Consumer Proposals and OSAP

Navigating OSAP and Student Loans With a Consumer Proposal: A Comprehensive Guide

Dealing with debt can be a daunting task, especially when you need to balance your finances while pursuing higher education. This situation often leads debtors to consider different options, such as Consumer Proposals, to handle their financial obligations. In this context, understanding how a Consumer Proposal interacts with the Ontario Student Assistance Program (OSAP) or Student Loans can be pivotal.

Consumer Proposals: A Primer

Before diving into the specifics, let’s understand what a Consumer Proposal is. Essentially, it’s a legally binding process overseen by a Licensed Insolvency Trustee, allowing you to negotiate a payment plan with your creditors. It’s a fresh start of sorts, often paving the way for better financial stability, and possibly, higher education.

OSAP and Student Loans: A Brief Overview

On the other hand, OSAP provides financial aid to Ontario residents pursuing post-secondary education. It comprises grants (which you don’t need to pay back) and loans (which you do).

The Interplay of Consumer Proposals and OSAP / Student Loans

The intersection of Consumer Proposals and OSAP/Student Loans arises when you’re applying for OSAP during or after your Consumer Proposal. Here are the important questions you need to answer on the OSAP application form:


  • Have you ever filed for a Consumer Proposal or related event?
  • Has your Consumer Proposal been fully paid off?


If the answer to these questions is yes, you’ll need to provide certain documents to OSAP.

Documents Needed

A letter from your Trustee stating that neither the Canadian Government nor the Ontario Government are creditors in your Consumer Proposal.

A statement that none of the OSAP funding you receive will be used to repay any creditors.

Potential Hurdles

Should any federal or provincial government debts be included in your Consumer Proposal, it might hinder your eligibility for OSAP funding. However, if you have no other government debts, your Consumer Proposal should not affect your OSAP application, provided your Trustee can furnish the required letter.

Eligibility Criteria

For those who have previously settled student loans through a Consumer Proposal, you need to prove that these loans have been fully paid or discharged. If not, or if fewer than three years have passed since the loans were paid or discharged, you need to meet the following criteria:


  • Proof of having no outstanding student loans; or
  • A letter from your educational institution confirming:
    • You were enrolled in an approved program at an approved school when you filed your Consumer Proposal;
    • You remain enrolled in the same approved program of study;
    • You have not had a break in studies of longer than six months since filing your Consumer Proposal.


In essence, if you’ve taken student loans, you must have either paid them off, discharged them through a Consumer Proposal at least three years ago, or stayed in the same program, at the same school, without a break in studies of over six months.

OSAP’s Stance

OSAP continues to assist you in completing a program you’ve already started in most cases. However, it won’t finance a new program until existing student loans have been paid off, or three years have passed since they were discharged.

Completing the Application

If you answer “Yes” to both the aforementioned questions, meaning you’ve completed your Consumer Proposal, you need to provide a copy of your bankruptcy search results. These can be obtained from the Office of the Superintendent of Bankruptcy for a small fee.

Final Thoughts

Even after filing a Consumer Proposal, it’s possible to get your OSAP application approved. But, the criteria are specific, and understanding them can help you make informed decisions.

Keep in mind that this guide is based on the 2020-2021 OSAP eligibility criteria concerning bankruptcy and insolvency. Student loan eligibility criteria may change regularly, so it’s advisable to contact your financial aid office directly if you have concerns about your OSAP eligibility.

Feel free to reach out to us if you need to discuss your situation with a Licensed Insolvency Trustee. We’d be happy to review your circumstances and explain your options at no cost. Let us impress you with a prompt response.

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