Elimination of interest on Canada Student Loans

This is an independent cost estimate of a budgetary measure contained in the federal government’s Fall Economic Statement 2020 (FES 2020).

Removing interest charges on the repayment of the federal portion of Canada Student Loans (CSL) and on Canada Apprentice Loans (CAL) for the fiscal year 2021-22.

PBO’s Student Financial Assistance Model was used to calculate and project net expense for CSL and CAL under the current policy as well as the impact of this temporary measure. Historical loan values attributed to students in each period of a loan lifecycle determined the change in the value of outstanding federal student loans.

The impact to the non-refundable Student Loan Interest Credit was estimated accordingly.

The estimate has moderate uncertainty. The universe of Canada Student Loans Program administration data is available to determine historical costs and the model is a top-down approach. However, loan repayment behaviour exhibits a certain degree of randomness. The value of outstanding CSL and CAL is influenced by the labour market and the broader economy. No behavioural response is considered in this cost estimate.

• Estimates are presented on an accruals basis as would appear in the budget and public accounts.
• Positive numbers subtract from the budgetary balance, negative numbers contribute to the budget balance.