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On average 75% of students in Canada have federal student loans while around 36% have bank loans. The average amount owing in student debt per student is around $26,075. Not surprisingly, those with the highest loans are medical students.
With so much student loan debt, it can take young Canadians years to pay these off. While interest rates for students are often lower, and in some cases, you have some time after you graduate to begin paying them back, you still have to pay them back. But what if you didn’t? What if you are able to get a partial amount, if not all of your student loan, forgiven? Well, in certain circumstances, you can.
How to get student loans forgiven
There are a few different ways to get your student loans forgiven, at least partially. There are different programs based on where you live in Canada as well as specific programs for those who are in the medical field.
The only way to get student loans to fully disappear is to declare bankruptcy, which isn’t something you should do without speaking to an advisor first, such as a credit counselor.
Bankruptcy and student loans
When it comes to bankruptcy and student loans there is a 7-year rule. You can get an early discharge on your student debt if you filed at least 7 years after you stopped being a student. This can be reduced to 5 by the court in a case of undue hardship.
In order to qualify for this, you will have to prove that your financial issues are long-term and that you used the student loan money appropriately. This is called a hardship provision.
Student loan forgiveness for doctors and nurses in Canada
This is offered by the Government of Canada and is available to doctors, residents in family medicine, nurse practitioners, and nurses who work in low-staffed rural communities who meet the eligibility requirements.
This is also only available to those with outstanding Canada student loan balances and doesn’t apply to any loans that have been converted into bank loans or any other kind of loan. It also only applies to federal government portions of student loans.
To be eligible you must:
- Have a student loan that is good standing, meaning you do not owe any missed payments.
- Have started your employment in a rural or remote community that is low staffed on or after July 1, 2011.
- Have a minimum of 400 hours of in-person service and 12 months worked consecutively
The completed list of medical professionals that could qualify are:
- Family doctor
- Registered nurse
- Registered psychiatric nurse
- Registered practical nurse
- Licensed practical nurse
- Nurse practitioner
- Family Medicine resident with an accredited Canadian medical school
If you meet these requirements, you could get up to $40,00 ($8,00 per year) in loan forgiveness as a family doctor or resident. As a nurse, you could get up to $20,000 ($4,00 per year). This amount applies to the amount owing on the principal loan balance after 12 months of service.
The five years needed to work in a rural community do not need to be consecutive to qualify; you just must have some sort of student loan balance at the end of each of those 5 years worked.
The one exception to the 12-month rule is if you take sick/paternal leave during the 12 months but still complete the 400 hours, you are still eligible.
How to Apply
In order to apply for this program, you must submit your application within 90 days of completing the mandatory 12 months of service. After that, you must resubmit an application every year. You can find the Canada Student Loan forgiveness form here.
Keep in mind that once you are approved you are not receiving the money directly. The balance of your student loan will be reduced accordingly.
Loan Forgiveness Program in BC
In B.C, certain occupations are eligible for loan forgiveness when you agree to take a position in a facility that is publicly funded and located in an underserved community. It also applies in a position of working with children where there is a shortage of workers.
Eligibility Requirements
- Graduated from an accredited post-secondary institution.
- Not currently enrolled in post-secondary school full-time.
- Are currently repaying a B>C Student Loan that is not in default, delinquency, or bankruptcy.
- Are going to be employed in a position that is working with children or is considered to be in an underserved community.
| Occupations in Underserved Communities that are Eligible | Occupations Working with Children that are Eligible |
| Nursing | Speech Language Pathologist |
| Doctors and residents | Occupational Therapist |
| Midwives | Audiologist |
| Medical Laboratory Technologists | Physiotherapist |
| Diagnostic Medica Sonographer | School Psychologist |
| Speech Language Pathologist | Technology Educator |
| Audiologist | Teachers of deaf/hard of hearing/visually impaired |
| Occupational Therapist | |
| Physiotherapist | |
| Respiratory Therapist | |
| Polysomnography |
How much can be received in loan forgiveness?
Well, this ultimately depends on how many hours of service you provide yearly. Up to 99 hours is 0%, 100-249 hours is 10%, 250 to 399 is 15% and 40 or more hours is 20%. All of these percentages are done annually, not just a one-time percentage.
How to Apply
In order to apply for this, you must have access to the StudentAid BC dashboard to submit the required documentation. Then you would complete the B.C. Loan Forgiveness Program application and submit it online.
The second thing you would need to send in is an employment letter that includes:
- The current date
- Be on company letterhead
- The applicant’s name and job title
- Employers signature
- Employment status
- Hire date and/or start date
- Name of the community
- Name of the publicly funded facility
- If you are working with children or no
Once you have completed that and submitted it you are to sign a declaration and submit it with the rest of your package.
Repayment Assistance Plan Alberta
This program is available in Alberta and is available for Albert and Canada Student loans. What it does is assess your financial situation and see if you can reduce or eliminate your monthly student loan payments. Because this isn’t debt forgiveness, just financial assistance, you need to reapply every 6 months.
Eligibility Requirements
In order to qualify for this program, you must:
- Be currently repaying a student loan whether it be in Alberta or Canada.
- Have completed your studies at least 6 months ago
- Be having difficulty making your payments
What are the different stages?
Well, this program comes in 2 stages. The first stage helps you calculate an affordable payment and the second stage, if you qualify, can actually make it so the government repays part of the loan for you. While this isn’t exactly full loan repayment, the government will help you with your loans if you are unable to cover them.
