There is no general program in Ontario that forgives student loans just because you cannot afford them. You can lower or pause your payments through the Repayment Assistance Plan, and some people qualify for forgiveness through disability, death or work in a rural community. Once you have been out of school for 7 years, student loans can also be dealt with in a consumer proposal like other unsecured debt. At Metus Lykos Debt Law Firm, we are Ontario lawyers who help people with student loan debt understand which of these options is open to them, and how to deal with the rest of their debt at the same time.
Quick answer
- Federal Canada Student Loans have been interest-free since April 1, 2023. The Ontario portion of OSAP still charges interest.
- The Repayment Assistance Plan (RAP) can cut your monthly payment to $0 if your income is low. You reapply every 6 months.
- Under the Bankruptcy and Insolvency Act, s. 178(1)(g), student loans are only wiped out in a consumer proposal or bankruptcy if you have been out of school for at least 7 years.
- Forgiveness exists for a severe, permanent disability, for death, and for some health and social service workers in rural and remote communities.
- Student loans never “expire” after 25 years. Ignoring them leads to collections, and the government can keep your tax refund.
If your student loans feel like they will follow you forever, you are not alone. Many people in Ontario are paying rent, a car loan and credit cards while their OSAP balance barely moves. The good news is that you have more options than most people realize. The key is knowing which rules apply to you.
Is there student loan forgiveness in Ontario?
Yes, but only in specific situations. Neither the federal government nor Ontario forgives student debt simply because the balance is high. Forgiveness is available in these cases:
- Severe, permanent disability. If a disability stops you from working and going to school for the rest of your life, you can apply to have your federal and Ontario student loans cancelled.
- Death. Government student loans are cancelled when the borrower dies. Your family does not inherit them.
- Rural and remote service. Family doctors, nurses and some other professionals who work in eligible rural or remote communities can have part of their Canada Student Loan forgiven each year.
If none of these apply, the next step is to lower your payment, or to deal with the loan through the legal process once you pass the 7-year mark.
How do I lower my OSAP payments if I can’t afford them?
Apply for the Repayment Assistance Plan through the National Student Loans Service Centre (NSLSC). RAP sets your payment based on your family income and size, not on how much you owe. If your income is below the threshold, your payment is $0.
For the federal part of your loan, the zero-payment threshold is a gross family income of $3,788 a month for a family of one. The threshold for the Ontario part of your loan can be different. RAP is approved for 6 months at a time, so you need to reapply twice a year to stay on it.
RAP does not reduce what you owe. It makes the payment fit your income while you get back on your feet. If you stay on RAP for long enough, the government covers more of the payment so the loan is paid off within 15 years.
Do student loans get wiped after a certain number of years?
No. Government student loans do not disappear after 10, 15 or 25 years on their own. If you stop paying, the loan goes into default and is sent to collections. The government can then take your income tax refund and some benefit payments to pay it down.
The number that matters is 7 years. That is how long you must be out of school before student loans can be released in a consumer proposal or bankruptcy.
Can a consumer proposal get rid of student loans?
Yes, if you finished or left school at least 7 years before the proposal is filed. This rule comes from section 178(1)(g) of the federal Bankruptcy and Insolvency Act. It counts from the last date you were a full-time or part-time student, not from when you took out the loan.
| How long since you left school | What happens to student loans in a consumer proposal |
|---|---|
| 7 years or more | Treated like other unsecured debt. The amount not repaid under the proposal is legally released when you complete it. |
| 5 to 7 years | Not released automatically. You may be able to ask the court to release them because of hardship. |
| Less than 5 years | Not released. You still owe them after the proposal, but the proposal can still deal with your other debts. |
A consumer proposal is a legal agreement with your creditors to repay part of what you owe, over up to 5 years. It is available if you owe between $10,000 and $250,000 in unsecured debt, not counting your mortgage. To see which other debts can be included, read what debts can be included in a consumer proposal.
What if I’ve been out of school for less than 7 years?
Your student loans stay with you, but that does not mean you are stuck. Many people with recent student loans are struggling because of credit cards, lines of credit, payday loans or CRA debt sitting next to their OSAP. Getting debt relief in Ontario for those other debts can free up enough money to keep your student loan payments on track, or keep you on RAP.
We still help people whose student loans are less than 7 years old. In most cases those loans cannot be included in a consumer proposal, but your other debts can. In rare cases a recent student loan can be dealt with too, for example where the person no longer works in the field the loan paid for. Whether that applies depends on your circumstances, so it is worth asking.
Does OSAP still charge interest?
Only on the Ontario part of the loan. The federal government stopped charging interest on Canada Student Loans on April 1, 2023. The Ontario portion of OSAP still charges interest, including during the 6-month grace period after you leave school.
Your NSLSC account shows the two parts of your loan separately. Check which part is growing before you decide what to pay first.
What happens if I stop paying my student loans?
After several missed payments, your loan goes into default. Default can lead to:
- Collection calls and letters
- Your tax refund and some government credits being held to pay the loan
- Damage to your credit report
- Losing access to RAP until the loan is brought back into good standing
If you are already in default, getting legal advice early helps. Your options are usually wider before collection action is in full swing.
Why speak to a debt lawyer about student loans?
We are a law firm licensed by the Law Society of Ontario, not a Licensed Insolvency Trustee. Our legal duty is to you, not to your creditors. We work out exactly how the 7-year rule applies to your dates, which of your debts can be reduced, and which path makes sense legally.
Student Loan Debt FAQs
Is there student loan forgiveness in Ontario?
Only in limited cases. Student loans can be forgiven for a severe and permanent disability, on death, and for some professionals working in rural or remote communities. There is no general forgiveness program for people who simply cannot afford their payments.
How do I apply for student loan forgiveness in Canada?
You apply through the National Student Loans Service Centre. Disability forgiveness needs medical proof. Rural and remote forgiveness needs proof of your profession and work location for each year you claim.
Does NSLSC forgive loans?
The NSLSC manages your loan and processes forgiveness applications, but it only approves forgiveness where you meet one of the government programs. For everyone else, it offers the Repayment Assistance Plan to lower payments.
Do student loans get wiped after 25 years in Canada?
No. Canadian government student loans do not expire after a set number of years. They stay until they are paid, forgiven under a program, or released in a consumer proposal or bankruptcy after the 7-year waiting period.
Can I include OSAP in a consumer proposal?
Yes. If you left school at least 7 years before filing, OSAP is treated like other unsecured debt and the unpaid part is released when you complete the proposal. If it has been less than 7 years, OSAP survives the proposal.
What is the 7-year rule for student loans?
Under section 178(1)(g) of the Bankruptcy and Insolvency Act, student loans are not released in a bankruptcy or proposal filed within 7 years of the date you stopped being a full-time or part-time student.
How much is the monthly payment on a $70,000 student loan?
It depends on the interest rate and the term, and on the Repayment Assistance Plan if you qualify. Under RAP, your payment is based on income, so it can be $0 even on a large balance. The NSLSC repayment estimator shows your exact standard payment.
Can a student loan garnish my wages in Ontario?
Defaulted government student loans are usually collected by holding your tax refund and benefit payments. Wage garnishment is possible after legal action. A filed consumer proposal stops most collection action while it is in place.
Can I keep my student loans and still do a consumer proposal?
Yes. If your student loans cannot be released yet, a consumer proposal can still reduce your other unsecured debts, and you keep paying the student loan as normal.
Find Out Where Your Student Loans Stand
Tell us when you left school and what you owe. We will explain which options are open to you in a free, confidential consultation. You’re not alone, and you’re not stuck.
