Interest Eliminated on Federal Student and Apprentice Loans

Summary#

These final regulations update the Canada Student Loans Regulations, the Canada Student Financial Assistance Regulations and the Apprentice Loans Regulations so the rules match the law that permanently stopped interest from accruing on federal student and apprentice loans. The change reflects the law that took effect on April 1, 2023, and the regulations were registered (and came into force) on December 8, 2023.

What it does#

• Removes or rewrites parts of the regulations that still talked about interest accruing on federal student loans and apprentice loans.
• Repeals the formulas and publishing requirements that set interest rates for guaranteed student loans.
• Makes technical changes to when someone ceases to be a “full‑time student” for loan purposes and when they can get a new loan after certain events (for example, illness, leave, or other interruptions).
• Sets a clear process in the Apprentice Loans Regulations for when loan repayment must start that does not depend on interest accrual.
• Confirms borrowers still owe any interest that built up before April 1, 2023 (so-called arrears interest).
• Updates the standard loan agreements (the Master Student Financial Assistance Agreement (MSFAA) and the Canada Apprentice Loan Application and Agreement (CALAA)) to match the regulatory changes.
• Notes that private lenders who lose interest revenue will be compensated under agreements between the Government and those lenders.

Who's affected#

• People with federal Canada Student Loans (CSLs) and Canada Apprentice Loans (CALs), including current borrowers and recent graduates.
• Private lenders that held guaranteed or risk‑shared student loans and received interest before the change.
• Student financial aid administrators and the offices that run the federal program (the Canada Student Financial Assistance Program at Employment and Social Development Canada).
• Provincial and territorial governments that deliver or coordinate student financial aid — they may still have separate rules for provincial loans.

Why it matters#

• For borrowers: no new interest will accrue on federal CSLs and CALs after April 1, 2023, which can lower future monthly payments and make repayment more affordable. However, borrowers still owe any interest that accumulated before that date.
• For lenders: the government will compensate private lenders for lost interest revenue, rather than lenders collecting interest from borrowers.
• For anyone applying for or managing federal student or apprentice loans: the regulations remove contradictory or confusing references to interest, so the rules and loan agreements should be clearer.
• For provincial borrowers: provincial/territorial loan programs are separate; provinces may still charge interest on their own loans, so affected people should check both federal and provincial rules.
• Fiscal note: the cost of permanently eliminating interest was estimated at $2.7 billion over five years and $556.3 million per year ongoing (these costs come from the earlier legislative decision).