Canada Student Loans Regulations

30.1 (1) Subject to subsection 42.1 of the Canada Student Financial Assistance Regulations, if, on the application of a borrower, a lender has reduced, on a pro rata basis, the amount of the outstanding principal of all of the borrower's guaranteed student loans, the lender is entitled to a gratuitous payment by the Minister in respect of the reduction in an amount calculated in accordance with this section if, at the time the application for reduction was made,

• (a) the borrower was not subject to a measure taken under subsections 9(3), (4) or (5) due to the occurrence of an event referred to in paragraph 9(1)(a), (b), (h) or (i);

• (b) the borrower had ceased to be a full-time or part-time student at least 60 months before making the application;

• (b.1) in respect of a borrower who had previously been granted a reduction in the principal amount of a student loan or a guaranteed student loan under section 42.1 of the Canada Student Financial Assistance Regulations, or a risk-shared loan or a guaranteed student loan that entitled the borrower's lender to a gratuitous payment under this section or section 42 of the Canada Student Financial Assistance Regulations,

  • (i) at least 12 months had elapsed since the day on which that previous reduction had been granted,

  • (ii) the borrower had ceased to be a full-time or part-time student at least 60 months before making the application,

  • (iii) the monthly payment made by the borrower after the last reduction in the principal amount of the student loan or guaranteed student loan was at least $25 unless the Minister concludes that the borrower, under a repayment arrangement entered into with the Minister or the lender, made a monthly payment of less than $25 on the basis that the borrower could not pay that amount owing to the borrower's family income, and

  • (iv) since the previous reduction was granted, an event referred to in paragraph 9(1)(a), (b), (h) or (i) has not occurred in respect of the borrower's student loans or guaranteed student loans;

• (c) the borrower had been granted all of the special interest- free periods that may be granted;

• (d) the borrower had not been granted more than two reductions in the principal amount of

  • (i) a guaranteed student loan or a risk-shared loan that entitled the lender to a gratuitous payment under this section or section 42 of the Canada Student Financial Assistance Regulations, or

  • (ii) a student loan or a guaranteed student loan under section 42.1 of the Canada Student Financial Assistance Regulations;

• (e) the monthly payment on the guaranteed student loans was greater than the payment amount corresponding to the borrower's monthly family income as indicated in Schedule 2 to the Canada Student Financial Assistance Regulations; and

• (f) the borrower resided in Canada.

(2) Subject to subsection (4), the amount of the gratuitous payment shall be determined in accordance with the following formula, rounded to the nearest dollar:

(3) In determining the amount of the gratuitous payment in respect of a second or third reduction, the monthly payment due on the loans as this amount is calculated in C of the formula set out in subsection (2) is based on the portion of the 15 year period remaining after the previous reduction.

(4) The gratuitous payment shall not exceed

• (a) $10,000, in the case of a first reduction in the principal amount of a student loan or a guaranteed student loan;

• (b) $10,000, in the case of a second reduction in the principal amount of a student loan or a guaranteed student loan; or

• (c) $6,000, in the case of a third reduction in the principal amount of a student loan or a guaranteed student loan.

(5) [Repealed, SOR/2004-121, s. 8]

(6) The Minister, on being notified of the reduction by the lender in the prescribed form, shall pay to the lender the amount of the gratuitous payment that has been calculated in accordance with this section.