This weekend, Premier Dalton McGuinty announced that students working in the not-for-profit sector will be eligible for an extended interest-free grace period from Ontario Student Loan payments after graduation. As such, graduates who work for organizations that are not-for-profit will not be required to begin paying back their student loans for a full year after graduation. Registered charities and advocacy groups are examples of workplaces that would make recent graduates eligible for the program, whereas the public and private sector would be ineligible.
All students are currently allowed a six-month grace period, which allows students time to access employment and begin earning income before OSAP payments begin. This grace period is interest-free on the Ontario Student Loan, while interest begins to accumulate immediately on the Canada Student Loan portion which accounts for approximately 60% of the average aid package. This flextime is critical to helping avoid student loan defaults, which have fallen substantially over the past decade from 9% to 5%. Additionally, it is well known that students with high debt obligations are less likely to have savings, purchase automobiles or property and contribute fully to the economy. Time to accumulate some savings and plan for payment is critical to a student’s ability to thrive later in life.
As such, the new program is a clear incentive for students to take work in the not-for-profit sector. The Premier has stated that this was indeed the goal of the program. Since non-for-profit wages are often lower than comparable public and private sector wages, this incentive could persuade some graduates to pursue charity or advocacy work. At the very least, it will help some students struggling with debt repayment in concert with the recently implemented Repayment Assistance Plan.
It is also worth noting that this program is the first known component of the forthcoming Liberal platform for education. It is encouraging to see that this initial contribution to the election has been centered on post-secondary education. The Ontario Undergraduate Student Alliance looks forward to the full platform and further clarity on the party’s proposed next steps on tuition and financial assistance to ensure access to higher education for all Ontario students.
Patrick Searle
VP University Affairs
University Students’ Council, University of Western Ontario
How might someone go about applying for this extended grace period? I have been trying to find out for the past month.
Hi Kyle, as of right now, the program is just a promise that hasn’t been implemented. The earliest date it likely will be implemented would be the next Ontario budget in March 2012. Once we have clarity on when it is up and running, we’ll get back to you. If you are having trouble with repayment though, you can apply for the Repayment Assistance Plan (information at http://www.canlearn.ca/eng/after/repaymentassistance/rpp.shtml).