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Debt Reduction in Repayment

What is Debt Reduction in Repayment?

If you have a Canada Student Loan, you may be eligible for federal Debt Reduction in Repayment Reduction (DRR), a debt management measure designed to help you manage the repayment of your Student Loan(s) if you have long-term financial difficulties. DRR lowers the principal amount of your loan and reduces your monthly loan payment to an affordable level based on your family income. 

In addition to the programs offered by the Government of Canada, provinces and territories provide their students with provincial/territorial repayment assistance, which may vary.  For more information, please visit the ‘Obtaining Repayment Assistance’ page, which is located in the ‘Repay’ section of ‘Pay’ on the CanLearn website (www.canlearn.ca). 

How does federal Debt Reduction in Repayment Work?

You can receive up to three reductions on your Canada Student Loan principal in your lifetime, for a total of up to $26, 000, depending on your financial circumstances.

Am I eligible for the federal Debt Reduction in Repayment Program?

To be eligible for federal DRR, you must meet all of the following conditions:

• Your monthly gross family income must fall within the maximum income guidelines.
  
• You must have signed a Consolidation Agreement for your Canada Student Loans upon completion of your studies. If you have not signed a Consolidation Agreement, contact the National Student Loans Service Center (NSLSC) and/or your financial institution.
  
• You must reside in Canada. For the purposes of DRR, you are considered a resident of Canada if you participate in an eligible international internship program or are a member of the Canadian Armed Forces stationed abroad.
  
• You have been out of full-time and/or part-time school for at least five years (60 months).
  
• You have used-up all Interest Relief benefits available to you (a minimum of 30 months).
  
• You have not already received three reductions
  
• You did not participate in a  bankruptcy-related event before May 11, 2004. 
  
• Your loan must not be in default (that is, not in collection with the Canada Revenue Agency or another collection agency). Note: If you filed for bankruptcy on or after May 11, 2004, you may still qualify for Debt Reduction in Repayment even if your loan is in default. 
   

Reapplying for federal DRR

• There is no limit to the number of times that you may apply for DRR (however you will only be granted DRR 3 times in your lifetime). 
  
• If you applied in the past and did not qualify, you may reapply if your financial circumstances have changed.

May I apply if I’ve missed scheduled loan payments?

You may be able to apply for DRR even if you have missed scheduled loan payments.  For more information, contact the  National Student Loans Service Centre (NSLSC) and/or your  financial institution. However, if your loan is in arrears for more than 270 days it is considered in default and you are no longer eligible for this program.

Note: If you filed for bankruptcy on or after May 11, 2004, you may still qualify for Debt Reduction in Repayment even if your loan is in default.

How do I apply for federal Debt Reduction in Repayment?

Your eligibility for DRR is assessed by either the  National Student Loans Service Centre (NSLSC) or the  financial institution that holds your loan. Consult the chart below to find out who to contact about your DRR application.

Application Process

Requesting additional reductions

If you have received a reduction, and wish to request a second or third, you must:

• wait 12 months before applying for a further reduction; and
• continue to make your minimum monthly payments