Stage 1
Stage 1 is just considered to be a temporary solution that covers your student loan payments. Based on your current financial situation the government calculates an affordable payment for you to make monthly. They will pay the interest only payments and the affordable payment is added to your final balance. Depending on your situation, you may be eligible for this for up to 60 months from the time you finish school.
Stage2
This part of the program helps with long-term payments if your difficult financial situation continues. In this part of the process, the government starts to cover both the principal and the interest payments that go beyond what is considered to be an affordable monthly payment for you. It is possible to stay in this program for 15 years, but no longer. While you are receiving stage 2 payments, you will see the balance of your loan slowly decrease.
The only thing with this is, that until the current student loan is paid off, you are unable to receive another one. However, if you do need another loan you can return to the interest-free status once you are taken off the stage 2 program.
How to Apply
In order to apply for this program, there are two different choices. The Repayment assistance plan for Canada and Alberta or the one just for Alberta. Depending on which program you are looking for will be which form you choose.
The Repayment Assistance Plan form is available here for Alberta and Canada and here for just Alberta.
Saskatchewan Loan Forgiveness
In Saskatchewan, loan forgiveness is offered to nurses and nurse practitioners who practice in remote communities or other areas that are underserved. They only forgive a portion of the loans and are calculated yearly allowing you to receive up to $400 for up to 5 years. This is paid to the amount owing on your student loans.
Eligibility Requirements
In order to qualify for this partial loan forgiveness, there are a few things you must have.
- First, you must have started your employment on or after April 1, 2022.
- You must work in a rural/underserved community.
- Have completed 12 months consecutively and are new to the community (didn’t grow up there).
- Work at least 400 in-person service hours
- Submit the application within 90 days of completing your first 12 months.
- Have an active Saskatchewan student loan or be in the grace period.
- Have a valid license as s:
- Registered Nurse
- Registered Psychiatric Nurse
- Licensed Practical Nurse
- Nurse Practitioner
- Registered Practical Nurse
How to Apply
In order to apply, you would send a completed application to the Nation Student Loans Service Centre (NSLSC) either by mail or fax. Your application form for the Saskatchewan Student Loan Forgiveness for Nurses and Nurse Practitioners can be found here.
OSAP Repayment Assistance Plan Ontario
Similar to Alberta, Ontario offers a repayment assistance plan to help those who are having difficulty making their student loan payments. They offer 2 different stages. The first is interest relief and the second is debt reduction and reapplication is needed every 6 months. While you are on this program you will either be exempt from making payments or given an affordable monthly payment.
The types of loans that are eligible are:
- Part-time Canada student loans
- Ontario Student loans (Issued prior to August 1, 2001)
- Canada Student Loans (issued prior to August 1, 2000)
- Canada-Ontario integrated student loans
Eligibility Requirements and Affordable Payments
In order to qualify for this program, you must:
- Be a Canadian resident
- Have student loans in good standing
- Qualify for an affordable monthly payment that is less than the current required payment
These payments are calculated based on your monthly family income. This program is available for 6 months or until you have completed school for 10 years.
| Number of Family Members | Gross Monthly Family Income |
| 1 | $2,083 |
| 2 | $3,254 |
| 3 | $4,205 |
| 4 | $4,959 |
| 5 or more | $5,652 |
Stage 1
This interest relief stage is the stage where you make affordable monthly payments. The monthly interest is covered by the government unless your monthly payment is enough to cover the principal amount as well as some of the interest.
Stage2
Once you have received stage 1 benefits for 60 months or have been doing school for 10 years, you will then be moved to stage 2. However, if you have a permanent disability, you apply for stage 2 immediately. While you still make an affordable payment. The government covers any principal and interest your monthly payment doesn’t cover so your debt is gone in a max of 15 years from finishing school, or 10 years if you have a permanent disability.
OSAP and Disability
For those with disabilities, their monthly payments are calculated a little differently with the OSAP Repayment Assistance plan. Not only is the family monthly income taken into consideration, but also the family size, and any expenses related to the person’s disability.
In order to qualify for this, you need to have been confirmed to have a permanent disability while you attended post-secondary for the purposes of OSAP or provide the proper documentation. As stated above, being approved for this entitles you to start immediately in stage 2 so the government can help you get the loan paid in a maximum of 10 years.
How to Apply
In order to apply it will depend on what type of loan you are applying for.
If you have the Canada-Ontario Integrated Student loan (COISL) and/or the Part time Canada student loan you would submit your application to the NSLSC (National Student Loans Service Centre. First you would down the application.
If you have the COISL and one or both of the Canada Student Loan issued before August 1,2000 or the Ontario Student Loan issued before August 1 ,2001 then this is the application you would submit to the NSLSC.
If you only have one or both of the loans that were issued August first 2000/2001, then you would contact the lender to get the appropriate information to apply.
Can you get student loan forgiveness due to COVID?
Unfortunately, there is no student loan forgiveness due to the pandemic. All there are the programs that are available above that are based on occupation and income but that is it.
What do you do if you can’t get student loan forgiveness?
Paying off student loans can be tricky, and bankruptcy isn’t always an ideal option. Depending on how long you have left to pay off your loan and what the interest rates are, debt consolidation may be a good option. Essentially, debt consolidation is when you take out a loan and pay off all of your debt with it, consolidating everything into one payment with one interest rate. If this is something you are considering, spring financial can help. We offer personal loans ranging from $500 to $15,000 and can have the money e-transferred to you just a few hours after approval. You can apply online or give us a call at 1-888-781-8439.
