Full application requirements for student loan forgiveness in Canada

The cost of financing education is expensive, especially in developed countries. According to statistics, an average Canadian student owes $26,075 in debt. Yet the number of debtors on study loans is still on a yearly increase.

If you qualify to receive a federal or provincial student loan forgiveness in Canada it will pay either part or all of your debts.

Alternatively, there are many options to help relieve you of your study loans and save yourself the burdens of paying huge sums monthly on loan repayment.

In this article, we have explained various loan forgiveness programs and the complete application requirements for your student loan forgiveness in Canada.

The Student Loan Forgiveness in Canada is for You

Nearly half of those who receive a study loan from the federal or provincial government or even the private sector encounter the challenges of paying back their debts. Many of them face unprecedented limitations such as loss of jobs, crucial health challenges, or not even finding jobs after school. 

Whatever your excuse, student loan forgiveness and repayment assistance programs were introduced to help you pay all or part of your debt.   

Although the repayment assistance program (RAP) doesn’t pay off your debt but can assist you in making steady payments you can easily do without heavy burdens.

Types of Student Loan Forgiveness in Canada

Canada student loan forgiveness applies only to loans issued by the Canadian government, Private loans are not included in the debt forgiveness programs available in Canada. Therefore only individuals with government loans like the Canada student financial assistance (CSFA) program are eligible to enroll for RAP. Nevertheless, there are other options for private student loan holders which we will discuss.

Student Loan Forgiveness in Canada for Doctors and Nurses

This loan forgiveness program is peculiar to medical professionals like Doctors and Nurses. To be eligible, they must have served in remote or under-served regions for one year. Individuals must have a record of 400 hours of service and their federal debts in good standing.

Eligible medical professionals include:

• Family Doctor    
• Registered Nurse   
• Registered Psychiatric Nurse    
• Registered Practical Nurse    
• Licensed Practical Nurse   
• Nurse Practitioner
• Family Medical Resident (training with an accredited Canadian medical school)

Note: only the federal portion of the outstanding loan balance is considered for student loan forgiveness in Canada.  

How Much is Provided for Forgiveness for Doctors and Nurses?

A total amount of $40,00 is provided for doctors’ student loan forgiveness for 5 years ($8,000 per year) and $20,000 for Nurses for 5 years ($4,000 per year).

The amount covers only the principal loan amount for 12 months. You have to pay loan interest monthly. 

Repayment Assistance Program (RAP)

The student loan repayment assistance program is geared towards a reduced monthly payment to enable debtors to pay a considerably low amount mainly because of low earnings. 

The standard student loan repayment term is 114 months (9 years and 6 months). RAP offers you an extension of 5 years stretching your loan terms to 14 years and 6 months with about a 44% reduction in your monthly payments. The loan term you will receive is grossly affected by your remaining loan balance, employment status, and current monthly earning. 

In this repayment option, you can also opt for a temporary reduction on monthly payments suppose you have a sudden financial constraint or loss of job. Missing a monthly payment on RAP is not a good record instead you will have a down score which will adversely affect your credit report.

How to Apply for RAP

Before you begin your RAp application get your financial proof ready such as your pay stubs and current bank statement. Take the next step for your student loan forgiveness in Canada once the documents are available. 

• First, reach out to a representative from the National Student Loan Service Centre (NSLSC) and declare your interest to enroll in RAP.
• Schedule an appointment with an interviewer
• During your interview with a representative, state your limitation in meeting up with payments and why you want a reduction in your monthly payments.
• You may be required to provide evidence to support your claim (pay stubs and current bank statement).
• Once you get approval for RAP, start to make your payment at a reduced cost.

Note: If you are seeking student loan forgiveness in Canada and your federal debt is in default status, you cannot get approval for RAP.

You have a chance to enter a loan rehabilitation program with NSLSC that will help reactivate your account to current. It will require strict adherence to making a timely payment over a given time to restore your status from default. 

