Interest paid on a government student loan lowers income tax. The credit is non-refundable: it reduces tax to nil at most and is never paid out as cash.
The rules
- Which loans. A loan under the Canada Student Loans Act, the Canada Student Financial Assistance Act, the Apprentice Loans Act or a provincial student-aid law. A bank loan, a student line of credit, or a government loan combined with other debt does not qualify.[1]
- Who claims it. Only the borrower, even when a parent pays the interest.[1]
- Federal credit. The lowest federal rate, 14% for 2026, times the interest paid. There is no maximum. It is applied after the tuition credits.[1]
- Provincial credit. Every province and territory outside Quebec allows the same interest at its own credit rate (for Ontario, 5.05%).[2]
- Quebec. The credit is 20% of the interest, a higher rate than Quebec's other credits.[3]
- Carrying it forward. Interest that cannot be used in the year it is paid may be claimed in any of the next five years federally, and later still in Quebec.[1]
Canada Student Loans have charged no interest since April 2023, so the credit applies to provincial student loans that still charge interest and to interest paid before then.
What the plan does
A debt entered as a student loan is a government student loan of the person named as its borrower. Each year the plan claims that year's interest and any interest carried from the 5 years before, oldest first, up to what the federal tax can absorb. The rest is carried forward, and interest not claimed within 5 years is lost.[4] The provincial credit is on the same amount, so Quebec's longer carry-forward is not used.[5] See car loans, student loans, lines of credit and credit cards for how the loan itself is paid off, and the tuition credit for the other student credit.