431-00034 (Education and training)

The Government of Canada would like to thank the petitioners for sharing their views on interest rates for Canada Student Loans. We welcome input on this important issue.

Canada’s prosperity depends on Canadians getting the education and experience they need to prepare for the jobs of today and tomorrow. We recognize the challenges recent graduates may face as they transition to the labour force. That’s why we are making post-secondary education more affordable by providing financial assistance to students through Canada Student Grants and Loans.

Canada Student Loans are provided to eligible students interest-free for the entire period of study. Borrowers can also lower the total interest they pay on their student loans by claiming a federal tax credit on interest payments made on federal and provincial student loans.

The Government also provides non-repayable financial assistance to students from low- and middle-income families in the form of Canada Student Grants. Furthermore, for borrowers who may have difficulty repaying their Canada Student Loans, the Government provides a Repayment Assistance Plan where eligible borrowers can make a reduced or zero payment.

Recent changes to Canada Student Loans are helping more students receive enhanced student financial assistance. Beginning November 1, 2019, we made the six-month non-repayment period interest-free and lowered interest rates on Canada Student Loans. The interest-free non-repayment period ensures that student loans will not accumulate any interest during the six-month “grace period” after a student loan borrower leaves school. We also lowered the floating interest rate, the rate chosen by approximately 99 percent of Canada Student Loan borrowers, to prime, from its current rate of prime plus 2.5 percent. The fixed rate has also been reduced from prime plus 5 percent to prime plus 2 percent, which is set for the life of the loan. Together, these measures will help over 1.1 million borrowers and provide the average borrower with savings of approximately $2,000 over the life of their loan.

Reducing interest rates and providing an interest-free grace period build on other investments the Government of Canada has made in recent years to ensure that post-secondary education remains affordable and student debt loads manageable. For instance:

• We have increased Canada Student Grants by 50% and expanded eligibility to more students. As a result, over 450,000 students from low- and middle-income families are receiving up to $3,000 per year in support that they do not need to repay.

• We have increased the repayment threshold under the Repayment Assistance Plan to ensure that no borrower will have to repay their Canada Student Loan until they earn at least $25,000 per year. This threshold applies to a single individual and is adjusted by family size. For those with higher incomes, monthly payments are limited to no more than 20 percent of a borrower’s gross family income. In 2017-18, more than 326,000 borrowers benefited from the Repayment Assistance Plan of which 86 percent had zero monthly payments on their loans.

• We have introduced a three-year pilot project in 2017-18 that provides top-up grant funding of $1,600 per school year to recipients of Canada Student Grants for Full-Time Students who have been out of high school for at least ten years. To date, approximately 85,000 low- and middle-income adult learners have benefited from this top-up grant funding.

• We are implementing an interest-free and payment-free leave for borrowers taking temporary leave from their studies for medical or parental reasons, including mental health leave. 

In addition to these recent investments, we have committed to strengthen Canada Student Grants and Loans, making post-secondary education more affordable by further increasing Canada Student Grants, and improving repayment supports.