OSAP Repayment: What Happens the Month After You Graduate

You finished school. Six months later, your OSAP repayment starts — and most graduates have no idea what to actually expect. The numbers on your loan statement can be jarring if you haven’t looked at them since signing your first funding offer three years ago. Here’s everything you need to know about the OSAP repayment process before that first bill lands.

The 6-Month Non-Repayment Period

After you graduate, leave school, or drop below full-time enrollment, you enter a 6-month non-repayment period (sometimes called the “grace period”). During this time, you don’t make payments — but interest does not accumulate on your federal OSAP loan.

This changed in 2023: the federal government eliminated interest on Canada Student Loans. As of April 2023, the federal portion of OSAP is interest-free for the life of your loan — during school, during the non-repayment period, and throughout repayment.

The Ontario provincial portion of OSAP operates differently. The provincial component does not currently charge interest either, following Ontario’s 2019 changes. Confirm the current terms for your specific loan at the time of repayment, as provincial policies can change.

Practically: during your 6-month window, use the time to understand your loan balance, register for the National Student Loans Service Centre (NSLSC), set up a repayment plan, and apply for assistance if needed.

What Your Repayment Looks Like

Once the non-repayment period ends, you enter the standard Repayment Assistance Plan (RAP) calculation. The default repayment period for OSAP is up to 10 years — though you can extend this by up to 5 additional years if you qualify.

Your monthly payment is calculated based on:

1. Your total loan balance
2. The interest rate (0% for federal; check current provincial rate)
3. The repayment period you select

For example: a $30,000 OSAP balance repaid over 10 years with 0% interest = $250/month exactly. This is simpler than most people expect.

Payments are made to the National Student Loans Service Centre (NSLSC) for federal loans. You’ll register at nslsc.canlearn.ca before repayment begins.

Repayment Assistance Plan (RAP)

This is the most important program most OSAP graduates don’t know exists. The Repayment Assistance Plan caps your monthly OSAP payment at 20% of your gross family income. If you can’t afford your minimum payment, you shouldn’t be missing payments — you should be applying for RAP.

How RAP works:

• Apply online at nslsc.canlearn.ca
• The government covers the interest portion you can’t afford
• After 10 years on RAP, any remaining balance on your federal loan is forgiven
• After 15 years on RAP, the same applies to the provincial portion

RAP is renewable: apply every 6 months by submitting proof of income. There’s no penalty for using it, it doesn’t affect your credit score, and it doesn’t affect your ability to eventually apply for a mortgage.

If your income is below the threshold (roughly $25,000–$40,000 depending on family size), your required monthly payment under RAP could be $0. You’re still making progress under RAP because the government is covering the gap.

What Happens If You Miss Payments

Missed payments without applying for RAP create real problems:

Within 90 days: NSLSC will contact you and attempt to arrange repayment. Your credit score begins to take hits.

After 270 days (9 months): Your loan goes into default. At this point:

• The federal government reports the default to credit bureaus
• Canada Revenue Agency can withhold your tax refunds
• Future government programs (grants, loans) become inaccessible
• Legal collection action can begin

Default is avoidable. If you’re struggling, RAP is always the right move — not ignoring the bill.

Paying Down Your Loan Faster

If you have income above your minimum payment, aggressively paying down OSAP is straightforward:

• Make extra payments anytime, no prepayment penalty
• Designate additional payments toward principal
• The faster you eliminate the balance, the less interest (even at 0% provincial, faster is still better than slower)

Priority question: should you pay down OSAP before investing? With a 0% interest federal loan, mathematically you should prioritize TFSA or RRSP investing — money in a TFSA earning even 4% beats paying down a 0% loan. But if the psychological weight of the debt matters to you, paying it down first is also a reasonable choice.

Frequently Asked Questions

When does OSAP repayment start after graduation?

Repayment begins 6 months after you graduate, leave school, or drop to part-time enrollment. You do not make payments during this 6-month non-repayment period.

Does OSAP charge interest in 2026?

The federal portion of OSAP (Canada Student Loan) is interest-free as of April 2023. The Ontario provincial portion also currently charges no interest. Confirm the current status for your specific loan at nslsc.canlearn.ca.

What is the OSAP Repayment Assistance Plan?

The Repayment Assistance Plan (RAP) limits your monthly OSAP payment to 20% of your gross income. If your payment would exceed that threshold, the government covers the difference. After 10–15 years on RAP, any remaining balance is forgiven.

What happens if I default on OSAP?

After 270 days of missed payments, your loan goes into default. CRA can withhold tax refunds, your credit score is affected, and collection action can begin. Apply for RAP before defaulting — it’s available even at $0 income.

Can I pay off my OSAP early?

Yes. You can make extra payments at any time with no prepayment penalties. Additional payments go toward your principal and reduce your total loan balance faster.

How do I contact NSLSC about my OSAP repayment?

Register and manage your account at nslsc.canlearn.ca. You can apply for RAP, set up automatic payments, request a repayment schedule, or get information about your current balance there.