Student Loan Basics
Types of Student Loans
| Type |
Interest Rate |
Repayment Start |
| Canada Student Loans |
Prime + 0% (federal) |
6 months after graduation |
| Provincial loans |
Varies by province |
6 months after graduation |
| Private/bank loans |
Higher (Prime + X%) |
Varies |
Current Rates
| Loan Type |
Rate |
| Federal (floating) |
Prime + 0% = ~5% |
| Federal (fixed) |
Prime + 2% = ~7% |
| Provincial |
Varies |
| Private |
7-12%+ |
Know Your Loans
Get the Details
| Find Out |
Where |
| Federal loan balance |
NSLSC portal |
| Provincial balance |
Provincial student aid office |
| Private loans |
Lender statements |
| Detail |
Why |
| Total balance |
Know your starting point |
| Interest rate |
Calculate cost |
| Monthly payment |
Budget |
| Payoff date |
Set goals |
Repayment Strategies
Standard Approach
| Strategy |
Details |
| Minimum payments |
10-year payoff |
| Grace period |
6 months (interest may accrue) |
| Auto-payments |
Never miss |
Accelerated Payoff
| Strategy |
Impact |
| Extra payments monthly |
Reduces principal faster |
| Lump sum payments |
Tax refund, bonus |
| Round up payments |
$320 β $400 |
Payoff Timeline
| $30,000 Loan at 5% |
Payment |
Time |
Interest |
| Minimum (~$320) |
$320 |
120 months |
~$8,200 |
| Extra (+$100) |
$420 |
86 months |
~$5,600 |
| Extra (+$200) |
$520 |
68 months |
~$4,400 |
Avalanche vs Snowball for Student Loans
If You Have Multiple Loans
| Method |
Approach |
| Avalanche |
Pay highest-rate loan first |
| Snowball |
Pay smallest balance first |
Typical Priority
| Loan Type |
Priority |
| Private loans (highest rate) |
First |
| Provincial loans |
Second |
| Federal loans (lowest rate) |
Last |
Repayment Assistance Plan (RAP)
Federal RAP
| Feature |
Details |
| Eligibility |
Income-based |
| Stage 1 |
Reduced payments based on income |
| Stage 2 |
After 60 months, gov may pay interest |
| Stage 3 |
After 120 months, may cover principal |
RAP Income Thresholds (Approximate)
| Family Size |
Income Threshold |
| Single |
~$25,000-$30,000 |
| Family of 2 |
~$35,000-$40,000 |
| Family of 4 |
~$50,000-$55,000 |
Below threshold = $0 payments required.
How to Apply
| Step |
Action |
| 1 |
Contact NSLSC |
| 2 |
Submit income verification |
| 3 |
Reassessed every 6 months |
Tax Benefits
Interest Deduction
| Feature |
Details |
| What |
Interest on federal/provincial student loans |
| Credit rate |
15% (federal) + provincial |
| Example |
$1,000 interest = ~$200 tax savings |
| Carry forward |
Up to 5 years |
Claiming the Credit
| Step |
Action |
| Get slip |
From NSLSC |
| Enter on return |
Line 31900 |
| Reduce tax |
~15-25% of interest |
Loan Forgiveness Programs
Federal Options
| Program |
Who |
| RAP after 15 years |
Remaining balance forgiven |
| Death or disability |
Loan forgiven |
Provincial/Professional Programs
| Province/Program |
Details |
| BC Loan Forgiveness |
Nurses, doctors in underserved areas |
| Ontario Tuition Grants |
Not forgiveness, but reduced debt |
| Professional programs |
Varies by region/profession |
Limited Forgiveness
Unlike the US, Canada has fewer forgiveness programs. Most people repay in full.
Pay Off or Invest?
The Debate
| Factor |
Pay Off |
Invest |
| Guaranteed return |
Yes (loan rate) |
Market risk |
| Peace of mind |
Debt-free |
Wealth building |
| Opportunity cost |
Miss market gains |
May be higher |
General Guidelines
| Loan Rate |
Strategy |
| Over 7% |
Prioritize payoff |
| 5-7% |
Balance or prioritize payoff |
| Under 5% |
Could lean toward investing |
Balanced Approach
| Priority |
Action |
| 1 |
Get employer RRSP match (free money) |
| 2 |
Build $1,000 emergency fund |
| 3 |
Pay extra on student loans |
| 4 |
Build full emergency fund |
| 5 |
Invest beyond |
Consolidation Options
Federal Loan Consolidation
| Feature |
Details |
| Automatic |
Federal + provincial combined |
| Rate |
Weighted average |
| One payment |
Simplified |
Bank Consolidation
| Feature |
Details |
| Product |
Personal loan or LOC |
| Rate |
May be higher or lower |
| Warning |
Lose tax deduction |
Caution: Converting to personal loan/LOC means interest is no longer tax-deductible.
Tips for Faster Payoff
Strategies
| Tip |
Impact |
| Automate extra payments |
Consistent progress |
| Use raises for loans |
Lifestyle unchanged |
| Apply tax refund |
Lump sum reduction |
| Side income |
Dedicated to debt |
| Track progress |
Stay motivated |
Example: Using Raises
| Income Increase |
Direct to Loans |
| 3% raise on $50K |
+$125/month extra |
| Over 3 years |
Could shave 2 years off |
Budget for Repayment
Sample Budget
| Category |
Percentage |
| Housing |
30% |
| Food |
10% |
| Transportation |
10% |
| Student loans |
15% |
| Other |
25% |
| Savings |
10% |
If Struggling
| Option |
Action |
| Apply for RAP |
Reduce required payment |
| Extend term |
Lower payment (more interest) |
| Find extra income |
Gig work |
| Cut expenses |
Temporarily |
After Payoff
Next Steps
| Step |
Action |
| 1 |
Redirect payments to savings |
| 2 |
Build emergency fund (3-6 months) |
| 3 |
Increase TFSA/RRSP |
| 4 |
Other goals |
Celebrate!
| Milestone |
Celebration |
| Halfway |
Acknowledge progress |
| Paid off! |
Meaningful reward |
| Stay debt-free |
New habits |