How to Repay your Ontario Student Assistance Program (OSAP)
Congratulations graduate!!! You’re finally finished with exams, study sessions, and all-nighters fueled by bad coffee. As you embark on this new phase of your life, where will the journey take you; an exciting new job? Time off to relax and travel? Perhaps you’re not sure of your next step. The one certainty you can count on is that within six months you’ll need to start paying back your student loan.
What is the Ontario Student Assistance Program?
The Ontario Student Assistance Program (OSAP) is a financial aid program for any Ontario resident wishing to attend college or university. The program includes grants, which don’t have to be repaid, and student loans, which will be repaid. If you are a Canadian Citizen, permanent resident, or protected person, you are eligible for the OSAP.
The program was designed to help students with tuition, books, equipment, and supplies, mandatory student fees, living expenses, and child care. However, you will not be eligible if you have the financial resources to pay for school, if you are receiving other Government post secondary education assistance, or if you have misrepresented your income showing a significant difference from what the CRA has on record. You will also be denied assistance if you have previously defaulted on a student loan, have outstanding payments or grant over payments, failed a credit check or reached your limit for student loan funding.
Paying back your OSAP Loan
In the excitement of receiving your student loan, you may have failed to realize that this is not free money. Though grants and bursaries are available to offset the cost of your education, you are expected to repay the loan. There will be a 6-month interest-free grace period upon graduation, then you will start making payments. During your grace period, you will receive an information package from the National Student Loans Service Centre outlining how much you owe, the date of your first payment and the interest rates applied to your payments. The OSAP states the Ontario portion of the loan will be the prime rate of interest plus 1 percent. Whereas the Canada portion will be the prime rate of interest plus 2.5 percent.
According to the OSAP Info pages at Ontario.ca, you are not required to make any payments during the six-month grace period, nor will you be charged interest on the Ontario portion of your loan. However, you will be charged interest on the Canada portion of the loan.
One Degree No Job
It’s an unfortunate reality that a post-secondary education doesn’t guarantee a great job upon graduation. Let’s just say there are a lot of very educated people working in the service industry. If your financial situation is such that you are unable to start repaying your OSAP loan, you may be eligible for repayment assistance. You can apply for Repayment Assistance online through your National Student Loans Service Centre account. If further assistance is required you will be expected to re-apply every six months.
If you default on your loan there will be far reaching consequences. The debt will be turned over to a Collection Agency, it will be reported to the credit bureau, and interest will continue to add up on the unpaid portion of your loan. All of this is going to impede your credit rating, your ability to get a car loan, mortgage, or other forms of credit, and your tax refund and rebates may be withheld.
Debt Help for Student Loans and other Debt
Because you’re just starting out you may find it hard to juggle life’s expenses along with your student loan payments. You may even be tempted to rely on those newly minted credit cards to help pay the bills. To avoid further debt and any negative ramifications on your financial future, create a realistic budget for yourself and make every attempt to pay your credit card balance in full, every month. Limited debt and a strong credit history will make it easier for you to secure a car loan, mortgage, or line of credit in the future.
If you’ve been struggling with your debt for some time and you are unable to make your payments, real debt help is available in the form of 4 Pillars Brampton Debt Solutions. A meeting with a 4 Pillars Brampton Debt Specialist could lead to a debt resettlement strategy that will help you manage your payments. One option may be Debt Consolidation; a lower interest loan that is used to pay off your consumer debt, leaving you with a one, lower payment each month.
Your 4 Pillars Brampton Debt Specialist will show you how to avoid further debt. They will also help rebuild or strengthen your credit rating, as well as work with you to create a workable budget so you are able to make your student loan payments along with your Consolidation Loan payments.
Just One More Thing…
You spent a lot of years in school so you could build your career and enjoy a good life. The Ontario Student Assistance Program played a big role in your education. If your debt is starting to derail your journey to a successful financial future talk to 4 Pillars Debt Solutions and get your goals back on track.
About the Author
Frank Eichinger is a Debt Specialist with 4 Pillars Brampton. If you have questions about restructuring your debt call Frank Eichinger at (647) 403-4992 or log onto 4Pillars.ca to find a 4 Pillars office near you.
