Canada offers student loan forgiveness through the Repayment Assistance Program (RAP), which eliminates remaining federal student loan debt after 15 years. Average student debt at graduation is about $26,000. Here are all your options.
Key Changes: Interest-Free Federal Loans
As of April 2023, Canada Student Loans are permanently interest-free. This is a major change — your balance only decreases, never grows. Provincial loan portions may still carry interest (varies by province).
| Loan Type | Interest Rate |
|---|---|
| Federal Canada Student Loan | 0% |
| Ontario (OSAP provincial) | 0% |
| BC provincial portion | 0% |
| Alberta provincial portion | Prime rate |
| Quebec (Aide financière) | Prime rate |
| Other provinces | Varies |
Repayment Assistance Program (RAP)
RAP is Canada’s main loan forgiveness pathway:
Stage 1: Reduced Payments (Years 1–10)
- Payments capped at an affordable level based on income
- Government covers extra interest (now $0 since loans are interest-free)
- No payments required if income is below ~$40,000/year (single)
Stage 2: Forgiveness (Years 10–15)
- Government begins paying down your principal
- After 15 years of RAP participation, remaining balance is forgiven
- 10 years if you have a permanent disability
Income Thresholds for $0 Payments
| Family Size | Annual Income Threshold |
|---|---|
| 1 person | ~$40,000 |
| 2 people | ~$55,000 |
| 3 people | ~$65,000 |
| 4 people | ~$75,000 |
Other Forgiveness Programs
| Program | Who Qualifies | Benefit |
|---|---|---|
| Canada Student Loan Forgiveness (nurses, teachers in rural areas) | Healthcare/education professionals | Up to $20,000 forgiven |
| Disability forgiveness | Permanent disability | Full federal loan forgiveness |
| Bankruptcy (after 7 years) | Anyone, post-graduation | Includes student loans |
| Death | Estate | Loans forgiven, not passed to heirs |
Provincial Programs
| Province | Program | Benefit |
|---|---|---|
| BC | BC Loan Forgiveness | Nurse, midwife programs |
| Ontario | OSAP Grants (up-front) | Income-based, reduces borrowing |
| Alberta | Alberta Student Aid Completion Grant | High-need students |
| New Brunswick | NB Tuition Relief | Grads who stay in province |
Repayment Strategies
| Strategy | Best For |
|---|---|
| Standard repayment | Can afford payments, minimize payback time |
| RAP Stage 1 | Low income, reduce payments to $0 |
| Aggressive extra payments | Want to be debt-free fast (no prepayment penalty) |
| Consolidation with other debt | Only if other debt is high-interest |
Bottom Line
With interest-free federal loans and RAP forgiveness after 15 years, Canadian student debt is much more manageable than in previous decades. If your income is low, apply for RAP immediately — you may qualify for $0 payments while still progressing toward forgiveness. Never default when RAP exists.
See our average student loan debt in Canada or how to get out of debt in Canada for more resources.