Student Loan Forgiveness in Ontario

Student loans are a common reality for many Canadian graduates. Recent studies suggest that approximately 49% of graduates owe some form of student debt. This predicament is seeing an increasing trend as the cost of education continues to rise, especially in provinces like Ontario where living costs in cities like Toronto and Ottawa can be quite high. Given this scenario, it’s no surprise that student loan forgiveness in Ontario is a topic of high interest for many. This article aims to provide an in-depth understanding of this subject and explore the options available for debt relief.

What is a Student Loan?

In simple terms, a student loan is a form of financial assistance provided to students to cover their educational expenses. This could be facilitated by the government, a bank, a financial institution, or even through private personal loans.

The amount of student loan a student can avail of depends on various factors such as their income, their parents’ income, duration of the course, type of educational program, and any dependents they may support, among others. Government-issued loans do not accumulate interest while the borrower is still studying and offer a grace period of six months post-graduation before the repayments begin.

OSAP (Ontario Student Assistance Program) – A Closer Look

The Ontario Student Assistance Program (OSAP) is a financial aid program that offers support to students through loans and grants.

The eligibility for OSAP depends on several factors such as residency status, academic performance, and previous financial history, including any bankruptcy or defaults on previous loans. The amount allocated through OSAP depends on the education costs, the duration of the course, and the student’s financial situation.

Interest Rates on Student Loans in Canada

Most student loans in Canada are divided into federal and provincial parts, each carrying its own interest rate.

When taking out a student loan, students can choose between a fixed rate (2% plus prime rate) and a variable rate (equal to the prime rate). For the provincial part of the loan, the rates may vary. In Ontario, for instance, the OSAP interest rate is Prime + 1%. The rates for private student loans may vary significantly depending on the lending institution.

Repaying your Student Loan in Ontario

Post-graduation, students are given a grace period of six months before they need to start repaying their loans.

Repayment terms, including the interest rate and monthly payment amounts, are specified in a letter sent to the borrower. While typically, the interest rate is fixed, borrowers can opt to change this and choose to make overpayments if they wish.

Student Loan Forgiveness in Ontario – An Overview

Ontario offers several options for student loan forgiveness to help students manage their debt.

Certain professionals, such as nurses working in rural areas, may qualify to have part of their student loans forgiven. Another option is to start making payments during the grace period before the interest starts accumulating, thus reducing the principal amount.

Key Options for Student Loan Debt Relief

If you are struggling with repaying your student loan, there are several forms of student loan forgiveness in Ontario that you can consider.

Voluntary Renegotiation

If you are unable to keep up with your loan payments, you could consider speaking to your lender about renegotiating the terms of your loan. This could be a viable option if you can commit to revised payments temporarily and are confident of repaying the loan in full over time.

Canada Repayment Assistance Plan

The Canada Repayment Assistance Program can offer some student loan forgiveness in Ontario by reducing or eliminating your monthly loan payments, based on your income level. However, while this provides relief from making payments, it does not clear your loan or the associated consequences such as potential impact on your credit score.


If you have been out of school for seven years or more, you could consider filing for bankruptcy. While this could provide relief from all your unsecured debts, it requires the services of a reputable Licensed Insolvency Trustee and has its own implications.

Consumer Proposal

A consumer proposal is a formal debt settlement process with your creditors and can reduce your debt by up to 80%. This includes not just your student loan debt, but also other unsecured debts such as tax debt and credit card debt. However, you must have finished your studies at least seven years ago to be eligible for this option.


While student loans are a great way to finance your education, they can be challenging to repay, especially in a high-cost province like Ontario. However, various options for student loan forgiveness in Ontario can provide some relief. It’s essential to understand these options and seek the right advice to make informed decisions.

For more personalized advice, consider booking a free consultation with a Licensed Insolvency Trustee who can guide you on the best way to reduce or eliminate your student loan debt in Ontario.

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