Canada Student Financial Assistance Regulations

42.1 (1) In each province participating in the student loan program established by the Act and that is financed by the government, the Minister may, on the application of a borrower who is indebted to the Minister under any direct loans, reduce the amount of the outstanding principal of all of the borrower's student loans and guaranteed student loans in an amount calculated in accordance with this section if, at the time the application for reduction is made,

• (a) the borrower is not subject to a measure taken in accordance with subsection 15(2) due to the occurrence of an event referred to in paragraph 15(1)(a),(b), (h) or (i);

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

• (b.1) if the borrower has previously been granted a reduction in the principal amount of a student loan or a guaranteed student loan under this section, or a risk-shared loan or guaranteed student loan that entitled the borrower's lender to a gratuitous payment under section 42 of these Regulations or section 30.1 of the Canada Student Loans Regulations,

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

  • (ii) the borrower 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 15(1)(a), (b), (h) or (i) has not occurred in respect of the borrower's student loans or guaranteed student loans;

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

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

  • (i) a risk-shared loan or a guaranteed student loan that entitled the lender to a gratuitous payment under section 42 of these Regulations or section 30.1 of the Canada Student Loans Regulations, or

  • (ii) a student loan or a guaranteed student loan under this section;

• (e) the monthly payment on the loans is greater than the monthly payment corresponding to the borrowers monthly family income as indicated in the Debt Reduction in Repayment Income Table in Schedule 2; and

• (f) the borrower resides in Canada.

(2) Subject to subsection (3), the amount of the reduction shall be determined in accordance with the formula set out in subsection 42(2) and rounded to the nearest dollar.

(3) The reduction 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.