Repaying

Help with Repaying - Debt Reduction

Debt Reduction

Debt Reduction is available to help reduce your student loan debt if you are still having difficulties repaying your student loans 5 or more years after school. Eligibility is based on your gross family income (before deductions), government student loan debt, and family size.

Debt reduction on the Ontario portion of your Canada-Ontario Integrated Student Loans (full-time student loans) is provided through the Ontario Debt Reduction in Repayment Program. Starting August 1, 2009, debt reduction on the Canada portion of your full-time student loans and on your Part-Time Canada Student Loans will be provided through the federal government’s Repayment Assistance Plan (RAP).

Debt reduction for the Ontario portion is provided in up to three lump sum payments, at least one year apart, of $4,300, $2,200 and $2,200. These payments are applied directly to the balance of the Ontario portion. To become eligible for these reductions you must first exhaust all available periods of interest relief on the Ontario portion – (i.e. be at least 5 years out of school and have received at least 30 months of Interest Relief). If you do not qualify for debt reduction on the Ontario portion of your Canada-Ontario Integrated Student Loan, you may still qualify on the Canada portion.

Debt reduction for the Canada portion of your full-time student loans or for your Part-Time Canada Student Loans occurs after you reach 60 months of interest relief or have been in repayment for 10 years since finishing school. If you qualify, the federal government will make monthly contributions that will help retire the Canada portion within 15 years from the date you entered repayment after finishing school.

By submitting a single application to the National Student Loans Service Centre (NSLSC), you will be assessed for repayment assistance (i.e. debt reduction or interest relief) on both the Canada and Ontario portions of your full-time student loans and/or your Part-Time Canada Student Loans.

Like interest relief, eligibility for debt reduction is based on gross family income, government student loan debt, and family size. To be approved for additional terms of debt reduction you must reapply.

If you do not qualify for debt reduction or interest relief but are having difficulty repaying your student loans, you can request a Revision of Terms which can reduce your monthly payments to a more affordable level by extending the repayment term of your loan.

Any payment you make above what is required during debt reduction will be applied directly towards reducing your loan principal. To be eligible for additional terms of Debt Reduction you must reapply.

You must meet all eligibility criteria in order to be granted debt reduction and provide any required proof of income.

Eligibility Requirements

The following is a list of eligibility requirements:

You must have consolidated your loan(s) and signed a Consolidation Agreement for your OSAP loans. If you have not signed a Consolidation Agreement, contact the NSLSC.

You must reside in Canada. An individual who is participating in an international internship program or is a member of the Canadian Armed Forces who is stationed abroad is considered to be residing in Canada.

You must have reached at least 30 months of interest relief on the Ontario portion of your student loans and be at least 5 years out of school. You must either reach 60 months of interest relief on the Canada portion of your full-time student loans and/or your Part-Time Canada Student Loans or be at least 10 years into repayment since finishing school..

You must make any overdue payments before the start of the period for which you would otherwise be eligible for debt reduction.

Your eligibility for debt reduction will be assessed based on your gross family income including your spouse’s/partner’s income if married/common law, family size, and government student loans.

Your eligibility for debt reduction must not have been previously revoked or terminated.

You may be ineligible for debt reduction if you are currently restricted from eligibility for student loans from the Government of Canada and/or the province from which your student loans were issued.

If you do not qualify for Debt Reduction on your student loans, you may lower your monthly payments by lengthening the loan repayment period through Revision of Terms.

How to Apply for Debt Reduction

For your Canada-Ontario Integrated Student Loan and for your Part-Time Canada Student Loan, you only have to fill out one repayment assistance application in order to be considered for debt reduction or interest relief on your student loans. This application is available from the National Student Loan Service Centre (NSLSC). For more information, please contact the NSLSC at one of the following numbers.

Toll Free: 1 888 815-4514 (within North America)

1 800 225-2501 (outside North America)

TTY: 1 888 815-4556

NOTE: If, in addition to a Canada-Ontario Integrated Student Loan, you also hold Canada Student Loans negotiated prior to August 1, 2000 and/or Ontario Student Loans negotiated prior to August 1, 2001, these loans will be included in your single application to the NSLSC.

If you do not hold a Canada-Ontario Integrated Student Loan and hold only a Canada Student Loan issued prior to August 1, 2000 and/or an Ontario Student Loan negotiated prior to August 1, 2001, (and), you must apply for repayment assistance through the financial institution that issued your student loans.