4.4.6 The time and cost to repay student loans

From: Financial Consumer Agency of Canada

The answers depend on how large a loan you have borrowed and how quickly you repay it.

Here is an example showing two different payment plans. In both cases, assume that you graduate with a total student debt of $25,000 and that you start repaying your loan right away.

In Option 1, you choose a fixed interest rate (8.0 percent) and repay the loan within five years.
In Option 2, you choose a variable interest rate (averaging 5.5 percent) and repay the loan within 10 years.

$25,000 student loan	Option 1 Fixed rate of 8.0% for 5 years	Option 2 Variable rate averaging 5.5% for 10 years
Interest rate	8.0%	5.5%
Amount of each monthly payment	$506.91	$271.32
Total interest payable over the life of your loan	$5,414.59	$7,557.88
Total cost of your loan	$30,414.59	$32,557.88

If you find that you have trouble repaying your student loan, contact your loan officer as early as possible. Student loans in Canada are not automatically discharged in a bankruptcy or consumer proposal unless they are over seven years old.

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Date modified:: 2023-02-20