# Grace Period
A Grace period is a 6-month period that begins after you graduate or leave school. During this period, you are not expected to start repaying your loan. However, what many students don’t know is that during this period, interest starts to accumulate (check "Pay back OSAP" (opens new window)). Earlier, we mentioned to take note that the Ontario (provincial) and Canada (federal) components of the loans are independent, and this is why: during the grace period, interest is not charged (check "Non-repayment Period" (opens new window)) on the federal portion of your loan, but it is charged on the provincial portion. After the 6-month grace period, interest will accumulate on both components of the loan.
Note
After the changes made by the provincial government (opens new window), interest will be charged on the provincial portion of the loan during the grace period instead of the federal portion. Prior to September 1, 2019 interest would accrue on the federal portion but not the provincial portion.
# Forgiven Interest
If you return to school as a full-time student within the 6-month grace period the accrued interest will be forgiven. Many students think of the grace period as a six-month "interest-free" period that begins after graduation. This is not entirely accurate. Post secondary students taking OSAP actually go through a grace period every year without even knowing about it. Each year, a grace period is initiated on the last day of your last OSAP-funded term. For most students, this is usually the end of April when the Winter semester finishes. So, unless you are taking spring/summer courses, interest accumulates during your summer break even if you plan to return to school for the fall semester. However, when you actually return to school in September, the interest gets cleared. This is because the spring/summer term is only 4 months, which is less than the maximum grace period of 6 months. By returning to school in September, you return to the In-Study category.
It is only if you decide to not return to school for the fall semester that the interest will not be forgiven and it will be added on to your outstanding loan. This is the case regardless of which term you are not in school. For example, if you take the winter semester off (4 months) but return in the spring/summer semester as a full-time student, the accrued interest will drop. However, if you take the winter semester AND the spring/summer semester off (8 months) the accrued interest will remain and you will even be required to start repaying your loans (and the accrued interest) after the 6-month mark. The only exception to the 6-month maximum is if you are registered in an approved co-op placement.
# Interest Rates During Grace Period
| Loan Type | Canada Portion | Provincial Portion |
|---|---|---|
| Canada – Ontario Integrated Student Loan | No Interest | Interest Accrues |
| Part Time Canada Student Loan | No Interest | Not Applicable |
Link to table (opens new window)
# Interest Rates After Grace Period (In Repayment)
| Loan Type | Canada Portion | Provincial Portion | ||
|---|---|---|---|---|
| Floating Interest rate | Fixed Interest Rate* | Floating Interest rate | Fixed Interest Rate* | |
| Canada Student Loan | Prime Rate | Prime Rate + 2% | Refer to your province or territory for information | |
| Canada-Ontario Integrated Student Loan | Prime Rate | Prime Rate + 2% | Prime Rate + 1.0% | Not available |
| Part Time Canada Student Loan | Prime Rate | Prime Rate + 2% | Not Applicable | |
Link to table (opens new window)
# Extensions
There are 2 ways to extend the grace period from 6 months to 1 year:
- Work in the Not-For-Profit sector
- Start a business
Note
You must apply within the first grace period (6 months)
Note
From the links below, we understood that this extension only applies to the Ontario portion of the Canada-Ontario Integrated Student loan. Which means you may have to start making payments for the Canada portion of the loan.
# Extension for Not-For-Profit Employees
To be considered, you must meet the following criteria:
- You left full-time postsecondary studies within the last six months.
- You have full-time OSAP loans not currently in repayment status.
- You are working in Ontario at least 30 hours per week (as a paid and/or volunteer worker) at an eligible not-for-profit organization.
Eligible not-for-profit organizations are entities registered with the Canada Revenue Agency. They must be registered as a charity and/or incorporated as a not-for-profit corporation or similar entity with Canada, Ontario or another Canadian province or territory.
The following organizations, which may fall within the above definition, are excluded for the purposes of this program:
- Schools (public and private elementary, secondary, and postsecondary)
- Hospitals (public and private)
- Federal, provincial and municipal governments and their agencies However, if you work at one of the excluded organizations and the work you do mainly or entirely involves administering their charitable activities (e.g., you raise funds or distribute raised funds for the charity or foundation of the organization), you can still apply for this program.
For more information click here (opens new window)
# Extension for Entrepreneurs
To be considered, you must meet the following criteria:
- You left full-time postsecondary studies within the last six months.
- You have full-time OSAP loans not currently in repayment status.
- You are the sole owner or joint owner of an eligible new business operating in Ontario (includes a director or officer of the business with a controlling share).
- You are currently working in Ontario at least 30 hours per week for your eligible new business*.
*Eligible new business means:
a business that has been registered with the CRA within the current calendar year or within the two previous calendar years; or a business registered with the CRA in which you acquired a controlling interest within the current calendar year or within the two previous calendar years.
For more information click here (opens new window)