was permanently eliminated in 2023. Some provinces still charge interest on their own portion, so check the rules for the province that issued your loan.
What happens to a student loan when the borrower dies?
A Canada Student Loan is cancelled on the borrower's death and is not collected from the estate. Provincial loans follow provincial rules, and a bank student line of credit is a debt of the estate like any other.
Does student loan forgiveness affect my credit score?
Repayment assistance does not, because the loan is reported as current. Default is reported and hurts the score. A bankruptcy or proposal leaves a note for 3 to 7 years, which is the trade for releasing the loan and the other debts with it.
Does going back to school reset the 7 year clock?
Yes. The clock runs from the last date you ceased to be a full time or part time student, so a single semester restarts the count. Anyone close to the 7 year mark who is considering a filing should weigh that before enrolling.