Student Loan Rehabilitation and Repayment Assistance Canada (2026)

Canada has two main pathways for struggling student loan borrowers: the Repayment Assistance Plan for those still in repayment, and rehabilitation for those who have already defaulted. Both restructure your payments. Neither discharges your debt. Understanding what each does — and does not — accomplish helps you choose the right path.

Source: RAP program details from Canada Student Financial Assistance Act and canada.ca/student-aid. Rehabilitation procedures from NSLSC. Insolvency context from OSB Insolvency Statistics.

The Two Programs: RAP vs Rehabilitation

Repayment Assistance Plan (RAP): The Early Intervention Tool

RAP is the program you should apply for the moment you cannot afford your regular student loan payment. There is no waiting period, no penalty for applying, and approval is based on your current income — not your credit score.

RAP Stage 1 (Years 1–10 of repayment)

Your payment is capped at 20% of your monthly family income. The government covers any interest not covered by your reduced payment.

2026 RAP income thresholds (approximate — confirm at canada.ca/student-aid):

Thresholds are updated annually and vary by family income and loan balance. Use the RAP estimator on canada.ca for your exact 2026 payment amount.

If your income is below the threshold, your payment is $0 and the government covers all interest. You make no payments but your loan remains in good standing and collection is not triggered.

RAP Stage 2 (After 10 years on RAP, or 15 years total repayment)

The government begins contributing toward your principal, not just interest. After 15 years of repayment (combined Stage 1 and 2), any remaining balance is paid by the government.

The catch: RAP Stage 2 assumes you stay in the program continuously and your income never rises above the threshold long enough to exit RAP. High-income years can disqualify you from RAP and push remaining balance back to normal repayment.

How to Apply for RAP

1. Log into your account at csnpe-nslsc.canada.ca or call 1-888-815-4514
2. Select “Apply for Repayment Assistance” in your account dashboard
3. Complete the income and family information form
4. RAP approval typically takes 2–4 weeks
5. Your new payment takes effect the following month
6. Reapply every 6 months to maintain your reduced payment

Post-Default Rehabilitation: Restoring Your Standing

If you have already missed enough payments to enter default status (270 days for federal loans), RAP is no longer available. Rehabilitation is the alternative.

Rehabilitation Requirements

1. Contact NSLSC directly (not CRA) — call 1-888-815-4514 and request rehabilitation
2. Agree on a payment schedule — typically calculated at 10–15% of your monthly income
3. Make 9 consecutive voluntary payments — no gaps, no NSF returns, no late payments
4. Confirm restoration — NSLSC notifies CRA to close the collection file

What Happens During the 9 Months

• CRA may continue garnishment during rehabilitation unless you negotiate a suspension
• Tax refunds may still be intercepted
• The loan balance continues to grow (interest was capitalized at default)
• Your credit report still shows R9

What Rehabilitation Accomplishes

After successful rehabilitation:

• Your loan returns to NSLSC from CRA
• You regain access to RAP going forward
• Future government student loans become possible (important for professional retraining)
• CRA’s administrative enforcement file is closed

What Rehabilitation Does Not Accomplish

• Does not reduce the balance
• Does not remove the R9 credit history (6-year clock continues)
• Does not eliminate interest that accumulated during default
• Does not stop collection during the rehabilitation process

When Formal Insolvency Beats Rehabilitation

Rehabilitation makes sense when:

• Your student loan is the only significant debt
• You are under 7 years from end of studies (so insolvency would not discharge it anyway)
• You have stable income that can support the 9-month payment schedule
• You need future access to student loans for retraining

A consumer proposal or bankruptcy makes more sense when:

• You have other significant unsecured debts (credit cards, CRA tax debt, personal loans)
• CRA is already garnishing wages and you need immediate relief
• You are 7+ years post-studies (the loan becomes fully dischargeable)
• The rehabilitation payment schedule equals or exceeds what a proposal would cost
• The interest capitalized during default has made the balance much larger than the original loan

Use the consumer proposal calculator to compare a proposal payment to what you would pay through rehabilitation plus continued interest. Many people find the proposal costs less total — and resolves everything, not just the student loan.

The free LIT consultation is the right starting point if you are unsure which path fits your situation.