How to Pay Off Student Loans in Canada | Complete Guide

This page covers how to pay student loans off faster: which part of the loan costs interest, what extra payments do to the payoff date, whether consolidating or refinancing helps, paying a 0% loan or investing, and the tax credit on the interest. Help with payments you can’t afford is covered in the Repayment Assistance Plan guide, and forgiveness in student loan forgiveness programs. The student loans hub lists every guide, including one per province.

Which part of your loan charges interest

Most Canadian student loans are two loans: a federal Canada Student Loan and a provincial loan.

Since the federal portion carries no interest, the interest cost comes from the provincial portion and any private borrowing. Ontario charges interest on its portion, including during the six-month grace period. Nova Scotia charges no interest on its provincial loans for graduates who stay in the province. Each province’s rule is in the interest-by-province table on the student loans hub, and in the provincial guides for British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, PEI and Newfoundland and Labrador.

Know your loans

For each loan, track the balance, the interest rate, the monthly payment and the payoff date. The interest rate decides which loan an extra dollar should go to.

Repayment strategies

The standard schedule

Payments are set on a 9.5-year schedule (114 months) unless you ask for a longer one; the term can be extended up to 14.5 years, which lowers the payment and raises the interest paid on an interest-bearing portion. Automatic payments avoid missed payments.

Paying faster

Extra payments go straight to principal. Common sources are a fixed extra amount each month, lump sums such as a tax refund or bonus, and rounding the payment up.

The table shows a $30,000 balance charged at Ontario’s rate for its portion (prime + 1%, currently 5.45%), repaid on the standard 114-month schedule, and what extra monthly payments do. It assumes the rate stays the same; Ontario’s rate floats with prime.

For a loan that is entirely interest-free, extra payments don’t reduce the total paid; they only end the loan sooner. The student loan repayment calculator runs the same numbers for your own balance and rate.

Which loan to pay first

With more than one loan, the two common methods are:

The avalanche method costs the least interest. For Canadian student debt it usually points to private loans and interest-bearing provincial portions before the interest-free federal portion: every method still requires the minimum payment on each loan, and extra money then goes to the highest rate. The snowball method pays more interest but clears individual loans sooner. Debt avalanche vs snowball compares them in detail.

If payments are hard to afford

The Repayment Assistance Plan caps payments at 10% of family income, and borrowers below an income threshold for their family size pay nothing; the government covers what the reduced payment doesn’t. The thresholds and how to apply are on that page. Missed payments and default are covered in what happens if you can’t pay your student loan.

The student loan interest tax credit

Interest paid on federal and provincial government student loans earns a non-refundable tax credit, claimed on line 31900. The federal credit is 14% of the interest for 2026, plus a provincial credit at the province’s lowest rate. Unused interest can be carried forward up to five years.

For example, $1,000 of interest paid by an Ontario resident gives a federal credit of $140 (14%) and an Ontario credit of $51 (5.05%), about $191 in total, if there is tax to reduce.

Interest on a loan that isn’t a government student loan doesn’t qualify, and neither does interest on a student loan that was combined, renegotiated or reconsolidated with another loan, which is one of the costs of refinancing covered next. (Source: CRA, line 31900.)

Consolidating or refinancing student loans

Government loans are already combined where the province’s loan is integrated. In those provinces the federal and provincial loans sit in one NSLSC account with one monthly payment, so there is nothing to consolidate. Quebec and some other provinces run their own loans, which stay separate.

Refinancing a government loan into a private loan (a bank consolidation loan or line of credit) replaces it with an ordinary debt. What goes with it:

Refinancing an interest-free federal portion can only add interest. For an interest-bearing provincial portion, the private rate would have to be well below the provincial rate to make up for the lost tax credit and RAP protection.

Private student debt is different. A student line of credit or other private borrowing has none of those protections to lose, so moving several private balances into one lower-rate loan can cut interest. A consolidation loan adds a hard credit inquiry and a new account; debt consolidation loans compares the options.

Loan forgiveness

Forgiveness doesn’t speed up payoff, but it can end a loan early: the Repayment Assistance Plan ends repayment within 15 years of leaving school, and federal and provincial programs forgive part of the loan for some occupations working in rural or underserved communities. Who qualifies and how much is in student loan forgiveness in Canada.

Pay off a 0% loan or invest?

The comparison only applies to the portions that charge interest. An extra payment on an interest-free federal portion saves no interest; it only ends the loan sooner. Money that would have gone to it can instead go to interest-bearing debt, an emergency fund, or a TFSA or RRSP, where any return beats the 0% the loan costs, though investment returns aren’t guaranteed. Some borrowers still pay a 0% balance down early for non-financial reasons (a lower debt load on a mortgage application, one less bill). The minimum payment is required either way: missed payments lead to default whatever the rate.

Tips for faster payoff

• Automate extra payments so they happen every month.
• Send part of each raise to the loan. For example, a 3% raise on a $50,000 salary is $1,500 a year before tax, or $125 a month.
• Put tax refunds and other lump sums toward the highest-rate portion.
• Track the balance to see progress.

Budgeting for repayment

A sample budget that makes room for loan payments:

If payments don’t fit, the options are the Repayment Assistance Plan, extending the term (a lower payment but more interest on any interest-bearing portion), extra income, and temporary spending cuts.

After the loan is paid off

The payment amount can go to savings instead: an emergency fund of three to six months of expenses, then a TFSA or RRSP. The budgeting guide covers setting up the new budget.