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The Ontario Student Assistance Program (OSAP) provides different types of financial aid, such as grants and loans to qualified students who need help paying for their post-secondary studies. The amount of financing a student is eligible to borrow depends on their course-load, tuition fees, and financial resources (income, credit ,etc.). While OSAP has many benefits, figuring out how to repay the debt can be difficult.

When Do You Have To Repay OSAP?

The Ontario Student Assistance Program offers two types of financial aid to students who are trying to finance for their college or university educations: 

  • Grants – Also called a bursary, a grant is a lump-sum of funding that you can receive for various reasons, like good academic merit. This award is “granted” by OSAP to help your education, so it doesn’t need repayment. The size of the grant depends on factors like your grades and current financial support.  
  • Loans – You can also borrow a specific amount of money from OSAP to finance your education or living costs. Like a personal loan, you must repay what you borrow by a set date. Repayment starts after your study period ends and is done by sending installments to the National Student Loans Service Centre (NSLSC).

OSAP also offers extra funding for students in certain circumstances.

When Do Students Need To Start Repaying OSAP Loans?

You normally have to begin repaying an OSAP loan six months following the conclusion of your full-time or part-time studies. However, you can delay your repayment term by several months if you’ve been enrolled at the same school for another study period, as long as you get approved for one of these other OSAP programs:

  • Continuation of Interest Free Status
  • OSAP for Full-Time Students   

Don’t forget, you must send your loan payments to the National Student Loans Service Centre (NSLSC), rather than OSAP. There may be other conditions if you acquired your loan through the OSAP Micro-Credentials Program.

What Do You Need To Pay Back?

You will eventually have to repay the money you receive from OSAP if:

  • You’ve borrowed an OSAP loan
  • You’ve accidentally received an overpayment from an OSAP grant/bursary
  • The OSAP converts your grant into a loan due to withdrawal from your studies, reassessment of your situation, or unverifiable income

How To Repay OSAP?

Like a traditional loan, an OSAP loan needs to be repaid on time to avoid any penalties or financial consequences. The repayment process is done in 6 steps:

1. Withdraw From Your Full-Time Studies Or Graduate

Once you finish your studies, you’ll have a six-month grace period before you need to start repaying your loan, unless you’re confirmed for another term at school. It’s important to know that interest will apply to the portion of the loan that comes from the Ontario Government and will be added to your final loan balance.

2. Calculate Your Monthly Loan Payments

The size of your monthly OSAP payments depends on the interest rates that apply to your first loan payment:

If provincial or federal rates fluctuate, your monthly payment won’t change but your principal loan balance will be adjusted accordingly.

3. Log Into Your National Student Loans Service Centre Account

When you sign up for OSAP, you’ll have to create a National Student Loans Service Centre account through the Government of Canada. With this account, you can:

  • Apply for different types of financial assistance
  • Change your personal information and contact details
  • Monitor your student loan accounts and debt balances 
  • Modify your repayment plan (by request) 

4. Open Your NSLSC Repayment Package

Within the 6 months following your graduation or withdrawal from schooling, the National Student Loans Service Centre will send you a “repayment package” containing:

  • The size and date of your first payment
  • The provincial and federal interest rates that apply to your payment
  • The total amount of loan payments you have to make 

5. Begin Repaying Your Loan

You’ll have 9.5 years maximum to repay your OSAP loan (the average time for most students). Remember, you must send your payments to the National Student Loans Service Centre, not OSAP. You can also repay your loan at any time.  

If you can’t fully repay your loan, there are options you can try:

  • Repayment Assistance – If you provide a valid reason for being unable to repay your student loan on time, you may be able to enter a Repayment Assistance Plan (RAP) with help from OSAP.
  • Severe Permanent Disability Benefit – Contact the NSLSC to apply for this benefit if you have a serious mental or physical disability that’s preventing you from working, earning income or attending courses. 
  • Repayment Period Extension – If your payments are too high, you can get them lowered by requesting an extension of your repayment term for a specific number of years. Contact the NSLSC to find out if you qualify for a repayment extension. 

6. Complete Your Repayment Term

Shortly after you’ve made your last OSAP payment, you should receive a confirmation letter from the National Student Loans Service Centre. You’ll then be free of any student debt until you borrow another loan. 

How Can You Get OSAP Repayment Assistance?

If you’re an Ontario student with the proper qualifications, there are several ways to get assistance repaying OSAP, including but not limited to:

Extend Your Repayment Period

As mentioned, one of the simpler ways of making OSAP payments more affordable is by reducing them with an extension to your repayment period. You can make this request by logging into your National Student Loans Service Centre account. If approved, your 9.5 year repayment period can be extended up to 14.5 years. 

