Canada Student Financial Assistance Regulations

42.2 (1) Where a borrower, who has made an application under subsection 42.1(1) and whose application for debt reduction has been approved, has outstanding direct loans and outstanding risk-shared loans or guaranteed student loans, the reduction in the borrower's loans principal shall be distributed on a prorata basis between the direct loans, the risk-shared loans and the guaranteed student loans.

(2) Where the Minister reduces any of the borrower's risk-shared loans or guaranteed student loans pursuant to subsection 42.1(1), the lender is entitled to a gratuitous payment by the Minister in respect of that reduction in an amount calculated in accordance with subsection 42.1(2), which amount is to be applied to the borrower's risk-shared loans or guaranteed student loans on a prorata basis.