Many students in Canada use different assistance programs to support their education. These assistant programs come in various forms and are provided by designated bodies based on the province. The Ontario Student Assistance Program (OSAP) is quite prominent amongst students in Ontario.
The National Student Loan Service Center (NSLSC) is in charge of administering student loans in Ontario and other provinces in Canada aside from Quebec.
The NSLSC expects you to start paying your student loan once you graduate from your studies, transfer to part-time studies, or take a break from studies that will span over six months.
Regardless of what your study situation might be amongst the three mentioned above, it is recommended that you commence your loan repayment six months after you stop schooling on a full-time basis.
OSAP Payment in Canada
Once you are due to pay your student loan in Ontario, you will receive a mail from the NSLSC that entails your loan details. Note that you are responsible for setting up a repayment plan for your loan. Otherwise, your lender will automatically withdraw it from the account where your loan was deposited initially.
You have a six-month grace period following the end of your full-time studies. During this grace period, your loan will not accrue any interest, nor will you be mandated to make payments towards your loan.
However, on the first day of the seventh month following the month you toped being a full-time student, the NSLSC will consolidate all your outstanding loans.
The NSLSC will mail a document to you 6 – 8 weeks before the end of your grace period. This document entails your student loan agreement such as:
- Your total loan amount
- The interest rate
- Your repayment term
- Monthly payment
- First payment date
Bear in mind that your first payment is due on the last day of the month, marking your consolidation date.
OSAP Repayment Obligations
As a student with the OSAP loan, you have the following obligations:
- Sign a Consolidated Student Loan Agreement
- Repay your loan
- Make all interest payment
- Inform the NSLSC or other lenders in case of any change to your details
Three Ways to Pay OSAP in Canada
There are tons of ways to pay OSAP in Canada. The next section of this article will be recommending three ways on how to pay OSAP in Canada.
1. Automatic Withdrawal
An automatic withdrawal is one of the easiest ways to pay OSAP in Canada. It is a payment arrangement with your lender that allows your lender access to withdraw money from your credit card, checking, or savings accounts. With an automatic withdrawal, you eliminate the chances of late payment, and it saves you time.
When using this payment method, ensure that you have enough money in the account your lender will withdraw from; else the transaction will not be successful.
2. Online Payment
Online payment is the in-thing now as many people opt for this option rather than vising a physical, financial institution to transact. With online payment, you need:
- Your financial institution’s app.
- Then you can proceed to set up a new bill by searching the NSLSC.
- Input your seven-digit loan account number
- Then proceed to pay your loan and any interest accrued.
You can always contact the NSLSC for any assistance regarding your loan payment and your financial institution for help setting up a new bill. If you are unsure about the interest rate, you can use a Repayment Calculator. However, the provincial loan prime interest rate is 1% and 2.5% on a federal loan.
3. Repayment Assistance Plan (RAP)
The Repayment Assistance Plan (RAP) is among many other financial relief programs for students who have difficulty repaying their loans in Ontario. With RAP, you may qualify to lessen your monthly payment or making no payment; this depends on your financial situation.
You must apply for RAP via your NSLSC account or by downloading an application through the National Student Loans Service Centre’s online services. Fill and sign all required portions and return to alongside your Consolidated Student Loan Agreement.
Also, you must re-apply every six months to maintain your eligibility. You can access the RAP if your loan falls under the following:
- Canada-Ontario Integrated Student Loans
- Ontario Student Loans issued before August 1, 2001
- Part-Time Canada Student Loans
- Canada Student Loans issued before August 1, 2000
RAP Eligibility Criteria
To qualify for the Repayment Assistance Plan, you must possess the following:
- Be a Canadian residence
- Have a student loan(s) in good standing
- Be able to pay an affordable monthly payment even if it less than the required monthly payment.
The NSLSC calculates your affordable monthly payment based on your annual family size and income. Note that your family income is subject to verification.
And if you have a spouse, both of you may be required to provide a supporting document to prove your claim. At the same time, your required monthly payment is calculated based on the overall amount of your government student loans.
RAP Assistance Option
There are two options available to eligible persons. It is either:
- You are exempted from making a monthly loan payment
- Make affordable monthly payment – this requires that you make only the affordable payment for six months
RAP Aid Stages
There are currently two stages of Rap Stage, they include:
i. Interest Relief
The interest relief aid is accessible for up to 60 months for an eligible person(s) or when you have left school for ten years. With interest relief, the NSLSC requires that you make an affordable monthly payment.
The NSLSC uses this payment to pay down your loan principal, and if there are any reminders, it will offset your monthly interest. The Canadian and provincial (Ontario) government will pay all monthly interest that your payment does not cover.
The eligibility process for this aid is random. The NSLSC samples random applicants for proof of reported family income. If you fail income verification, the NSLSC will randomly award you a benefit. However, you can re-apply if you are not satisfied with the aid the NSLSC issue you.
Mary has a Canada-Ontario Integrated Student Loan of CA$500. Out of this amount, CA$200 is the interest while the principal loan is CA$300. However, Mary’s affordable payment is CA$100. Therefore, Mary qualifies for RAP, and her CA$100 will go towards her loan principal. Hence, the Canadian and Ontario governments will pay CA$200 towards Mary’s monthly interest amount.
ii. Debt Reduction
The debt reduction option comes after you have received interest relief. With debt deduction, you either make an affordable monthly payment or get a waiver depending on your income and family size.
The NSLSC requires that you include proof of your family income – copies of pay stubs for the applicant, and spouse if any. For those with a Permanent Disability, however, they automatically qualify for debt reduction once they enter repayment without having to go through interest relief.
Once you make your affordable payment, if any, it will go towards your loan principal, and if there are any outstanding, it will go towards your monthly interest. Like with the interest relief, the Canadian and Ontario government will pay down all monthly interest and any outstanding principal that your payment did not cover.
This way, your debt is eliminated within a maximum of 15 years from exiting school or within a maximum of 10 years if you have a permanent disability.
The NSLSC requires Tracey to make a CA$400 monthly payment towards her Canada-Ontario Integrated Student Loan. Her principal loan is CA$250, while her interest is CA$150.
However, Tracey’s affordable payment is CA$0.00. So for debt reduction, the governments of Canada and Ontario pay CA$250 monthly towards Tracey’s principal loan and CA$150 towards her monthly interest.
There are tons of ways to pay OSAP in Canada, and financial relief is also a part of it. For example, if you have difficulty paying your loan, you can renegotiate your payment term and repayment length.
For example, you can extend your repayment duration from an average of 9.5 years to 14.5 years. This renegotiation will lessen your monthly payments.
However, suppose you have any issues or any difficulty with your payment. In that case, you can access the NSLSC “Repaying your Government Student Loan” webinars to get information on your student loan repayment.