What Happens When You Default on a Canada Student Loan: Collections, Credit Score and Tax Refunds

The 270-day default trigger

A Canada Student Loan goes into default after 270 days, about nine months, of missed payments. At that point NSLSC refers the loan to the Canada Revenue Agency for collection, and the debt is no longer handled through your regular NSLSC account. This is a federal timeline that applies to the Canada Student Loan portion of your debt specifically.

Collection moves to the Canada Revenue Agency

Once CRA takes over collection of a defaulted student loan, it treats the debt the same way it treats other money owed to the federal government. CRA can apply your income tax refund against the balance, and your ability to receive new federal grants or loans stops entirely, according to the NSLSC FAQ . If your loan is an integrated federal and provincial loan, the provincial portion may follow a separate default process run by your province, so check with your provincial student aid office about how that side of the debt is handled, since the rules are not the same in every province.

Credit score impact

A defaulted student loan reported to the credit bureaus lowers your credit score and stays on your credit report for years after the default is reported. That affects far more than future loan applications: landlords, cell phone providers and some employers pull a credit check as part of a standard application, so a default shows up well beyond your student finances.

What you lose access to

Default blocks new Canada Student Loans and grants outright, and it removes access to the Repayment Assistance Plan, which is only available to borrowers in good standing on a current loan. That combination often makes the debt harder to manage over time, not easier, since the assistance programs meant to lower your payments stop applying the moment you fall behind far enough to default.

Getting ahead of default

Before you reach the 270-day mark, contact NSLSC about adjusting your payment amount or applying for the Repayment Assistance Plan , which can reduce or eliminate your payment for a six-month period if your income is low relative to your family size. A borrower dealing with a medical issue or new parental responsibilities can also apply for an interest and payment-free leave of up to 18 consecutive months across the life of the loan. Missing a payment once does not put you into default. Ignoring the account for months is what does.

If you are already past the 270-day mark, see our companion guide on getting a defaulted Canada Student Loan back into good standing for the steps to resolve the debt with CRA and regain access to federal aid.

Missing one payment is not the same as default

A single missed or late payment does not put your loan into default. NSLSC and your loan servicer treat one missed payment as a payment issue to fix, not a default event, and you can usually catch up or adjust your payment amount without lasting consequences. Default specifically means the loan has sat unpaid for 270 consecutive days, so the risk builds only after months of no contact and no payments, not after a single missed date.

The debt does not shrink while it sits with CRA

Interest keeps building on a defaulted student loan while CRA manages the collection, so the balance you owe grows the longer the debt sits unresolved. Waiting it out does not make the debt smaller or easier to deal with later, and the credit and collection consequences apply the entire time the loan remains in default, not just at the moment it first crosses the 270-day mark.

A realistic timeline

Protecting yourself before you get close

Update your contact information with NSLSC every time you move, since a missed notice about a payment problem is a common reason a fixable situation turns into an unresolved one. If your income drops, apply for the Repayment Assistance Plan before you fall behind rather than after, since it is built specifically for borrowers whose income cannot support their scheduled payment. A borrower who reaches out early nearly always has more options than one who waits until the debt has already moved to collections.

The moment you realize you are behind

Contact NSLSC directly the day you notice you have missed a payment, rather than waiting to see if a letter arrives. Explain your situation and ask what adjustment or assistance program fits your current income, since a borrower still inside the early missed-payment window has far more flexibility than one whose file has already reached the 270-day default mark. Avoiding the phone call does not slow down the timeline toward default. It only shrinks the window where a smaller fix is still available.