How to Pay Back OSAP in 5 Easy Steps

Graduating from your post-secondary studies is definitely worth celebrating, but for many, it also comes with a huge pile of student debt. Here, we cover how to pay back OSAP in 5 easy steps and provide answers to a few common questions about OSAP funding. 

What is OSAP?

OSAP, or Ontario Student Assistance Program, is a program designed to help students in Ontario with financing post-secondary education. 

OSAP offers two types of funding: 

• Grants – money that doesn’t need to be paid back
• Loans – money that needs to be paid bac

Your application will help calculate both your grant and loan portion, but you don’t need to take out the loan if you feel that the grant is sufficient. You can use OSAP funds to cover any of your expenses, such as tuition, school fees, housing, textbooks, and child care. 

Update: Changes to OSAP and Tuition (Effective Fall 2026)

In February 2026, the Ontario government announced changes to postsecondary funding, tuition, and the Ontario Student Assistance Program (OSAP). Starting in Fall 2026:

• Ontario students will be eligible to receive a maximum of 25% of their OSAP funding as grants and a minimum of 75% as loans. This means a larger portion of OSAP funding will be repayable compared to previous years.
• OSAP will no longer offer grants to students attending private career colleges.
• Publicly assisted colleges and universities will be allowed to increase tuition by up to 2% per year for three years, and then by up to 2% or the three-year average rate of inflation (whichever is lower).
• Low-income students may receive additional financial support through an enhanced Student Access Guarantee (SAG) if OSAP does not fully cover tuition, books, and mandatory fees.

Most of the repayment rules below remain the same, but future students may graduate with a higher proportion of loans due to the new 75% minimum loan requirement.

What part of OSAP do you need to repay?

When you receive your OSAP funding, you have the option of taking out the loan portion – this is usually the only part you need to pay back. So if you received a total of $30,000 funding, but only $20,000 of it was a loan, you only owe $20,000 (plus interest). 

Starting in Fall 2026, at least 75% of OSAP funding will be issued as loans, meaning most students will graduate with a higher proportion of repayable funding.

Wait, do you have to pay back grants from OSAP then?

There are a few cases in which you may need to pay back the grant portion of your OSAP funding. If you’ve been overpaid for your grant, you could be required to pay some or all of the overpayment back before you can apply for more OSAP funding. This could happen if you make a change to your study plans (e.g. drop a course) or inaccurately report your information (e.g. leave out your part-time job). 

It’s also possible for your grant to be converted into a loan, meaning you’ll need to pay back your entire funding amount. This could happen for the following reasons:

• You withdraw from school or stop taking the minimum course load in the first 30 days, and you don’t go back full-time within 5 months of the same academic period 
• You’re found to not qualify for the grant you originally received (e.g. you dropped a course, you didn’t report both parents’ income) from an OSAP reassessment
• The income amount on your application can’t be verified within a year from when you started your studies 

When do you start paying back OSAP?

You need to start paying back your OSAP funding six months after the end of your study period. For example, if you graduated in May, your first payment would be due in November.

Your payments do not go directly to OSAP. They are made through the National Student Loans Service Centre (NSLSC).

If you’re planning to return to school for the following study term, you won’t need to begin repayment as long as your enrolment is confirmed and you’re approved for full-time OSAP again or for the Continuation of Interest-Free Status program.

For example, if you decide to pursue a Master’s degree immediately after graduation, you can apply for OSAP again instead of starting repayment at the six-month mark. The same applies if you switch programs and return the following term.

If you take a gap year, however, the six-month non-repayment period still applies. After you leave full-time studies, interest rules change.

Currently, the federal portion of OSAP loans is interest-free during both your study period and repayment. The Ontario (provincial) portion begins accruing interest once you leave full-time studies. This includes the six-month non-repayment period and the repayment period. While you’re enrolled full-time, or approved for interest-free status, neither portion accrues interest.

If you return to school and are approved for more OSAP funding, interest on the Ontario portion stops during your study period, and you won’t be required to make payments until you graduate or leave full-time studies again.

How to pay back OSAP

Paying back your OSAP funding can be a simple process, as long as you’re given all the information you need. Here’s a breakdown of the 5 steps you need to take to become student debt-free. 

Step 1: Graduate or leave your full-time education

Before repayment begins, you must either graduate from your program or leave full-time studies.

You will still have six months before your first payment is due. During this time, interest accrues on the Ontario (provincial) portion of your loan, while the federal portion remains interest-free.

If you aren’t already working, this is a good time to secure employment or build additional income so you’re prepared when repayment starts.

Step 2: Estimate how much you’ll need to pay each month

The next step is to calculate how much money you’ll need to pay back each month. You can use the OSAP repayment calculator as a quick and easy tool to do so.

Your loan has two parts, federal and provincial, which follow different interest rules. Currently:

• The federal portion of OSAP loans is interest-free.
• The provincial interest rate is variable and typically set at the prime rate plus 1%.

The Ontario (provincial) portion accrues interest once you leave full-time studies, including during the six-month non-repayment period and throughout repayment.

