Paying back student debt

From Financial Consumer Agency of Canada

Make a plan before starting to repay your student debt

Consider the following before paying down your student debt.

How much you need to repay

Figure out the following:

  • the total amount you owe
  • the interest rate that will be applied to your debt
  • how you’ll repay your debt
  • how much you’ll pay each month
  • how long it will take to pay back your debt

Make sure you know the date your payment is due. Note that if you have more than one loan, or a line of credit, you may have more than one payment due date.

Who you need to repay

After graduation, you may have loans or lines of credit that you need to repay to the government and/or your financial institution.

In some provinces and territories, Canada Student Loans are issued separately by the federal and provincial/territorial governments. This means that you could have more than one loan to pay back.

Find out where to pay back your Canada Student Loan depending on which province or territory gave you the loan.

Your repayment schedule

Contact your loan provider to determine your loan repayment schedule. Your repayment schedule will tell you when you have to make payments and how much each payment will be.

Your repayment schedule may be part of your loan or line of credit contract. Be sure you’re aware of this information before you sign the contract.

Canada Student Loans repayment schedule

Contact your loan provider to confirm when and how your payments have to be made.

Once you read and accept the Canada Student Loan repayment schedule, sign and return it to your loan provider. Payments may be withdrawn from your account even if they don’t receive your signature.

When you need to start making payments

Different student loans and line of credit have different rules on when you need to start making payments.

Canada Student Loans

If you have a Canada Student Loan or a provincial student loan, you don’t have to make payments on that loan as long as you’re in school.

You’ll have to start repaying your loan if you:

  • graduate from your studies
  • transfer from full-time to part-time studies
  • leave school
  • take time off school for more than 6 months

After you graduate, there is a six-month grace period until you have to begin making payments on your Canada Student Loan or provincial student loan. Be aware that interest will accumulate during this time.

You can choose to pay the interest you owe during this six-month grace period in the following ways:

  • start making payments right away
  • pay the six months’ interest as a lump sum before you start making your regular payments
  • have your loan providers add the six-months’ worth of interest to the total amount of your loan

Interest rates when repaying your Canada Student Loan

When repaying your Canada Student Loan, you can choose a fixed interest rate or a variable interest rate. A fixed interest rate is a rate of interest that doesn’t change for the length of your loan. A variable interest rate is a rate of interest that may change depending on the current market interest rate.

Find out how interest is calculated on your Canada Student Loan.

Student lines of credit

If you have a student line of credit through your financial institution, you'll have to pay the interest on the amount of money you borrow while you’re still in school.

After you graduate, many financial institutions give you a 4- to 12-month grace period. During this time, you only have to pay the interest on your line of credit. After this, you’ll pay back the money you borrowed by following a repayment schedule. You agree upon a repayment schedule with your financial institution.

Speak with your financial institution to get information about paying back your student line of credit.

Find out what you should consider before applying for or using a student line of credit.

If you’re having trouble making payments

There are options available to you if you’re having trouble paying down your student debt.

Trouble repaying your Canada Student Loans

If you’re having trouble repaying your Canada Student Loan, you may be able to revise the terms by:

  • changing the amount you pay per month
  • changing the length of time you want to take to repay your loan

Learn what you can change with a revision of terms.

Help with repaying a Canada Student Loan

If you have a Canada Student Loan, you may qualify for the Repayment Assistance Plan. Under this plan, you may not have to pay back part of your loan or you may get a new repayment schedule.

Find out if you're eligible for the Repayment Assistance Plan and how to apply.

Missing Canada Student Loan payments for 9 months or more

If you miss payments on your Canada Student Loan for 9 months or more, your loan is considered to be in default. You debt will be sent to the Canada Revenue Agency (CRA) for collection.

It's possible to get your Canada Student Loan out of collection.

Find out who to contact to take your loan out of collection.

Trouble repaying your student line of credit

If you have a student line of credit, you may be able to ask your financial institution for lower monthly payments.

Contact your financial institution for more information on repaying your student line of credit.

Bankruptcy

Be aware that if you file for bankruptcy within seven years of finishing your studies, your Canada Student Loan won’t be discharged as part of the bankruptcy. You’ll have to continue paying back your Canada Student Loan.

Learn how bankruptcy affects your Canada Student Loan debts.

How student loans and lines of credit affect your credit score

Your Canada Student Loan and student line of credit payments form part of your credit history. If you miss or are late with your payments, it can affect your credit score. A credit score shows future lenders how risky it would be for them to lend you money. A poor credit score can also affect your ability to get a job, rent an appartment or get credit.

Learn how to order a copy of your credit report for free.

Tips for repaying your student loan

Consider doing the following to help you repay your student loan.

Make lump-sum payments while attending school

Any payments you make while attending school will go toward the principal of your loan. The principal is the amount of money you borrowed. It doesn’t include the interest you pay to borrow the money.

Paying down the principal will reduce the total amount you owe. This means you’ll have to pay less interest.

Increase the size of your monthly payments

The amount you pay over and above your monthly minimum payment will go directly toward the principal of your loan. This decreases your total loan amount, which reduces the amount of interest you’ll pay.

Use the Financial Goal Calculator to see how increasing your monthly payments will lower the amount of interest you pay.

Include payments in your budget

Build loan payments into your budget and make at least the minimum payments. Speak with your financial institution about setting up automatic payments.

Use the Budget Calculator to help you make a budget that includes paying back your student loan.

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