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Newfoundgrant: Newfoundland and Labrador, Non-Repayable Grants, and OSAP

As some of you are probably aware, Newfoundland has been in the news today for converting their provincial student loans to non-repayable grants. This means that the provincial portion of a student’s debt (forty percent of their overall debt, with the additional sixty percent being a federal loan) is automatically “forgiven”; students who study in-province are not required to pay it back. This is definitely a pretty cool move on the part of the NFLD government, and sets the province apart as the only province in Canada to have fully converted their loans to grants (and the only province to have a time zone that works on the half hour).

We’ve been getting a lot of questions about when we can expect Ontario to follow suit– but as with so many things in the Ontario Student Assistance Program, the answer is complicated. The good news is that, in several important ways, Ontario does have a similar system of non-repayable grants. However, what has been happening in Newfoundland these past few months is a good chance to talk about how we can do it better in Ontario.

So what do we mean by all that? A lot of people don’t know about a program called the Ontario Student Opportunities Grant (OSOG), which converts any amount of loan you receive beyond the OSOG cap (which is $7400 this year) into a grant as you complete each year of your program. It just so happens, as explained above, that the OSOG cap sits at the 60/40 divide between federal and provincial responsibilities. So, for students who are awarded the maximum loan amounts for their Canada-Ontario Integrated Student Loan (COISL), the province is essentially writing off their entire provincial loan, as is now the case in Newfoundland.

Things are a little different for students who are not awarded the maximum loan amounts in Ontario. Unlike Newfoundland, Ontario is only going to write-off the loan amount beyond the OSOG cap, so for students not hitting maximum amounts, they will have to pay back some of their provincially awarded loan since, less of their total integrated loan rises above the OSOG cap.  Presumably, students in Newfoundland are going to receive their non-repayable grants ‘up-front.’ This is again in contrast to Ontario’s OSOG, which is only officially awarded to students when they begin repaying their debt.

So, while OSOG may target the students that would benefit from loan remission the most- with the assumption being that students who are not receiving the maximum loan amounts do not have as much financial need as students who do- there are a couple of problems with this way of doing things. It’s likely most of you reading this are completely unaware that OSOG exists. To add fuel to the fire, you won’t know you’ve received this grant until you start to pay off your student debt. These two issues combined mean that students’ perception of their debt is inflated.

The province should consider offering its non-repayable grant program (OSOG) up-front, just like Newfoundland, so that students like you have a realistic expectation of their government debt. In changing students’ expectations, there is the chance their behaviour may change as well. Students could prepare in advance for loan repayment, know exactly how much they owe, and even plan to acquire large assets (like a mortgage on a house, for example) that we know students avoid when they perceive their student debts to be quite large.

The point is, students need to be set-up for success. Newfoundland is doing a great job of making their students aware of all of the grant programs available to them and ensuring students have realistic expectations of their student debt. Ontario could do better as well if would focus its attention to student financial assistance on the period pre-study, i.e. before students are taking out loans and covering the high up-front costs of their education.