Big Changes Are Coming to OSAP

The Government of Ontario has announced substantial changes to the provincial student loan program that will make repayment more challenging.

The Government of Ontario recently announced important changes to the way the Ontario Student Assistance Program — more popularly known as OSAP — is repaid. OSAP is the provincial student loan program for students from Ontario, and these new rules will affect all new borrowers applying for OSAP.

We'll have more details when the 2026/27 OSAP application is released this spring, but here's what we know so far:

Loans versus grants

When a student receives funding from OSAP, the money comes in two basic types:

• Grants, which don't have to be repaid
• Loans, which do have to be repaid, with interest

The current system, which will soon be the "old" system, allows students to receive as much as 85% of their total funding as grants, which don't have to be repaid. So, some students had to repay as little as 15% of the money they received from OSAP, depending on family income and other factors.

The new system: more loans, fewer grants

The proposed new system is almost the complete opposite. Now, students will receive a maximum of 25% of their total funding as grants, meaning that up to 75% of OSAP funding received will have to be repaid after graduation, with interest.

In short, more graduates will have to repay more money after graduation. This will likely mean larger payments, more frequently, which could put new graduates in a tough financial position.

When implemented, these changes will affect all OSAP borrowers. OSAP repayment assistance will still be available, which is good, as more students are likely to need it.

An illustrative example

As an example, let's assume you apply for OSAP, and you're approved for $10,000.

Under the current system, let's assume your $10,000 assessment is split down the middle, so you receive 50% as a grant and 50% as a loan. After graduation, you'll be responsible for paying back 50% of your $10,000 assessment: a $5,000 loan, plus interest. You can expect to pay approximately $97 per month for 5 years to pay off this loan.

Under the new system, you can receive, at most, 25% of your $10,000 assessment as a grant, meaning the remaining 75% is a repayable loan. After graduation, you'll be responsible for paying back 75% of your $10,000 assessment: a $7,500 loan, plus interest. You can expect to pay approximately $146 per month for 5 years to pay off this loan.

So, under the new system, your initial repayment is much bigger, which means larger payments, and more interest charges. In short, under the new system, OSAP will become more expensive for more students.

How OSAP repayment works

OSAP borrowers have up to six months after graduation to start repaying loans. A repayment assistance plan may be available, depending on your circumstances.

You can calculate your estimated repayment using the OSAP repayment calculator. The interest rate is prime +1%. At time of writing, prime is 4.45%, so interest on an OSAP loan is 5.45%.

No grants at private colleges

An additional change is coming for private career colleges, too. Private colleges will no longer be eligible for grants from OSAP. Students attending a private college can still take out an OSAP loan, but any money borrowed must be repaid — there will be no grant portion available.

The Government of Ontario claims these changes bring OSAP closer in line with other provinces, but overall, this is unfortunate news for Ontario students. Under the new system, OSAP will be more expensive, so saving money, and spending wisely, will become even more important. Remember to check with your school's financial aid department, and check out ScholarshipsCanada, for other funding sources that don't need to be paid back, in order to help you fund your education in Ontario.