Your Student Loan Is Actually Two Loans

One Balance, Two Loans Underneath

When you applied for student aid, you filled out one application with your province. Behind the scenes, that application funded two separate loans: a federal portion under the Canada Student Financial Assistance Program, and a provincial portion under your province's own program. In the nine provinces and one territory that are "integrated" with the federal program, both portions are serviced together by the National Student Loans Service Centre (NSLSC), which is why your account shows one combined balance and collects one combined payment.

The two portions have very different price tags. The Government of Canada permanently eliminated interest on the federal portion effective April 1, 2023. That 0% rate applies while you study, during the grace period, and through your entire repayment. Only interest that had already accrued before April 1, 2023 is still owed. The provincial portion is a different story: some provinces also charge 0%, while Ontario, Alberta, Saskatchewan, and Quebec still charge interest tied to the prime rate.

How big is each slice? It depends on your province's funding formula and your assessed need, but the federal side is capped: the Canada Student Loan limit for the 2026-27 loan year is $300 per week of study, a temporary extension of the higher limit, with no decision yet published on whether it continues past that. Whatever your provincial program added on top of the federal weekly amount became your provincial portion.

So the single number on your NSLSC dashboard is really an average of a free loan and, depending on your province, a not-free loan. Knowing the split is the single most useful fact about your student debt, and you can see it by opening the loan details in your NSLSC account, where the Canada Student Loan and the provincial loan are listed as separate line items.

What Every Province and Territory Charges in 2026

Here is the full picture, jurisdiction by jurisdiction. The provincial rates below assume a prime rate of 4.45%, the level in effect as of August 2026. Each program name links to the official student aid office.

Two notes on that table. First, the floating rates move with prime: the Bank of Canada's policy rate sits at 2.25% as of August 2026, and its next rate decision is scheduled for September 2, 2026, so Ontario, Alberta, Saskatchewan, and Quebec borrowers should expect their provincial rate to shift whenever prime does. Second, Saskatchewan is the only province where you choose your structure: floating at prime, or fixed at prime + 2.5% locked in when you consolidate.

The Practical Consequence: Extra Payments Belong on the Provincial Portion

Once you see the two-loan structure, the strategy writes itself. The federal portion is a free loan: at 0% interest, a dollar owed today costs exactly a dollar whenever you repay it. The provincial portion, if you are in Ontario, Alberta, Saskatchewan, or Quebec, is a real interest-bearing debt. Every extra dollar of prepayment should therefore land on the provincial portion, and only once it is gone should extra dollars go to the federal side (or, better, to savings, since rushing to repay a 0% loan has no financial payoff).

This does not happen automatically. When you make a lump-sum prepayment through your NSLSC account, ask explicitly for it to be applied to the provincial portion of your loan. The servicer can direct payments to one portion or the other, but the default handling of your regular payment is split across both. A two-minute message or phone call is the difference between paying down a 5.45% debt and paying down a 0% one.

Take an Ontario example. At today's 5.45% on the OSAP portion, every $10,000 sitting on the provincial side accrues roughly $545 of interest per year, while $10,000 on the federal side accrues exactly nothing. If you have $2,000 available for a prepayment, directing it at the provincial portion saves you about $109 of interest in the first year alone, and more each year after as the standard NSLSC amortization runs 114 months (9.5 years, extendable to a maximum of 174 months). Rather than guessing at the amortization math, plug your actual federal/provincial split into our Student Loan Repayment Calculator: it models the two portions separately and shows what a targeted prepayment does to your payoff date and total interest.

The same logic applies if you are weighing a bank's student line of credit against government loans. A line of credit typically prices around prime + 1%, which beats nothing on the federal side and only sometimes beats the provincial side. Our Student Loan vs Line of Credit Calculator runs that comparison with your numbers.

Quebec: A Different System Entirely

Everything above describes the integrated federal-provincial system. Quebec sits entirely outside it. The province opted out of the federal program (it receives compensating payments instead), which means Quebec residents get no federal Canada Student Loan at all. Instead, students borrow a single loan through Aide financière aux études (Student Financial Assistance), under its Loans and Bursaries Program, at prime + 0.5%: 4.95% as of August 2026. There is no 0% slice hiding inside a Quebec student loan; the entire balance bears interest.

