The overall 2013 default rate for Ontario postsecondary institutions is 9.6%. The 2013 default rates for each sector range from 4.5% for universities, to 13.2% for colleges of applied arts and technology, to 18.8% for private career colleges and 3.7% for other private and publicly funded institutions.
To date, the Ministry has taken a number of measures to reduce the incidence and cost of loan defaults. These include but are not limited to:
Repayment Assistance Plan
On November 1, 2010, the Ontario Government joined the federal Repayment Assistance Plan (RAP) to provide students with more help in repaying their Ontario student loan. Eligibility for RAP is tested based on the applicant’s post-study family income, family size and student loan debt. While participating in the Plan, either no payment is required, or the borrower qualifies for a reduced payment. Each term of repayment assistance is for 6 months. To remain eligible to apply, borrowers must keep their loans in good standing. After 15 years, loans are reduced to 0 while participating in the Plan. For students with disabilities, any remaining loan is forgiven after 10 years while participating in the Plan. For students with disabilities, any remaining debt is forgiven after 10 years.
The 2013 OSAP Repayment Assistance Plan participation rates by institution are available at the Ontario Open Data website at https://www.ontario.ca/education-and-training/osap-repayment-assistance-plan-usage-0 . These rates indicate the percentage of borrowers in the 2013 OSAP default rate report that received repayment assistance for one or more six month periods between the end of their 2010-11 studies and July 2013. The 2013 provincial average repayment assistance rate is 31.7%.
Sharing the Cost of Loan Defaults
The sharing of loan default costs first applied to loans issued in 1998-99. For these loans, institutions with a 1997 default rate 15 percentage points or more above the 1997 provincial average of 23.5% were required to share the cost of defaults.
For loans issued in 1999-00, the policy applied to institutions with a 1997 default rate 10 percentage points or more above 23.5%.
For loans issued in 2000-01, the policy applied to institutions with a 1999 default rate above 28.5%.
For loans issued from 2001-02 to 2013-14, the policy applied to institutions with annual default rates above 25.0%.
For loans issued in 2014-15, the default cost sharing policy will apply to institutions with a 2013 default rate above 22.5%.
Reporting Program Outcomes
Institutions are required to provide students with accurate information on default rates, graduation rates, and graduate employment rates by program so that students can make a more informed choice of studies.
Ontario Student Opportunity Grant
Students who borrow more than $7,300 for a two-term academic year receive a grant for the eligible amount above $7,300. The eligible loan amount is determined after verification of reported income with the Canada Revenue Agency. Qualified borrowers must also complete their academic year and keep their loans in good standing while eligibility is assessed.
30% Off Ontario Tuition Grant
The Government of Ontario launched the 30% Off Ontario Tuition grant in January 2012. In 2013-14, students in a university or college degree program saved $1,730 on tuition, while students in college diploma or certificate programs saved $790. About 230,000 college and university students saw their tuition costs reduced in 2013-14.
Ontario Access Grants
Introduced in 2005-06, the Government of Ontario now provides the Ontario Access Grant (OAG) to first-year and second-year students from low-income and modest middle-income families (generally those earning under $82,000 in income per year, net of deductions) who attend postsecondary studies for the first time. The value of the OAG is equal to the lesser of: 50% of actual tuition; $3,000; or the student’s Ontario Student Loan entitlement.
Credit Screening
New loan applicants aged 22 and older who have been in arrears for 90 days or more on three or more personal loans or credit accounts in the past three years, each with a value of $1,000 or more, are ineligible for student loans. Students may still become eligible if they appeal and can demonstrate exceptional circumstances and a strong likelihood of repayment.
Interest Free Grace Period
The government pays the interest charges on the Ontario portion of student loans during the first six months after full-time studies, and no payments are required. This makes the Ontario portion of all OSAP loans interest free and payment free for the first six months for all borrowers. In addition, borrowers who work in the non-profit sector or start their own business can apply to have their grace period extended to one year.
Income Verification
The Ministry verifies income information that students, their parents or spouses provide to OSAP with taxpayer information from Canada Revenue Agency. When income is under-reported, students are notified and overpayments are deducted from future loans or grants for which the student may be eligible.
Closing the Bankruptcy Loophole
Federal legislation exempts federal and provincial student loans from being included in bankruptcy proceedings for a 7-year period following students’ completion of their studies.
Collections
The province recovers monies owed on student loans through contracted private collection agencies and set-offs against defaulters’ personal income tax refunds.
Postsecondary institutions have an important role to play in reducing loan defaults. Improving program quality and relevance, ensuring adequate recruitment, testing and admissions practices, providing support to students to complete their studies and providing assistance with job placement are examples of measures institutions can take to reduce student loan defaults.
