ABOUT OSAP
Loan Forgiveness Program
Starting in the 1998-99 academic year, the Loan Forgiveness Program has been replaced by the Ontario Student Opportunity Grant. Loan Forgiveness will continue to be provided for loans issued from the 1993-94 to 1997-98 academic years.
Purpose and Description
The Loan Forgiveness Program was developed to help students reduce their debt loads. Starting the 1993-94 to the 1997-98 academic years, students who received Canada and/or Ontario Student Loans through OSAP may be eligible to have a portion of their loans forgiven by the Province of Ontario.
After your loan is consolidated and all income is verified, the ministry automatically calculates the amount of loan forgiveness you are eligible to receive based on the total number of terms in your study period(s). The loan forgiveness amount is subtracted from the total amount of Canada Student Loans and Ontario Student Loans that you were entitled to or borrowed.
Loan Forgiveness is paid if your loan is in good standing and after you have consolidated your loan and all income information has been verified. The ministry forwards the loan forgiveness amount directly to your bank to pay down your loan.
How the loan forgiveness process works
Six months after you complete your postsecondary studies or stop being a full-time student, you are responsible for repaying your student loans. Before this six-month period ends, you must contact your bank to discuss and agree upon the repayment terms (monthly payment amount, method of payment, and the number of years in the repayment period). This process is called "consolidation".
When you sign a consolidation agreement with the bank, the agreement is forwarded to the Ministry of Training, Colleges and Universities. The receipt of this agreement begins the process of determining if you are eligible for Loan Forgiveness including:
- the determination that your loan is in good standing (i.e., you have not defaulted on your loan.)
- the verification of all your (and your spouse's or parents, if applicable) income information with Revenue Canada.
During verification, all income information (including yours and your spouse's or your parent(s) if applicable) indicated in your OSAP file are verified with Canada Customs and Revenue Agency(CCRA). If there is a difference in the amount of income reported in your OSAP file and the amount on file at CCRA, the CCRA amount is used to calculate your loan forgiveness amount.
Once all the income information has been verified, your loan forgiveness amount is calculated. The ministry then sends the loan forgiveness amount directly to your bank to be applied against the principal amount of your loan(s). Loan Forgiveness is processed monthly.
If you have repaid your Canada and/or Ontario Student Loans in full within six months after you have completed your postsecondary studies or stopped being a full-time student, you must request that your loan forgiveness amount be calculated. Send the Ministry of Training, Colleges and Universities a letter requesting that loan forgiveness be calculated. This letter must include your current mailing address and Social Insurance Number, and the name, complete address and transit number of the bank in Ontario that held your loan(s). You must also attach documentation that indicates that your Canada and/or Ontario Student Loans have been paid in full (e.g., a letter from the bank or a receipt stating the loan has been paid in full) The ministry will send to your bank in Ontario the loan forgiveness amount that you receive.
You must make arrangements with the bank that held your loan(s) to forward your loan forgiveness amount to you.
When You Are Not Eligible For Loan Forgiveness
You are not eligible for loan forgiveness if:
- Your loans are not in good standing, which means you have defaulted on a Canada Student Loan or on provincial funding (i.e., do not repay an Ontario Student Loan or bursary overpayment). You are not eligible even if you have repaid the defaulted loans in full.
- You accepted a student loan but do not attend classes.
- You did not complete all the forms required to consolidate your loan.
- You received a loan by the use of false, inaccurate, or incomplete information.
How the Loan Forgiveness Amount Is Calculated
The amount of loan that will be forgiven is based on a loan forgiveness level, which is the maximum amount of loan that you must repay. Any amount of loan borrowed above this loan forgiveness level is forgiven. Remember, if your loan is reassessed, your loan forgiveness amount will be affected.
The loan forgiveness level is calculated on the cumulative value of loans you borrowed from the 1993-94 academic year to the end of your 1997-98 study period . The total of both your Canada Student Loans and Ontario Student Loans is used to calculate this cumulative total. Starting in the 1998-99 academic year the Loan Forgiveness Program has been replaced by the Ontario Student Opportunity Grant.
Note:
- The loan forgiveness levels for the 1997-98 academic year are different than the levels prior to 1997-98 as indicated in the chart below.
- Loans negotiated before the 1993-94 academic year are not eligible for loan forgiveness.
- Students enrolled in a 1-term program are not eligible for loan forgiveness.
Loan Forgiveness Level
| Total number of terms | Loan forgiveness levels prior to 1997-98 | 1997-98 loan forgiveness levels |
|---|---|---|
| 1 term | Loan forgiveness not available | Loan Forgiveness not available |
| 2 terms | $6,000 | $7,000 |
| 3 terms | $9,000 | $10,500 |
| 4 terms | $12,000 | $14,000 |
| 5 terms | $15,000 | $17,500 |
| 6 terms | $18,000 | $21,000 |
| 7 terms | $21,000 | $24,500 |
| 8 terms | $24,000 | $28,000 |
| For each additional term add $3,000 | For each additional term add $3,000 | For each additional term add $3,500 |
Number of Terms
| Study period length | Number of terms |
|---|---|
| 4 - 20 weeks | 1 term |
| 21 - 40 weeks | 2 terms |
| 41 - 52 weeks | 3 terms |
1993-94 to 1996-97
The total amount of loan(s) borrowed between 1993-94 and 1996-97 minus the total combined loan forgiveness levels for each completed year equals the amount of loan forgiven. For example, for the years 1993-94 to 1996-97, the loan forgiveness level for two terms of study (September to April) is $6,000. Therefore, the maximum loan you will have to repay for one year is $6,000. Any amount borrowed above $6,000 is forgiven.
1997-98
The total amount of loan(s) borrowed in 1997-98 minus the loan forgiveness level for that year equals the amount of loan forgiven. The 1997-98 loan forgiveness level for two terms of study (September to April) is $7,000. Therefore, the maximum loan you will have to repay is $7,000. Any amount borrowed above $7,000 is forgiven. For example, if you have borrowed $9,000, you will be required to repay $7,000 and the difference of $2,000, you will be forgiven.