Student Loan Forgiveness in Canada Province

Below are four provincial student loan forgiveness programs.

British Columbia (B.C.) Loan Forgiveness Program

The B.C. student loan forgiveness program is meant for some specified majors who are willing to work in the B.C. publicly-funded facility or with children where there is a shortage of workers in any of the province’s under-served areas.

To be eligible, you should be duly certified in any of these majors:     

• Nursing    
• Physicians 
• Teacher-educator
• Polysomnographer
• Diagnostic medical sonographer 
• Medical laboratory technologist  
• Speech-language pathologist  
• Respiratory Therapist    
• Occupational therapist   
• Physiotherapist  
• Midwifery    
• Audiologist

The loan forgiveness program provides 20% of your loan balance yearly for five years. once you complete your service terms in any of the specified areas you are qualified to receive your student loan forgiveness in Canada B.C., and both the principal and loan interest are paid for. 

Quebec Loan Remission Program

The Quebec loan remission program is designed to facilitate students who took loans from the province’s Loan and Bursaries program to finish their program faster. When students meet up with the specified months of study in completing a program type, they will be eligible to receive 15% on loan forgiveness yearly when they apply three years after graduating. 

Below are the program types and finishing times to qualify for student loan forgiveness in Canada Quebec

PEI Debt Reduction Program

The PEI program provides grants for student loan forgiveness in Canada’s PEI province to help reduce debt for residents who borrow up to $6,000 per year to fund their studies. 

PEI grants up to $2,000 in loan reduction for students who were enrolled in school before August 1st, 2018, and up to $3,500 per year for students who enrolled after August 1st, 2018.

Students in the province who graduated before August 1st, 2018, have a chance to apply within the first one of graduation. While those who graduated after can apply within the first three years of their graduation. 

You will be required to submit the following documents during the application:

• Debt Reduction Program application  
• Loan statements from the National Student Loan Service Centre (NSLSC) and Edulinx-PEI
• A copy of your degree or diploma

Also, you will be required to submit any two documents stated below that show proof of residence in Prince Edward Inland for at least six months:

• Utility bill 
• Property tax assessment 
• Letter from your employer
• Credit card statement
• Bank statement 

Nova Scotia Student Loan Forgiveness Program   

Student loan forgiveness in Canada’s Nova Scotia province can help you repay your debt for up to five years. The program provides a total of $20,400 for loan forgiveness. It is available for only undergraduate degree students who receive their loan on or before August 1st, 2015.

Eligibility Requirement for Student Loan Forgiveness in Nova Scotia:

• Only first degree qualify for the program
• You have an eligible study loan specific to the Nova Scotia province  
• Complete your first degree within 8 years of starting. 

Bankruptcy Forgiveness

Before you declare bankruptcy check if you qualify for RAP. Bankruptcy forgiveness is issued when it is clear you cannot meet up with payment because of a crucial financial constraint that you cannot overcome. 

To qualify for this program, you must have graduated seven years before applying for student loan bankruptcy forgiveness.   

However, a minimum of five years can still be considered with proof of clear financial hardship.

Sum Up

Getting a student loan forgiveness in Canada is possible if you search thoroughly to know which program you qualify for. You may be eligible for either the federal or provincial portion of a loan forgiveness program. Whichever you are lucky to get will help you pay all or part of your student loans and save you the burden of monthly payments. 

FAQs 

Will Student Loan Forgiveness in Canada hurt my Credit Score?

Not at all, loan forgiveness doesn’t hurt your credit score except if you have a loan default. For you to have a loan default it means you must have skipped payment for 270 days and that will make your loan provider submit your record on default status. 

What Happens to my Student Loan when I Die?

suppose death comes, your federal student loan will not be transferred to your family or estate. For a private student loan, it will be transferred to your estate and not your family. 

You may also want to read: How to Get Your Student Loans Forgiven – 5 credible ways to Forgiveness