How to Pay Back OSAP

Advice on Paying Back OSAP & Why It’s Important

Are you a recent graduate in Ontario, Canada, and not sure how to navigate the repayment of your Ontario Student Assistance Program (OSAP) loans? Or perhaps you are a parent assisting your child in understanding the complexities of student loan repayment? This comprehensive guide on how to pay back OSAP in Canada will help you navigate the process and provide practical advice to ensure a smooth repayment journey.

Understanding OSAP

Before delving into the repayment process, it’s essential to understand what OSAP entails. The Ontario Student Assistance Program, or OSAP, is a financial aid program aimed at assisting Ontario students in financing their post-secondary education. It provides two types of funding:


Grants: These are funds that students receive but do not need to repay.

Loans: These are borrowed funds that students must repay after completing their education.

The funds received from OSAP can be used to cover a variety of expenses, including tuition, school fees, housing, textbooks, and child care.


Repayment Responsibility

When it comes to repaying OSAP, one crucial aspect to note is that you only have to repay the loan portion of your funding. For instance, if you got $30,000 in total funding and $20,000 was a loan, you are obligated to repay the $20,000 loan plus the accumulated interest.

Exceptions exist where you might need to repay the grant portion of your OSAP funding. This could occur if you received a grant overpayment, which means you received more grant funds than you were eligible for. This overpayment could occur if you changed your study plans unexpectedly or inaccurately reported your income. In such cases, you might have to repay some or all of the overpayment before you can apply for more OSAP funding.

In certain situations, your grant might also be converted into a loan, which you must repay in full. This conversion can happen if you withdraw from school or stop taking the minimum course load within the first 30 days and don’t return to full-time studies within five months of the same academic period. It can also happen if you are found to not qualify for the grant you initially received after an OSAP reassessment or if the income amount on your application can’t be verified within a year from when you started your studies.

Starting the Repayment Process

The repayment process begins six months after the end of your study period. This six-month period is known as the grace period. However, it’s important to note that even though you don’t have to start making payments during this period, interest will accumulate on your loan. Therefore, the earlier you can start making payments, the less interest you will end up paying.

If you plan to return to school for the following term, you won’t need to start the repayment process. This exemption applies as long as your school can confirm your enrollment and if you get approved for full-time OSAP again or the Continuation of Interest-Free Status Program.

Steps to Repay Your OSAP Loan

Paying back your OSAP loan involves a series of steps that you should follow to ensure a successful repayment process:

Step 1: Completion or Termination of Full-Time Education

The first step in the repayment process is to either graduate from your program or leave your full-time studies. Once this occurs, you have a six-month grace period before you have to start repaying your OSAP loan. During this period, it’s a good idea to seek employment if you haven’t already done so to start saving for your upcoming loan payments.

Step 2: Estimate Your Monthly Payments

Next, you should calculate your expected monthly payments. OSAP provides a repayment calculator that you can use to determine your monthly repayment amount. This calculation is based on the interest rate at the time you start repaying your student loans. The OSAP loan is divided into two parts, federal and provincial, each with its own interest rate:


  • The federal part of your loan has an interest rate equivalent to the prime rate.
  • The provincial part of your loan has an interest rate equivalent to the prime rate plus 1%.


These rates could fluctuate throughout your repayment period, but your monthly payment amount remains the same. Instead, the loan balance, or the amount you still have to pay, adjusts accordingly.

Step 3: Access Your NSLSC Account

To manage your loan repayment, access your account with the National Student Loans Service Centre (NSLSC). This account allows you to check your loan status, update your contact information, apply for repayment assistance, and request changes to your repayment terms.

Step 4: Receive Your Repayment Package

Within the six-month grace period, you’ll receive a package from the NSLSC. This package contains important information about your loan repayment, including the total number of payments, the date of your first payment, and the interest rates applied to your loan.

Step 5: Commence Loan Repayment

Once the grace period ends, it’s time to start repaying your loan. Your payments are made through your NSLSC account. You can set up pre-authorized debit to have your payments automatically withdrawn from your bank account each month. Alternatively, you can log into your account each time to make lump-sum payments, which can help you pay off your loan faster.

Your payments are based on a standard repayment schedule of 9.5 years, which is the average repayment period for an OSAP loan. You can opt to make additional payments at any time to repay your loan faster. If necessary, you can also extend your repayment period to up to 14.5 years.

Extending Your OSAP Grace Period

In some cases, you might be eligible to extend your six-month grace period to a full year. This extension applies if you own or co-own an Ontario business or if you work or volunteer at a non-profit organization. To apply for this extension, you must submit an application within the original six-month period.

Repayment Assistance Plan (RAP)

If you’re having trouble meeting your monthly OSAP loan payments, you can apply for the Repayment Assistance Plan (RAP). This plan helps you manage your loan repayments by calculating a new repayment amount based on factors like your family’s income, family size, and outstanding loan amount. The provincial and federal governments also contribute towards your payments under this plan.


Navigating the repayment of your OSAP loan might seem challenging, but with this comprehensive guide on how to pay back OSAP in Canada, you’re well-equipped to handle the process. Remember, the earlier you start planning for your loan repayment, the smoother your repayment journey will be. Don’t hesitate to seek assistance through the Repayment Assistance Plan if needed, and always keep your contact information updated with the NSLSC to stay informed about your loan status. Soon, you’ll be on your way to becoming student debt-free.

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