Back to School: Canada Student Loan Forgiveness

Evelyn Jacks

Did you know that family doctors, family medical residents in an accredited medical school and nurses or nurse practitioners, including registered psychiatric nurses, registered practical nurses, licensed practical nurses, or nurse practitioners can receive federal student loan forgiveness? In addition, the province of Saskatchewan offers loan forgiveness to nurses and nurse practitioners. This important financial provision comes with strings attached, however: the professionals must work in an under-served rural or remote community to qualify. Plus, there is a short window of time to make application. That brings a host of planning opportunities with tax and financial professionals. Here are the details:

How much can be forgiven? Doctors or residents can receive up to $40,000 in Canada Student Loan forgiveness; $8,000 per year, over a maximum of 5 years; while nurses or nurse practitioners can receive $20,000 in Canada Student Loan forgiveness. $4,000 a year again over a maximum of 5 years.

The federal loan forgiveness applies to outstanding loan principal balances after the end of 12 months of service in under-served rural or remote communities. Those with a Canada Student Loan balance at the end of each year of service in an eligible community, will qualify for loan forgiveness for 5 years. The 5 years does not have to be consecutive.

Are there minimum working commitments? Yes. The professional must provide at 400 hours of in-person service over a 12-month period. It is also possible to work for multiple employers during the 12-month period.  Note however that residents are exempt from being employed, but they still have to provide at least 400 hours of service. 

How is the forgiveness calculated?  A full 12-month loan forgiveness period must have been completed before applying and a subsequent loan forgiveness period may only begin after an approved period has ended. The first loan forgiveness period cannot have started before July 1st, 2011.

What’s the Application Deadline?  Once the loan forgiveness period has been completed, the application for the benefit must be made within 90 days. The loan balance will then be reduced as of the day after the end of  the loan forgiveness period.

In Saskatchewan, the forgiven amount is calculated annually and paid as a reduction to the provincial student loan amount: one-fifth (20%) of the outstanding Saskatchewan Student Loan debt, up to $4,000 annually, for up to five years, to a maximum of $20,000.

What is a remote or underserved community? This is determined by Statistics Canada. It is a community located outside census metropolitan areas; census geographic units with an urban core population of 50,000 or more; and provincial capitals.  The government has provided a postal code lookup tool to determine the status of a community for these purposes.

How to apply.  The federal government has a form to complete:  HRSDC SDE 0094 (2021-11-003) E.   Ask your DMA -Tax Services Specialist for assistance.