Apply For The Repayment Assistance Plan

As an OSAP beneficiary, you also have the option of applying for the Repayment Assistance Program (RAP), which allows you to receive lower monthly payments for individual periods of 6 months. Here’s how it works:

  • Both the Ontario and Canadian Governments offer this type of assistance
  • If you’re approved for RAP, you and both governments will share the loan debt
  • You may be exempt from making payments during a specified 6 month period
  • If you’re not exempt, your payments will increase but not by more than 20% of your household income. Their size is adjusted according to the number of people in your family/household, your family’s household income, and how much OSAP debt you have left to repay.

You can qualify for RAP if you have a:

  • Canada Student Loan (borrowed before August 1st, 2000)
  • Ontario Student Loan (borrowed before August 1st, 2001) 
  • Canada-Ontario Integrated Student Loan (COISL) 
  • Part-Time Canada Student Loan 

Extend Your Grace Period

If your studies conclude and you haven’t been confirmed for another school term, you’ll have a six-month grace period before you need to start repaying your OSAP loan. However, it’s possible to get an extension, during which you won’t have to make payments for your Ontario Student Loan or the Ontario portion of your Canada-Ontario Integrated Student Loan.

Unfortunately, federal student loans aren’t eligible for this type of extension, even if they’ve been issued by OSAP. After your new 12-month grace period ends, any loan payments that were formerly postponed will re-activate. Any interest that your loan has generated will also apply to your upcoming payments.

Start A New Business

If you’re a proprietor or joint-owner of a new Ontario business and your original 6-month grace period is still in effect, you may qualify for an extension called the “One-Year Grace Period for Entrepreneurs”, which gives you an additional 6-months. To become eligible for this extension, you must:

  • Be the sole owner or co-owner of an eligible new Ontario business
  • Be working at your business for at least 30 hours weekly
  • Have concluded any post-secondary studies within the past 6 months
  • Have a qualified OSAP loan that isn’t in its repayment term

To qualify as a “new” enterprise in Ontario, your business must: 

OR

  • Be registered with the CRA within the current or the previous 2 calendar years. 

Work For A Non-Profit Organization 

If your regular OSAP loan grace period is in effect and you work for a non-profit organization (whether paid or volunteering), you may also qualify for a 6-month extension. Like the other solutions above, your loan payments will resume after the new 12-month period, along with any interest generated during it.  

To become eligible for this extension, you must:

  • Be working or volunteering for an eligible Ontario non-profit at least 30 hours weekly
  • Have concluded any post-secondary studies within the past 6 months
  • Have an eligible OSAP loan that isn’t in its repayment term

To be considered a non-profit organization in Ontario, the entity must: 

  • Be incorporated as a not-for-profit corporation or similar organization in Canada, Ontario or another province/territory.

AND/OR

  • Be registered with the CRA as a charity (schools, hospitals and federal, provincial or municipal governments and their agencies don’t qualify).

What Happens If You Miss Your OSAP Payment? 

Similar to a bank loan, OSAP will consider your loan defaulted if you don’t make a payment for 270 consecutive days or more. After this point:

  • Your loan debt will be assigned to a collection agency
  • Your missed payments will be reported to Equifax and/or TransUnion
  • Your credit scores may drop
  • You may not qualify for more OSAP until your account is out of default
  • Interest will continue to generate and be added to your debt
  • The CRA could withhold your HST rebate and tax refund
  • Your debt will keep growing until your loan is repaid

Repaying OSAP FAQs

Will my OSAP loan go away if I declare bankruptcy?

No, your OSAP debt won’t disappear if you declare bankruptcy, which means you’ll still have monthly payments to keep track of. If this happens but you still can’t afford your payments, try applying for the Repayment Assistance Plan. 

Do student loans go away after 7 years?

While a bankruptcy discharge can free you from OSAP loan debt, the court will only include it (without a special request from your LIT) if you declare bankruptcy after you’ve been out of school for at least 7 years (from full or part-time studies).

Does my OSAP debt disappear if I die?

If you pass away while you’re paying a federal or provincial student loan, your family members can apply for a “loan discharge due to death”, which will release them from your remaining debt,

Can I get OSAP loan forgiveness?

Yes, if you benefit from OSAP, your remaining loan debt will be forgiven once your schooling has been over for at least 15 years. If you have a disability that prevents you from paying, your loan will be forgiven after 10 years.

Bottom Line

Although a loan from the Ontario Student Assistance Program can do wonders for your education and living costs, it’s a significant debt to take on and serious financial issues could occur if you start missing payments. Contact the NSLSC for more information about repaying your OSAP debt or getting OSAP loan forgiveness.              

Bryan Daly avatar on Loans Canada
Bryan Daly

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.

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