Canada Student Loans Go ZERO INTEREST!
Sometimes, change seems to take forever when suddenly, bang!
After several decades of debate, the interest charges on both Canada Student Loans and Canada Apprentice Loans were effectively ended yesterday (November 3, 2022).
Canada had a Covid-pandemic pause on student loan interest charges that was set to last through March, 2023. The new zero-interest policy takes effect starting April, 2023, replacing the Covid pause.
Revealed in Freeland's mini-budget
Canada's Finance Minister, Chrystia Freeland, dropped this major break for students and grads as a line item in her new mini-budget.
We've seen a positive trend in recent years for some provinces to either remove or reduce interest rates on provincial student loans. But since Canada loans represent 60% of the value of government student loans, this is the biggest interest-rate improvement in years.
If you're already paying Canada student loans, it will apply to you, not just to students getting new loans.
When elections make a difference...
Ending interest charges on federal student loans was a Liberal campaign promise during the last election. For those who doubt the value of voting, this is an example of 'elections having consequences'.
Zero interest will apply only to the following:
Canada Student Loans and Canada Apprentice Loans held by the federal government.
In other words, depending on the policies of your province or territory, you may still have to pay interest payments on provincial loans.
Zero interest would also not apply to Canada student loans held by the private sector (such as banks or private collection agencies).
However, the vast majority of Canada's existing student loans are managed by the National Student Loan Service Centre (NSLSC) or collections at CRA (Canada Revenue Agency).
Campaign promises are never guaranteed. But this time, voting paid off literally for Canada's students and grads with federal loans. Over the life of most student loans, total debt costs should be cut by thousands of dollars. Considering the interest rate hikes at the Bank of Canada, this decision has come in the nick of time.
Will Quebec follow?
Quebec has had the same pause as Canada, covering student loan interest until March 31, 2023.
Quebec's students have been very pro-active over the years to control higher educaton costs. Look for them to call for zero interest now.
