{"id":71100,"date":"2024-09-11T03:00:00","date_gmt":"2024-09-11T10:00:00","guid":{"rendered":"https:\/\/www.nerdwallet.com\/ca\/?page_id=71100"},"modified":"2024-09-10T09:41:08","modified_gmt":"2024-09-10T16:41:08","slug":"common-questions-about-student-loan-repayment","status":"publish","type":"page","link":"https:\/\/www.nerdwallet.com\/ca\/loans\/common-questions-about-student-loan-repayment","title":{"rendered":"Answers to 3 Common Questions About Student Loan Repayment"},"content":{"rendered":"\n

Over 550,000 Canadians take out student loans each year, and the average university graduate carries around $15,000 of student debt, according to the most recent analysis from Statistics Canada<\/a>.\u00a0<\/p>\n\n\n\n

After graduation, there\u2019s a six-month grace period before the first payment is due. If your student loans will enter repayment soon, you may have some questions about the process. <\/p>\n\n\n\n

Here\u2019s what you need to know. <\/p>\n\n\n\n

1. Where do I repay my loans?<\/h2>\n\n\n\n

It depends on where you live. <\/p>\n\n\n\n

Residents of Alberta, Nova Scotia, and Prince Edward Island repay federal loans through the National Student Loan Service Center (NSLSC)<\/a> and provincial loans through their provincial student aid office. <\/p>\n\n\n\n

Those living in Quebec, Nunavut, or the Northwest Territories will pay federal and provincial\/territorial loans through their province or territory.<\/p>\n\n\n\n

In all other provinces, you can pay both your federal and provincial loans through the NSLSC. <\/p>\n\n\n\n

2. Which repayment term should I choose?<\/h2>\n\n\n\n

Your loan repayment term is the number of months it will take to pay off the loan completely. <\/p>\n\n\n\n

You may have the option to choose between longer or shorter terms. The repayment term that\u2019s best will depend on your income, existing financial obligations, and whether your student loans accrue interest. <\/p>\n\n\n\n

You can extend your loan repayment up to a maximum of 174 months (14.5 years) to keep your payments low. A shorter term with higher monthly payments will enable you to pay your loan off faster. <\/p>\n\n\n\n

Typical repayment terms for student loans in Canada<\/h3>\n\n\n\n\n
Amount Owed<\/th>Repayment Period<\/th><\/tr><\/thead>
$0.01 to $1,365.99<\/td>18 months (1.5 yrs)<\/td><\/tr>
$1,366.00 to $2,975.99<\/td>42 months (3.5 yrs)<\/td><\/tr>
$2,976.00 to $4,375.99<\/td>66 months (5.5 yrs)<\/td><\/tr>
$4,376.00 to $6,985.99<\/td>90 months (7.5 yrs)<\/td><\/tr>
Over $6,986.00<\/td>114 months (9.5 yrs)<\/td><\/tr><\/tbody><\/table>
NSLSC Canada<\/a><\/figcaption><\/figure>\n\n\n\n\n\n\n

Nerdy Tip:<\/strong> Federal student loans are no longer subject to interest, but some provincial loans are. If your loan accrues interest, extending the payment term will increase the cost of borrowing. Keep the added cost in mind when establishing a repayment timeline. <\/p>\n\n\n\n

Remember, your wages will likely increase as you spend more time in the workforce. You can always bump up your payment amounts in the future to repay your loan more quickly. <\/p>\n\n\n\n

If you occasionally have extra money in your budget, you can make additional lump sum payments toward your student loan balance. Any payments made during your six-month non-repayment period will go directly toward the principal balance. Outside of this period, extra payments will go toward outstanding interest first. <\/p>\n\n\n\n

3. What\u2019s the student loan tax credit?<\/h2>\n\n\n\n

If you paid interest on your student loan from 2018 through 2023, you may be eligible to claim the student loan tax credit<\/a> to reduce your tax payable for the year. If you don\u2019t owe any income taxes, you can carry the interest forward for up to five years. <\/p>\n\n\n\n

The student loan tax credit can be claimed for loans received under:<\/p>\n\n\n\n