So you’re wrapping up the term, working fervently on term papers and studying for exams. You take a break and check your mail to see that the National Student Loans Service Centre (NSLSC) has sent you a letter advising you that your study period ends on April 27. Also in the letter, the NSLSC wants you to know that after April 27, interest will begin accruing on the federal portion of your student loan and after six months, you will need to start paying it all back.
“But I’ve only finished my first year, I’ve got three more to go”, you think to yourself. “Aren’t government student loans supposed to be interest-and payment-free as long as I’m a full-time student?”
Don’t Panic! Here’s why the NSLSC sends you this letter.
The NSLSC only knows your last confirmed study period through OSAP
When you sign your Master Student Financial Assistance Agreement (MSFAA) to receive OSAP funding, you enter into a loan agreement with Ontario and Canada, where the disbursement and repayment of your funding is administered by the NSLSC.
When your enrolment is confirmed for the release of your funding, OSAP provides the NSLSC with your full-time study period start and end dates. This ensures the NSLSC can properly carry out the terms of your loan agreement, keeping your loans interest-free while you are studying full-time, and initiating repayment when you cease to be a full-time student.
There’s no way to know if you’re coming back to school full-time
While it might seem obvious to you that you’ll be a full-time student for another few years, the NSLSC can’t know for certain that you’ll return next year. Therefore, they have to initiate the repayment process at the end of your OSAP confirmed study period.
This is why you are receiving this letter.
Now here’s the part that will ease your mind.
When you reapply for OSAP for next year, all is reversed
The grace period before you have to begin repaying your loans is six months and the summer break is only four months long. As long as your fall term enrolment is confirmed to OSAP before November, the NSLSC will know you have returned to school full-time. This will place your loans back on interest-free status, reversing any interest calculated in the summer.
Then, the process will start all over again, only the next time you receive that end of study period notice letter, you’ll know exactly why they sent it.
If you won’t be reapplying for OSAP but are returning to school full-time, you can let the NSLSC know
If you are returning to full-time studies in the fall, but won’t be applying for OSAP, you’re going to have to let the NSLSC know. You can do this through the Continuation of Interest-Free Status application, available online through your OSAP account.
You’ll want to set a reminder on your phone to do this the last week of August though, as the application can only be submitted within fifteen days of your study period start date.
If you won’t be returning to school full time
The system works! You should probably learn about the repayment process.
A note for out-of-province students
If you moved to Ontario to study and receive student loans from your home province or territory, the process described above is very similar. Your student aid program website will have information on how to keep your loans interest-free. If you have questions, please contact us.