Although the prime rate can change during your repayment period, your required monthly payment usually stays the same. Changes in the interest rate affect how much of each payment goes toward interest versus your principal balance.

You don’t need to start making payments until the six-month mark. However, if you have the funds available, making early payments can reduce the amount of interest charged on the Ontario portion of your loan.

Step 3: Log in to your NSLSC account

You should already have an account with the National Student Loans Service Centre (NSLSC) because you were required to set up this account in order to receive funding in the first place. Either sign in to your account using a sign-in partner (your bank) or your username and password. 

In your account, you’ll be able to check the status of your student loans and update any contact information needed. You can use it to apply for repayment assistance and request changes to your repayment terms (e.g. extend your payback period). 

Step 4: Receive your repayment package

Within your 6-month grace period, you will also receive a package from the NSLSC. This package will inform you of the total number of payments you’ll be making, when you’ll need to make your first payment, and the interest rates on your loan. 

Step 5: Repay the loan

After the 6-month period ends, it’s time to actually start repaying your loan. Remember, your OSAP loan payments are made through your NSLSC account, and not your OSAP account. 

Log into your NSLSC account and choose your payment method. A great way to ensure that all your payments will be made on time is by using pre-authorized debit. Having your pre-authorized debit set up means that each month, your payment will be withdrawn from your bank account automatically.

On the other hand, you can also log into your account each time and make lump-sum payments with your banking information. That way, you’ll be able to pay off your loan faster by giving more money each time. The NSLSC also accepts payments through online banking, telephone banking, cheques, money orders, cashier’s cheques, and bank drafts. 

By default, OSAP loans are scheduled to be repaid over 9.5 years (114 months), though you can repay your loan faster or extend your repayment period if needed. You can also extend this period in your NSLSC account to up to 14.5 years if needed. And after you’ve completed all your payments, you’ll receive a notice from the NSLSC and be officially student debt-free. 

Can you extend your OSAP grace period?

You can extend your 6-month grace period to a year if you either own (or co-own) an Ontario business or you work or volunteer at a non-profit. To be approved, submit an application with one of the following forms to the NSLSC within the original 6-month period:

• Application: one-year OSAP grace period for entrepreneurs
• Application: one-year OSAP grace period for not-for-profit employees

OSAP repayment assistance 

If you’re having trouble meeting your OSAP loan repayments, you can apply for the Repayment Assistance Plan (RAP) through your NSLSC account or by completing the paper application. 

If you’re eligible for the plan, you’ll get a new amount to pay back based on your family’s income, family size, and what’s leftover OSAP of your loan. The provincial and federal governments may help cover part or all of your interest, and in long-term cases, part of the principal.

If your income is below a certain threshold, you may not need to make a payment at all. Eligibility and payment amounts are based on income and family size, and you must reapply every six months to remain on the program.

To find out if you qualify for the Repayment Assistance Plan, you can fill out the Repayment Assistance Estimator. Also, keep in mind that the plan only lasts for 6 months, so you’ll need to keep re-applying if you would like to continue with further assistance. 

Repayment Assistance for Borrowers with a Disability (RAP-D)

If you have a disability and are struggling to repay your OSAP loans, you may qualify for additional help through the Repayment Assistance Plan for Borrowers with Disabilities (RAP-D).

RAP-D is a specialized stream of the standard Repayment Assistance Plan. The key difference is that it allows eligible borrowers to factor in disability-related expenses when determining what they can reasonably afford to repay. This can result in lower required payments than under the regular RAP program.

Like the regular Repayment Assistance Plan, you’ll need to reapply every six months to continue receiving support. You may also need to provide documentation confirming your disability if it is not already on file.

You can apply through your NSLSC account or by submitting a paper application. If you’re unsure whether you qualify, contacting the NSLSC directly can help you understand your options.

What happens if you don’t repay OSAP?

If you don’t make your required OSAP payments for 270 days, you’ll be in default. Having your student loans in default means that you’ve failed to repay your debt and it comes with the following consequences:

• The student debt is turned to a collection agency and reported to a credit bureau
• You can’t get more OSAP funding until you’re out of default
• It can be difficult to get a car loan, credit card, or mortgage
• You might not get your income tax refund or HST rebate 
• Your unpaid loan will continue to build interest

Your debt won’t be erased until you've paid off what you owe completely. To get out of default, you can visit Ontario’s page for useful resources. 

READ: What happens to your credit score if you default on student loans

The bottom line

When it comes to paying back OSAP, the most important thing is to figure out how much you owe and budget accordingly ahead of time. That way, you’ll be able to pay off your student debt as seamlessly as possible and avoid defaulting. If you’re having trouble with making your payments, you can also apply for the Repayment Assistance Program. Of course, paying it off as fast as you can is best. When you’re done, start investing the money using a robo advisor. Investing early will set you up for life. 

Also Read: 

• The 6 best student credit cards in Canada
• 5 financial to-do’s for higher education
• What should you do when student and credit card debts spiral out of control?