What Permanent Elimination of Federal Student Loan Interest Actually Changed About Your Repayment Math

What changed and when

Budget 2022 paused interest on the federal portion of Canada Student Loans and Canada Apprentice Loans for one year, covering the 2022-23 benefit year. The 2022 Fall Economic Statement, tabled in November 2022, made that pause permanent starting April 1, 2023. From that date, the government stopped charging interest on the federal portion of every student loan, for every borrower, with no end date attached, according to Employment and Social Development Canada .

This applies only to the federal share of your loan. If you study in a province where your student aid comes as one combined federal-provincial loan, your provincial portion follows its own province's interest rule, which can differ from the federal one.

How your repayment math used to work

Before April 2023, a standard federal student loan carried interest, and every payment split between interest owed and principal. On a loan that spent months or years accruing interest before repayment started, a chunk of your early payments went toward interest already built up, not toward shrinking what you actually borrowed. Paying extra toward the balance early cut future interest charges, which is why paying off a student loan ahead of schedule made mathematical sense.

How it works now

With the federal portion permanently at 0% interest, every payment you send goes straight to principal. Your outstanding federal balance drops by exactly what you pay, month over month, with nothing added on top while you carry it. That removes the interest-cost argument for prepaying the federal loan. You still owe the same total amount either way. Paying extra shortens how many months it takes to reach zero and frees up your monthly cash flow sooner, but it does not save you interest charges on the federal portion, because there are none to save.

The math looks different if your loan includes a provincial portion that still charges interest. On that portion, the old logic still applies: extra payments reduce the balance interest is calculated against, so prepayment still saves money there.

A simple before and after

Take a federal balance of $20,000 and a monthly payment of $200, as an illustration. Before April 2023, with interest applied monthly, part of that $200 covered interest already accrued on the balance, and the rest chipped away at the $20,000 borrowed. The exact split changed every month as the balance shrank. After April 2023, the same $200 payment reduces the $20,000 directly, month after month, with nothing subtracted for interest first. Over a full repayment term, this removes an entire category of cost that used to sit on top of every federal student loan.

What this means for your decisions

• Comparing prepayment against investing: since the federal portion carries no interest cost, redirecting spare cash into a high-interest savings account, an RRSP or a TFSA can outperform prepaying that portion, because you are not competing against a loan interest rate on that share of the debt.

• Minimum payments: your required payment is set to clear the federal principal over your repayment term, commonly up to 9.5 years under the standard plan, with nothing added for interest.

• Repayment Assistance Plan : if your income qualifies, RAP now works purely against principal on the federal side, since there is no interest component left to cover.

• Provincial portion: check your own province's interest policy separately, since it is not automatically included in the federal change.

No refund for interest already paid

The change only stops future interest from accruing. It does not refund interest you paid on your federal loan before April 2023. If you paid your loan off in full before that date, or paid interest charges in prior years, those payments stand. The permanent change affects interest going forward from April 1, 2023 onward, not backward.

Does this cover loans taken out years ago

Yes. The permanent change applies to your entire outstanding federal balance, not only to loans disbursed after April 1, 2023. If you have carried a federal student loan since before that date, the interest that would have applied to your remaining balance stopped accruing on April 1, 2023 as well, regardless of when you originally borrowed.

Apprenticeship loans are included too

The same permanent change covers Canada Apprentice Loans, not only Canada Student Loans. If you are financing a Red Seal trade apprenticeship through the federal program, your apprentice loan follows the identical rule: no interest on the federal amount since April 1, 2023.

It does not change your loan term automatically

Removing interest does not shorten your scheduled repayment term by itself. Your monthly payment amount and term were set based on your balance and chosen repayment plan. Without interest added on top, more of each payment reduces principal than before, which means a fixed monthly payment now clears the balance faster than it would have under the old interest structure, even though the scheduled term on paper has not changed. Contact NSLSC if you want to recalculate your term based on the new, interest-free math.

Check your own statement

Your NSLSC account breaks your balance into federal and provincial lines. Confirm the federal line shows no interest accruing month to month. If a statement shows interest applied to your federal balance after April 1, 2023, contact the National Student Loans Service Centre to have it corrected.