By Canadian Press

Fiscal Update 2022: Ottawa to permanently eliminate student loan interest

Nov 3, 2022 | 2:25 PM

Ottawa says it plans to make permanent the pandemic era removal of interest on student loans in an effort to reduce some of the current financial pressures on young Canadians as the cost of living rises. 

As part of its fall fiscal update tabled Thursday, the federal government says it will permanently eliminate interest on all federal student loans and apprentice loans beginning on April 1, 2023, including loans currently being repaid. 

The Liberals moved to suspend the accumulation of interest on student loans in 2021 until March 2023 due to the effects of the pandemic on graduating students. 

The fall economic statement says an average student loan borrower will save $410 per year as a result of their loan being interest-free. 

Eliminating of interest on these loans is expected to cost of $2.7 billion over five years.

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More than 1.8 million Canadian students owe the federal government a total of $20.5 billion, based on 2019 data from the Government of Canada website, with the average loan balance at about $13,367 at the time of leaving school. 

The permanent elimination of interest on federal student loans was a Liberal campaign promise during the last federal election. 

This report by The Canadian Press was first published Nov. 3, 2022.

The Canadian Press