British Columbia (BC) is seeing significant shifts in student loan repayment policies this year. Whether you’re a recent graduate from UBC, SFU, UVic, or another BC institution—or still completing your studies—understanding the new rules in 2025 is critical to managing your education debt effectively.

Both federal and provincial governments have introduced policy updates to address rising student debt, cost-of-living challenges, and economic uncertainty. From interest reinstatement to revised forgiveness programs, here are the five most important student loan repayment changes that BC borrowers need to know.

1. Interest Has Returned on Federal Student Loans

After a multi-year pause, the federal government has officially reinstated interest on student loans in 2025. While BC continues to offer interest-free provincial loans, anyone holding Canada Student Loans (federal) will now see interest charges ranging from 5% to 7.5%, depending on the rate type (fixed or floating).

For British Columbians who relied on federal support during their education, this change can significantly increase total repayment costs. Many students took advantage of the interest-free period to reduce balances—but with interest compounding again, strategic repayment planning is more important than ever.

What You Can Do:

• Consider prioritizing your federal loan portion to reduce interest buildup.
  
• Use the federal Loan Repayment Estimator to compare interest scenarios.
  
• Check your loan split: federal vs. provincial amounts matter more now.
  

2. Income-Driven Repayment Is Now the Norm

Starting in 2025, the federal government consolidated its multiple repayment programs into a new, simplified income-driven Repayment Assistance Plan (RAP). For BC borrowers, this means fewer options but a more streamlined system.

Under the new RAP:

• Borrowers pay a portion of their income (starting around 10%) above a protected threshold.
  
• Monthly payments are adjusted annually based on income and family size.
  
• Forgiveness is available after 20–25 years, but only if enrolled in RAP.
  

BC’s provincial repayment plan still includes a monthly payment cap based on income, but it is not automatically tied to the federal RAP. Managing both systems simultaneously requires more diligence for dual-loan borrowers.

3. Default Collection Activities Have Resumed

Pandemic-era protections on defaulted student loans have officially ended. The Canada Revenue Agency (CRA) has resumed collections on borrowers who haven’t made payments in over 9 months.

In BC, thousands of borrowers are now facing:

• Wage garnishment
  
• Withheld tax refunds or benefits
  
• Credit score damage
  

If you were behind on payments and assumed collections were still paused, this change could come as a shock. Even if your BC Student Loan is current, a federal loan default still subjects you to aggressive collection tactics.

Action Steps:

• Contact the National Student Loans Service Centre (NSLSC) immediately if you suspect you’re in default.
  
• Look into loan rehabilitation options or get back on RAP to stop collections.
  
• Reassess your repayment plan—federal and provincial loans require separate action.
  

4. Federal Forgiveness Programs Have Tightened

Forgiveness has become more limited under new federal guidelines. If you’re a BC borrower working toward Public Service Loan Forgiveness (PSLF) or relying on long-term forgiveness under income-driven plans, be aware of these updates:

• Only those on the new RAP plan will qualify for future forgiveness.
  
• Past progress under other plans (e.g., PAYE, REPAYE) must be consolidated into RAP by 2028.
  
• Forgiveness after 10–20 years is no longer available for new borrowers, except in rare cases (disability, death, or full-time low-income employment in public service).
  

For those working in public health, education, or nonprofits in BC—common in rural or remote areas—the eligibility changes may affect your repayment timeline and overall strategy.

5. Loan Limits and Borrowing Caps Are Now in Effect

To control borrowing and rising education costs, the federal government has imposed new loan caps. As of 2025, students in BC can borrow up to:

• $65,000 for undergraduate programs
  
• $100,000 for graduate programs
  
• Up to $200,000 for high-cost degrees (e.g., medicine, law)
  

This cap includes federal funds only. BC provincial loans remain available beyond this, but overall borrowing will be more restricted, especially for students attending private institutions or studying outside the province.

This impacts students in professional or extended programs, as they may need to rely on private loans, bursaries, or work-study programs to cover the gap.

Bonus: What Hasn’t Changed in BC

Some key elements of the BC student loan system remain unchanged—and that’s a good thing for many borrowers:

• BC provincial loans remain interest-free after graduation.
  
• Grace period: You still have a 6-month non-repayment period post-graduation (though interest may accrue federally).
  
• BC Access Grant and other bursaries are still available based on financial need.
  

The year 2025 brings a new era for student loan repayment in British Columbia. From the return of federal interest to the streamlining of repayment and forgiveness programs, BC borrowers are navigating a tighter, more complex system.

While BC’s provincial policies offer some relief—like zero interest and income-sensitive caps—federal changes still heavily impact monthly costs and long-term planning. Whether you’re graduating this year or already in repayment, take time to reassess your strategy and ensure you’re leveraging the latest tools and programs.

For British Columbians, staying informed and proactive is the key to turning education debt into manageable, sustainable repayment.