OSAP, Optimized: Pay Less, Finish Faster
What’s Inside: A clear, step-by-step way to pay off OSAP efficiently while saving on interest, plus a ready-to-use letter to accelerate repayment of your Ontario (provincial) portion.
What is OSAP?
The Ontario Student Assistance Program (OSAP) helps students cover the cost of their education through a mix of grants and loans. Grants are funds you keep, while loans must be repaid. After graduation, you have a 6-month grace period before payments are required to the National Student Loan Service Centre (NSLSC). Repayment is typically set on a 9½-year schedule, the average time it takes to repay an OSAP loan.
How We Recommend Paying Off Your OSAP
Your Ontario-Canada Integrated Loan is made up of two parts:
Federal (Canada) portion – interest-free.
Provincial (Ontario) portion – begins accumulating interest during the 6-month grace period.
To reduce the burden of interest:
Visit your bank and request a bank draft.
Write a short letter addressed to the National Student Loan Service Centre, clearly stating:
“This payment is to be applied directly to the provincial portion of my loan.”Mail the bank draft along with the letter to the NSLSC.
This ensures your payment goes directly toward the provincial portion, saving you money by tackling interest first.
Advisory
So, what does interest-free on the federal portion mean? An interest-free loan benefits you because you only repay what you borrowed, with no extra cost. This allows you to postpone payments on the federal portion while focusing on the provincial portion, which accrues interest. By doing this, you save more money in the long run.
As of April 1, 2023, the federal government removed interest on the federal portion of student loans. However, interest could return if government policy changes. That’s why we recommend treating the interest-free federal portion as a pause button, a chance to get ahead by paying off the provincial portion first.
NSLSC Letter Template
[Enter Date]
National Student Loans Service Centre (NSLSC)
P.O. Box 4030
Mississauga ON
L5A 4M4
Dear NSLSC,
My name is [Insert Name] and my Ontario-Canada integrated student loan number is [Insert Student Loan Number]. Please find enclosed a bank draft in the amount of [Enter $ Amount] to be applied toward my Ontario-Canada Integrated Student Loan. I kindly request that 100% of these funds be allocated to the Ontario portion of my loan. Should there be any surplus after this allocation, please apply the remaining balance to my Canada student loan.
If you require any additional information or documentation, please do not hesitate to contact me by phone at [Enter Phone Number] or by email at [Enter Email Address].
Thank you for your assistance.
Regards,
[Enter Name] Loan Number: [Enter Loan Number]
