As September approaches, students who are beginning post-secondary education this year have received one or more offers of admission and then chosen a college or university, have hopefully been offered a place in a university residence or have secured off-campus housing, and are making final plans to make the move away from the family home for the first time. While choosing courses for the upcoming fall semester and anticipating the independence of life on their own is undoubtedly exciting, the hard reality is that all such choices and decisions come with a price tag – sometimes a very steep one. Regardless of geographic location, housing arrangements, or program choices, post-secondary learning is expensive. There will be tuition bills, of course, but also the need to find housing and pay rent in what is, in most college or university locations, a very tight and very expensive rental market. Those who choose to live in a university residence and are able to secure a place will also face bills for that accommodation and, often, for a meal plan.
Fortunately for students (and the parents who are likely footing much of the bill), there are tax credits and benefits which can be claimed to offset such costs: the credits and benefits which can be claimed by post-secondary students (or their spouses, parents, or grandparents) in relation to the upcoming 2025-26 academic year are summarized below.
Tuition fees
A federal tax credit continues to be available for the single largest cost associated with post-secondary education – the cost of tuition. Any student who incurs more than $100 in tuition costs at an eligible post-secondary institution (which would include most Canadian universities and colleges) can claim a non-refundable federal tax credit equal to 15% of such tuition costs. Many of the provinces and territories also provide students with an equivalent provincial or territorial credit, with the rate of such credit differing by jurisdiction.
The charges imposed on post-secondary students under the heading of “tuition” include a myriad of costs which may differ, depending on the particular program or institution, and not all of those costs will qualify as “tuition” for purposes of the tuition tax credit. The following specific amounts do, however, constitute eligible tuition fees for purposes of that tax credit:
- admission fees,
- charges for use of library or laboratory facilities,
- exemption fees,
- examination fees (including re-reading charges) that are integral to a program of study,
- application fees (but only if the student subsequently enrolls in the institution),
- confirmation fees,
- charges for a certificate, diploma, or degree,
- membership or seminar fees that are specifically related to an academic program and its administration,
- mandatory computer service fees, and
- academic fees.
The following charges, however, do not constitute tuition fees for purposes of the tuition tax credit:
- Extracurricular student social activities,
- Medical expenses,
- Transportation and parking,
- Board and lodging,
- Goods of enduring value that are to be retained by students (such as a microscope, uniform, gown, or computer),
- Initiation fees or entrance fees to professional organizations including examination fees,
- Administrative penalties incurred when a student withdraws from a program or an institution,
- The cost of books (other than books, compact discs, or similar material included in the cost of a correspondence course), and
- Courses taken for purposes of academic upgrading to allow entry into a university or college program. These courses would usually not qualify for the tuition tax credit as they are not considered to be at the post-secondary school level.
Certain ancillary fees and charges, such as health services fees and athletic fees, may also be eligible tuition fees. However, a tuition tax credit can be claimed only for up to $250 in such fees and charges, unless the fees are required to be paid by all full-time students or by all part-time students.
At both the federal and provincial levels, the tuition tax credit is a non-refundable one, meaning that it can reduce or eliminate tax otherwise payable, but cannot create or increase a tax refund. Where, as is often the case, a student doesn’t have tax payable for the year because their income isn’t high enough, credits earned can be carried forward and claimed by the student in any future tax year or transferred (within limits) in the current year to be claimed by a spouse, parent, or grandparent.
Rent, food, and other personal and living expenses
Unfortunately, although housing and food costs will take up a very big chunk of each student’s budget, there is not (and never has been) a tax deduction or credit which is claimable for such costs. In all cases, living costs incurred by a post-secondary student (whether on campus or off) are characterized as personal and living expenses, for which no tax deduction or credit is allowed.
Student debt
Most post-secondary students in Canada must incur some amount of debt in order to complete their education, and repayment of that debt is typically not required until after graduation. Once repayment starts, a 15% federal tax credit can be claimed for the amount of interest being paid on such debt, in some circumstances. And, while other types of credits related to post-secondary education (like the tuition tax credit) can be transferred to and claimed by other family members, the student loan interest tax credit can be claimed only by the student – no transfer of the credit is allowed.
Students who are still in school and arranging for loans to finance their education should be mindful of the rules which govern that student loan interest tax credit, since decisions made while still in school with respect to how post-secondary education will be financed can have tax repercussions down the road, after graduation. That’s because while interest paid on a qualifying student loan is eligible for the credit, only some types of student borrowing will qualify for that credit. Specifically, only interest paid on government-sponsored (federal or provincial) student loans will be eligible for the credit. Interest paid on loans of any kind from any financial institution will not.
It’s not uncommon (especially for students in professional programs, like law or medicine) to be offered lines of credit by a financial institution, often at advantageous or preferential interest rates. As well, financial institutions sometimes offer, once a student has graduated and begun to repay a government-sponsored student loan, to consolidate that student loan with other kinds of debt, also at advantageous interest rates. However, it should be kept in mind that interest paid on that line of credit (or any other kind of borrowing from a financial institution which is used to finance education costs) will never be eligible for the student loan interest tax credit.
As explained in the Canada Revenue Agency publication on the subject: “[I]f you renegotiated your student loan with a bank or another financial institution, or included it in an arrangement to consolidate your loans, you cannot claim this interest amount”. In other words, where a government student loan is combined with other debt and consolidated into a borrowing of any kind from a financial institution, the interest on that government student loan is no longer eligible for the student loan interest tax credit.
Students who are contemplating borrowing from a financial institution rather than getting a government student loan (or considering a consolidation loan which incorporates that government student loan amount) must remember, in evaluating the benefit of any preferential interest rate offered by a financial institution, to take into account the loss of the student loan interest tax credit on that borrowing in future years.
Other credits and deductions
While the available student-specific deductions and credits are more limited than they were in previous taxation years, there are nonetheless a number of credits and deductions which, while not specifically education-related, are frequently claimed by post-secondary students (for instance, a deduction claimed for moving costs). The Canada Revenue Agency publishes a very useful guide which summarizes most of the rules around income, deductions, and tax credits which may apply to post-secondary students. The current version of that guide (P105 Students and Income Tax, which was last updated in 2024) is available on the CRA website at https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/p105.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
