Student Debt Relief Canada: Debt Forgiveness

The government of Canada has provided programs to assist students in finishing their studies. However, this comes through a student loan. If you struggle to make payments after graduation, this article about student debt relief through debt forgiveness is for you. 

How much does it cost to study in Canada?

According to UNIVERSITYSTUDY.CA, a student needs around C$20,000 and C$30,000 annually to pay tuition. However, this range still depends on the institution and program you are enrolled in. In addition, the cost of your housing, food, and other expenses depends on your location and lifestyle. 

International students usually pay higher fees for housing and tuition than local students. Factors affecting the cost of education in Canada include:

  • The school
  • Degree type
  • Credit requirements
  • Housing
  • Scholarships
  • Residency
  • Living expenses

You can calculate your overall expenses and estimate the cost of living in Canada through Step 1-2-3, a useful cost calculator for students.

What is debt forgiveness?

Debt forgiveness occurs when a government creditor entity in one economy formally agrees – via a contractual arrangement – with a debtor entity in another to forgive (extinguish) all, or part, of the obligation of the debtor entity to the creditor, the amount forgiven is treated as a capital transfer from the creditor to the debtor.

One way student debt relief option in Canada is to file for bankruptcy. If your application is approved, you will no longer be required to pay off your debts. However, there is a condition for your student loan to be covered by bankruptcy. 

The Seven-Year Rule Student Debt Relief Canada

Unfortunately, your Canada Student Loan won’t be canceled even if you apply for bankruptcy within seven years of finishing your studies. 

According to Section 178 (1)(g) of the Bankruptcy & Insolvency Act, any debt or obligation in respect of a loan made under the Canada Student Loans Act, the Canada Student Financial Assistance Act, or any enactment of a province that provides for loans or guarantees of loans to students where the date of bankruptcy of the bankrupt occurred:

(i) before the date on which the bankrupt ceased to be a full- or part-time student, as the case may be, under the applicable Act or enactment, or

(ii) within seven years after the date on which the bankrupt ceased to be a full- or part-time student.

Student Debt Relief Canada: Hardship Provision

In some cases, the court would allow you to reduce your bankruptcy eligibility from 7 years to 5 through the Hardship Provision. You need to meet the following conditions of  subsection 178 (1.1) of the Bankruptcy & Insolvency Act to get this benefit:

(a) the bankrupt has acted in good faith in connection with the bankrupt’s liabilities under the debt; and

(b) the bankrupt has and will continue to experience financial difficulty to such an extent that the bankrupt will be unable to pay the debt.

What if I don’t qualify for bankruptcy and hardship provision?

If your student loan is relatively fresh and could not be covered by the five or 7-year rule, there are still options to get student debt relief Canada . It is best to get advice from a trusted debt relief agency that will guide you to get out of debt. 

Canada Student Loan Forgiveness for Family Doctors and Nurses

This benefit is intended to encourage family doctors, residents in family medicine, nurse practitioners, and nurses to practice in under-served rural or remote communities by forgiving a portion of Canada Student Loans.

Family doctors and family medicine residents may be eligible for forgiveness of $8,000 per year to a maximum of $40,000 over five years. Nurses and nurse practitioners may be qualified for the forgiveness of $4,000 per year to a maximum of $20,000 over five years.

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