Student and Apprentice Loans Become Interest-Free

Summary#

This bill ends interest charges on federal student loans and apprentice loans. It also keeps the 6‑month grace period after studies before payments start, and bars fees during studies. It updates related rules, including how payments are handled and what penalties can be applied.

• Ends interest on federal student loans and Canada Apprentice Loans (Bill Summary; CSFAA “Interest and Deferral Period”; CSLA s.4; Apprentice Loans Act s.8).
• Keeps payment deferral until the last day of the 7th month after you leave studies (full-time or part-time) (CSFAA s.8; CSLA s.5).
• Bars fees of any kind during study periods; allows some charges only in cases of default under the guaranteed loan system (CSFAA s.7(2); CSLA s.7(d)).
• Clarifies that loans signed when under the age of majority are still collectible (CSFAA s.16.01; CSLA s.19; Apprentice Loans Act s.14).
• Speeds up remittance of electronic repayments to the federal Receiver General (within 2 business days) (CSFAA s.6.2(2); Apprentice Loans Act s.5(2)).
• Does not forgive past interest already owed; old rules continue to apply to amounts that were payable before the in‑force date (Transitional Provision).

What it means for you#

• Households and students

  • No interest will be charged on federal student loans and apprentice loans going forward (Bill Summary; CSLA s.4; Apprentice Loans Act s.8).
  • You will not make payments until the last day of the 7th month after you stop being a student (full-time or part-time) (CSFAA s.8; CSLA s.5).
  • No fees of any kind during study periods on student loans; for older “guaranteed” loans, fees can apply only if you default, as set by regulation (CSFAA s.7(2); CSLA s.7(d)).
  • If you already owe principal or interest from before the law takes effect, you still have to pay those amounts under the old rules (Transitional Provision).
  • If you signed your loan while under the age of majority, the loan remains enforceable against you (CSFAA s.16.01; CSLA s.19; Apprentice Loans Act s.14).

• Apprentices

  • No interest on Canada Apprentice Loans; payment start date is set by regulation after your training period (Apprentice Loans Act s.8).

• Borrowers with disabilities or estates

  • Loan obligations end on death, and for severe permanent disability when criteria are met, with the federal government settling with lenders as prescribed (CSLA s.12, s.13).

• Provinces and territories

  • Federal changes do not alter provincial student loan interest or repayment rules. Integrated programs may need administrative updates to align systems. Data unavailable.

• Lenders and loan servicers

  • Must remit electronically collected repayments to the Receiver General within 2 business days (CSFAA s.6.2(2); Apprentice Loans Act s.5(2)).
  • Some administrative penalty provisions are narrowed to denying or ending payment deferrals for a period; other penalty clauses are repealed (CSFAA s.17.1; CSLA s.18.1).

Expenses#

Estimated net cost: Data unavailable for C‑301; a comparable government measure was costed at CAD $2.7 billion over 5 years and $556.3 million ongoing.

• No official fiscal note for C‑301. Data unavailable.
• Comparable federal policy: The 2022 Fall Economic Statement announced permanent elimination of interest on Canada Student Loans and Canada Apprentice Loans starting April 1, 2023, with an estimated cost of $2.7 billion over 2022‑2027 and $556.3 million per year ongoing (Department of Finance, Fall Economic Statement 2022, Costing of proposed measures).

Notes:

• C‑301’s transitional clause does not forgive previously accrued interest, which could lower near‑term costs compared to any retroactive write‑off (Transitional Provision). Exact fiscal impact for C‑301 is not published. Data unavailable.

Proponents' View#

• Reduces borrowing costs for current and future students and apprentices by removing interest charges on federal loans (Bill Summary; CSLA s.4; Apprentice Loans Act s.8).
• Helps cash flow during the transition from school to work by keeping the 6‑month payment‑free period after studies (CSFAA s.8; CSLA s.5).
• Broad, simple relief that reaches many borrowers without an application process; the government estimated more than 1.8 million borrowers benefit each year under the comparable federal measure (Fall Economic Statement 2022).
• May lower defaults by making total repayment cheaper and simpler (assumption; no program‑specific default estimate provided). Data unavailable.
• Aligns treatment of student and apprentice loans, creating consistent, easier‑to‑understand rules (Apprentice Loans Act s.8; CSLA s.4; CSFAA s.7‑8).

Opponents' View#

• Fiscal cost is significant; funds could be targeted to need‑based grants or low‑income borrowers instead of all borrowers (Fall Economic Statement 2022 cost figures).
• Provides larger dollar benefits to people with bigger debts, which can include higher‑income graduates; distributional effects are not targeted by income. Data unavailable.
• Does not forgive interest already accrued; borrowers with past arrears get limited relief (Transitional Provision).
• Does not reduce principal or tuition costs; total debt levels remain the same, which may limit effects on access and completion. Data unavailable.
• Implementation risk: integrated federal‑provincial loan systems and servicers must update contracts, systems, and communications; errors could occur during transition. Data unavailable.