Student Loans in Canada: What's Actually Interest-Free in 2026

By Jordan Ellis · Published August 16, 2026 · Reviewed September 14, 2026

Quick Answer

Since April 2023, the federal portion of Canada Student Loans charges zero interest — permanently. Provincial portions vary: BC, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia and PEI charge no interest on their share, while Ontario (prime + 1%) and Alberta (prime) still charge interest, and Quebec runs its own program. Payments only begin 6 months after you leave school, and the Repayment Assistance Plan can reduce them to zero if your income is low.

Canada quietly made most student debt interest-free, and a remarkable number of graduates are still stress-paying a 0% loan while carrying 20% credit card debt.

What changed in 2023

The federal portion of Canada Student Loans — roughly 60% of most borrowers’ balances — has charged zero interest since April 1, 2023, and the change is permanent. Provinces control their own share: BC, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia and PEI are at 0%; Ontario charges prime + 1% and Alberta charges prime; other provinces set their own rates. Your NSLSC dashboard shows the exact split.

What your loan actually costs you

At 0% federal interest, a $25,000 loan costs exactly $25,000 whenever you pay it. There’s no compounding clock — which changes the payoff math completely:

Any provincial portion with interest — attack this first; model the payment with the loan calculator
Credit card and high-interest debt — avalanche it; 20% beats 0% every time
TFSA contributions — a 4–5% GIC or index fund earns real money while the federal loan sits still
The federal student loan — minimums are mathematically fine

If payments are hard: RAP, not default

The Repayment Assistance Plan caps payments at an affordable level — zero below roughly $40,000 of individual income. Interest (where any exists) is covered, and after 5 years on RAP the government starts paying the principal. Defaulting instead wrecks your credit score and triggers CRA garnishment — RAP is strictly better in every scenario.

The smart sequence for new grads

Confirm your federal/provincial split at the NSLSC
Build a small emergency fund first — one month, then three
Kill any interest-bearing debt by rate, highest first (the debt payoff calculator ranks them)
Invest the surplus in a TFSA rather than overpaying a 0% loan
Revisit when you buy a home — lenders count the monthly payment in your TDS even at 0% interest

The old advice — “student loans are an emergency, pay them off at all costs” — was written for 7% interest. At 0%, the loan is a free option: hold it cheaply, and put your money where it compounds.

Official sources

Rules and dollar limits change. Confirm current amounts with the official pages below before you act · Last reviewed September 14, 2026.

Canada Student Grants and Loans (Employment and Social Development Canada)
Repayment Assistance Plan for student loans (Employment and Social Development Canada)

Frequently Asked Questions

Are student loans interest-free in Canada now?

The federal portion (about 60% of a typical loan) has been permanently interest-free since April 1, 2023. Provincial portions depend on your province — BC, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia and PEI charge 0%, while Ontario (prime + 1%) and Alberta (prime) charge interest, and Quebec sets its own rules. Check your National Student Loans Service Centre breakdown.

When do I have to start repaying my student loan?

Six months after you graduate, leave school, or drop below half-time enrollment. You can make payments during the grace period, but none are required — and with 0% federal interest, there's no compounding penalty for waiting.

What is the Repayment Assistance Plan (RAP)?

RAP caps your payment at an affordable share of income — potentially $0 if you earn under roughly $40,000 (single; higher for families). After 5 years on RAP (or 10 years out of school), the government begins paying down the principal itself. Apply through the NSLSC; re-apply every 6 months.

Should I pay off my student loan early or invest?

With a 0% federal loan, paying ahead earns you a 0% return — a TFSA at 4–5% wins mathematically. Pay down any provincial portion charging interest first, hold the federal balance at minimums, and invest the difference. The exception: if the payment itself strains cash flow, shrinking it has real value.

Can student loans be forgiven in Canada?

Not through bankruptcy for the first 7 years after leaving school (5 if you prove hardship). Beyond that, RAP's long-term principal assistance, severe permanent disability discharge, and province-specific forgiveness for rural doctors and nurses are the main paths.