Question Period Note: PUBLIC ACCOUNTS OF CANADA 2025 FOR EMPLOYMENT AND SOCIAL DEVELOPMENT CANADA

Could you explain the nil write-off in Canada Student Loans?

Access to post-secondary education is key to building a strong middle
class. In 2024-2025, the Government of Canada provided $5.5 billion in
Canada Student Loans and $2.6 billion in Canada Student Grants to help
students with the cost of their education.
 Due to the prorogation of Parliament, approval for write-offs for 2024-2025
was not obtained and will be reflected in next year’s public accounts. The
estimated write-off of $197.2 million in 2024-2025 is for student debts for
which all reasonable collection efforts have been exhausted. The
percentage of write-offs represents approximately 1 percent of the total
direct loan portfolio.
 The Government of Canada has continued to take steps to support
borrowers and to make post-secondary education more affordable by:
 Permanently eliminating interest on Canada Student Loans (CSL)
and Canada Apprentice Loans (CAL);
 Increasing non-repayable Canada Student Grants (CSG) by 40
percent over pre-pandemic amounts for the 2025-26 school year and
permitting borrowers the flexibility to use the current year’s income
instead of the previous year to determine eligibility for CSGs;
 Making improvements to the Repayment Assistance Plan (RAP),
including increasing the annual income thresholds to ensure that no
borrower is required to repay their student loan until they are earning
at least $45,456 per year for the 2025-2026 school year; reducing the
cap on monthly Canada Student Loan and Canada Apprentice Loan
payments from 20 percent of household income to 10 percent; and
indexing the income thresholds to inflation;
 Expanding eligibility for disability supports to students whose
disabilities are persistent or prolonged, but not necessarily
permanent.
 Together, these initiatives are expected to further reduce the financial
burden on student borrowers and are expected to continue to decrease
future loan write-offs.

Removing these direct student loan debts from Program accounts reduces the portfolio
size, providing room within the portfolio’s regulatory limit, allowing for more student loans to
be available to Canadians.
 Measures implemented by the Government of Canada have led to a steady decline in the
projected future net default rate over the last ten years, as provided by the Office of the
Chief Actuary. Specifically, the future net default rate declined from 10.2 percent in July
2014, to 6.7% as at July 2024.
 Similarly, the three-year default rate, which looks at recent performance, has declined from
19 percent for the 2004-2005 cohort, to 8 percent for the 2021-2022 cohort.
 Most loans that are written off have been deemed unrecoverable due to the expiry of the
legislated statute of limitations under the Canada Student Financial Assistance Act; once
six years elapses without payment or acknowledgement of the debt, the Government can
no longer undertake legal activity to recover Canada Student Loan debt. Other reasons for
write-off include bankruptcy, exceptional financial hardship, and compromise settlements.

Direct Canada Student Loans write-offs are approved by the Treasury
Board under section 25(2) of the Financial Administration Act (FAA). There
are no write-offs in the Public Accounts of Canada 2025 ($212.5 million in
2023-2024).
 The Department could not proceed with write-offs during 2024-2025 due to
the prorogation of Parliament.
 The 2024-2025 write-offs were approved on June 26, 2025, via
Appropriation Act No. 1, 2025-26, for an amount of $197.2 million The 2024-
2025 write-offs will be included in the Public Accounts of Canada 2026
along with the write-offs identified in 2025-2026.