Ontario Student Loans-OSAP Repayment Assistance-Forgiveness

If you have an Ontario student loan you know that getting a post-secondary education in Canada is expensive and you may be seeking OSAP repayment assistance or OSAP loan forgiveness.

On average, you can expect to pay at least CA$6,463 per year for an undergraduate degree, and CA$7,056 per year for a graduate degree. It’s a requirement for many jobs, especially the ones with more employment opportunities. For many lower-income people who want to further their education part of the money to cover the cost of skyrocketing tuition fees will have to come from student loans, which you can obtain through a private lender or through government assistance. 

The Government of Canada at a federal level and most provincial and territorial governments offer grants and loans to finance post-secondary education through the Canada Student Loans Program, and for residents of Ontario, this comes in the form of the Ontario Student Assistance Program or OSAP. 

The OSAP is a financial tool set up by the provincial government to lend you money so that you can further your education and you can eventually get a lucrative high paying job that will allow you to create a life of your dreams so that you can pay back your student loans, pay your taxes and be an active contributing member of society. 

But life doesn’t always turn out to be a dream for some of us. In some cases, Canada student loans are putting students in serious debt. For some, it’s either changing economic conditions has made it challenging to find steady work in their chosen field and it has affected their ability to pay off their debt, or perhaps because of an unexpected life event they are no longer able to finish their studies and are suddenly left with an amount of outstanding debt they can’t afford to repay. 


Student debt is a big burden for many young Canadians. According to the Canadian Student Loan Program, the average student debt load at graduation is about $28,000 and most students take 10 years to pay off their educational debt.

After years of struggling, many graduates are either forced to put off major life milestones, like starting a family, buying a house, car and other assets because they simply can’t afford it, or they try their hardest to make sacrifices and make it all work — raise a family, work multiple jobs, make mortgage payments, and pay off credit card debt all while trying to keep up payments for their debt obligations. It’s not surprising that so many are seeking help to repay their student debt.

What Happens If You Don’t Pay Student Loans Canada?

Like any debt, it can lead to serious consequences if you don’t pay them. 

Government student loans include national student loans obtained through the National Student Loans Service Centre (NSLSC), or provincial student loans, such as Ontario student loans which are administered by the Ontario Student Assistance Program. These are loans you owe to the federal or provincial governments. An example would be OSAP loans for Ontario residences.

For federal or provincial student loans, if payments are not made for 9 months or 270 days, the loan automatically goes to default. Your account is then sent to the Canada Revenue Agency for collection. 

The broader collection powers of the CRA means that they can pursue collection activities against you even without any court order. They can issue a Requirement to Pay notice to your bank to freeze your bank accounts and to your employer to garnish your wages. They can also withhold your tax refund and apply this towards your student debt.


If you have private student loans, like credit cards or lines of credit, on top of government-funded loans, these will be treated largely as unsecured debts and will likely be referred to a collection agency once it defaults. You will then start to receive collection calls and collection letters and your unsecured creditors may pursue legal options such as a wage garnishment and also go after your co-signers if you have co-signed loans with them. 


For those struggling with provincial and federal student loans, you have several debt relief options available.

Canada & OSAP Repayment Assistance Plan (RAP)

If you are having trouble earning enough money and find it a struggle to make your minimum payments, you may be eligible to get repayment assistance under the RAP program. 

Every province has a repayment assistance program (RAP), and in Ontario, you have the OSAP repayment assistance. It’s not loan forgiveness, but rather an interest relief and debt reduction program. Under the OSAP RAP you are able to: 

  • Obtain payment deferral for several months 
  • Qualify for interest relief if you earn above a certain threshold.
  • Obtain principal reduction if interest relief is not enough to help you make the payments.

In order for you to apply for RAP, your Ontario student loan must be in good standing which means your loan payments are up to date and at least six months have passed since you finished school.

Revision of Terms

Under the Revision of Terms Plan, you can extend the amount of time to pay off the debt to make it easier to manage your student loans. This option will allow you to make smaller, more affordable monthly payments up to 15 years (or 10 years for borrowers with a permanent disability). It will mean paying more interest since it will take you longer to repay your loan, but if it allows you to stay current and avoid defaulting on your payments, this can be a viable option.


Canada Student Loan Forgiveness for Doctors and Nurses

Doctors and nurses can qualify for loan forgiveness for their Canada student loans by working in a remote or rural area. If you are a family doctor or resident in family medicine, you can qualify for up to $40,000 in loan forgiveness for a maximum of five years at $8,000 per year. Nurses or nurse practitioners can qualify for up to $20,000 in Canada student loan forgiveness for a maximum of five years at $4,000 per year.

Filing a Consumer Proposal

This can be an option for you if you have been out of school for seven years or longer. Filing a consumer proposal will allow you to combine your Ontario student loans with other unsecured debts such as credit card debts, tax debts and lines of credit into one monthly repayment plan that you can pay off for 3-5 years. A proposal is a form of debt forgiveness as debts can be cancelled by as much as 70% to 80% if your trustee can negotiate the terms favourably to your creditors. This allows you to pay only a portion of your debt as well as gives you a timeline to pay off all your debts.

Filing for Bankruptcy

In the same way as a consumer proposal, outstanding student loans can be discharged through bankruptcy if you have been out of school for more than 7 years. This is often taken as an option of last resort when other debt-relief alternatives have been carefully considered. A licensed insolvency trustee will be able to determine if this is a viable option for you.  


Ontario student loans are meant to assist you, not burden you with debt. However, we’ve seen young people who have taken on educational debt file for insolvency to deal with overwhelming student debt. Even after years of struggling to pay them off, they see no way out of the debt trap. 

We at Richard Killen & Associates assure you that there is a way out. If you are having a difficult time managing your debt, the best thing to do is to be proactive and look for some assistance right away. Don’t hesitate to give us a call at 1-888-545-5365 to talk to one of our local licensed insolvency trustees so you can find out what options you have for student debt relief. 

The government has put in place various Ontario student loan programs for OSAP repayment assistance, OSAP loan forgiveness and Canada student loan forgiveness so be sure to call us if you are having trouble making your payments.

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    Since 1992, Richard Killen & Associates, a Licensed Insolvency Trustee, have helped thousands of people resolve their financial problems. With 25 years experience in this industry, our president, Richard Killen, and the rest of our team understand the difficulties that honest people can sometimes find themselves in. This expertise makes it possible to provide you with a service that effectively deals with the issues.

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