The grace period also works differently. Rather than a six-month non-repayment period, Quebec applies a "période d'exemption partielle": a partial exemption during which you do not yet make payments but interest accrues on the full balance. And instead of the federal Repayment Assistance Plan, Quebec borrowers in financial difficulty apply to the Deferred payment plan (Quebec), which can suspend payments for up to 60 months over the life of the loan.

The Six-Month Grace Period, and Who Pays Interest During It

Outside Quebec, when you finish school you enter a six-month non-repayment period, and your first payment is due the first day of the seventh month. During those six months, the federal portion accrues no interest, ever. The provincial portion depends on your province: the 0% provinces charge nothing during grace either, but Ontario and Saskatchewan provincial portions do accrue interest during the grace period, quietly adding to your balance before your first payment is even due. If you are graduating this year, our companion post on when student loan repayment actually starts walks through the timeline month by month.

If Payments Are a Struggle, and at Tax Time

Two more pieces of the puzzle deserve a mention. If your income is low relative to your payment, the federal Repayment Assistance Plan can reduce your payment to as little as zero. Under RAP, no borrower pays more than 10% of gross monthly family income, you reapply every 6 months, and any balance still outstanding after 15 years of repayment (10 years for borrowers with a disability under RAP-D) is forgiven. Note that RAP covers the federal portion of your loan, thresholds may differ for the provincial part, and PEI borrowers apply separately with the province. We break down the income thresholds and how the affordability cap works in our guide to the Repayment Assistance Plan in Canada.

And because the federal portion charges no interest, the student loan interest tax credit now mostly matters for provincial-portion interest in Ontario, Alberta, and Saskatchewan, and for Quebec AFE interest. That credit, plus the tuition credits worth far more to most graduates, is covered in our post on student tuition tax credits in Canada.

FAQ

How do I find out my federal versus provincial split?

Log into your National Student Loans Service Centre (NSLSC) account and look at your loan details, where the Canada Student Loan and the provincial loan are listed separately. If the breakdown is not obvious, the servicer can tell you the exact split by secure message or phone.

Is the federal portion really 0% forever?

Interest on the federal portion was permanently eliminated as of April 1, 2023, covering the in-study period, the grace period, and repayment. Interest that accrued before that date is still owed, but no new federal interest has been charged since.

My province charges 0% on its portion too. Should I prepay at all?

If both portions are at 0% (British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, Yukon), prepaying saves you no interest. Many borrowers in these provinces reasonably choose to keep the standard schedule and put spare cash toward savings or higher-interest debt instead.

Can I prepay a government student loan without penalty?

Yes. Government student loans can be prepaid at any time, in any amount, with no prepayment penalty; extra payments reduce your principal directly. The catch is direction, not permission: tell the servicer which portion of the loan the extra payment should reduce, because that choice decides whether the prepayment saves you interest.

Do rates change when the Bank of Canada moves?

The floating provincial rates (Ontario, Alberta, Saskatchewan floating, Quebec) are set off the prime rate, which follows the Bank of Canada policy rate, currently 2.25%. The next scheduled rate decision is September 2, 2026. The federal portion stays at 0% regardless.

What about the Northwest Territories and Nunavut?

NWT loans are conditional: 0% for the first six months, 0% for as long as you remain an NWT resident, and otherwise the prime business rate minus 1%. Nunavut restructured FANS for the 2025-2026 academic year: the old loan components were cancelled, Nunavut Inuit students now receive their assistance as grants rather than loans, and non-Inuit students receive a remissible loan (one that can be forgiven under program conditions). FANS publishes no interest rate for that loan, so confirm your terms with the program directly before planning around them.

See Your Own Two-Loan Math

Enter your balance, your province, and your split, and see exactly what a targeted prepayment on the provincial portion does to your payoff date.