Dealing with debt

Student loan debt

Dealing with student loan debt

Are you having trouble repaying your student loan debt?

Student loans are one of the biggest debt challenges Canadians face. As tuition fees and living expenses continue to rise, more and more Canadians are financing their post-secondary education.

Did you know that almost half of post-secondary students will take on student loan debt? Paying it off while navigating affordability challenges, like housing, grocery bills, transportation costs, is very difficult.

What does the student debt burden look like in Canada?


of post-secondary graduates
have student loan debt.


is the average balance
at graduation.

3 out of 4

rely solely on
government-sponsored debt.

Source: Statistics Canada

student debt

4 signs that your student debt is unsustainable

  • You owe student debt 10 years after graduating;
  • You’re falling behind or missing payments;
  • You’re relying on credit to get by;
  • You’re putting off important milestones.

What are your options for managing student loan debt?

Repayment assistance plan (RAP)

If you qualify, the RAP can help reduce your payments. Depending on your income, you may be exempt from payments that exceed your income by 20 per cent or any payment at all.  
Learn more about the Repayment Assistance Plan here.

Revision of terms

By revising the terms of your loan agreements, you can extend the amount of time it takes to pay off your student loans by up to 15 years, making your monthly payments smaller.  
Learn more about Revision of Terms here.

Filing a consumer proposal

If you have been out of school for at least seven years, you can include your student loan debt in a consumer proposal, which can reduce your total unsecured debt by up to 80 per cent.  
Learn more about consumer proposals here. 

Filing for bankruptcy

If you are unable to repay your debts, you may qualify for bankruptcy, which can eliminate all your unsecured debt, including your student loan debt, if you have been out of school for at least seven years.
Learn more about bankruptcy here.

Student loan FAQ

How do I determine my last date of study?
To verify your last date of study, contact your federal and provincial loan providers. For Canada Student Loans, you can call 1-888-815-4514.
Should I consolidate my student loan debt with a private loan?
Student loans generally have better interest rates than most debt consolidation loans, so it might not make sense to consolidate student loan debt. However, if you have other forms of high-interest debt, a debt consolidation loan is always a good option to consider. 
What happens if I fail to make student loan payments?

Failing to make your student loan payments will have a negative effect on your credit score. Both Canada Student loans and private lenders will report late payments to the credit bureaus.  

If you don’t make the required loan repayment on student lines of credit or credit cards, the bank can apply to the court to garnish your wages. Both federal and provincial governments also have the power to take your tax refunds and garnish your wages.  

If you’re having trouble keeping up with your Canada Student Loans you can apply for a revision of terms, which will allow you to lower your monthly payment and extend the length of time it will take to repay your loan up to a maximum of 15 years. You can also see if you qualify for income-based repayment adjustments through the federal Repayment Assistance Program.

What is the 7-year rule for student debt and debt forgiveness? 
For government-sponsored student loans, you must wait at least seven years after completing your studies before you can apply for a debt forgiveness program, like a consumer proposal or bankruptcy. After this waiting period, a Licensed Insolvency Trustee may renegotiate or eliminate your student loan debt. Private student loans issued by a bank, however, like student lines of credit or student credit cards, can be forgiven at any point and are treated like any other type of unsecured debt.
What is the hardship provision?
In certain situations, a bankruptcy can eliminate your student loans before the seven-year waiting period by applying for the financial hardship provision. If approved, your student loans can be discharged five years after the completion of your studies. Your Licensed Insolvency Trustee can help you determine your eligibility.
When do I have to start making payments on my private student loans? 
Unlike government-sponsored student loans that give you a grace period before you need to make payments, private loans issued by a bank require that you pay the interest charges every month.

How BDO can help

Student loan debt can be intimidating and stressful. Our debt professionals provide sound advice on a path forward so you don’t have to face your debt alone.

A BDO Licensed Insolvency Trustee is always available to discuss your debt relief options free of charge and without any obligation on your behalf.