If you recently received a message like this through the OSAP Message Centre, read on to find out why OSAP may convert grants to a loan and what you can do to prevent it from happening.

Screen image showing OSAP Message Centre post. Text reads "Important information is now available about grants being converted to a loan."

Why does OSAP Convert Grants to a Loan?

If you’re a dependent student, the grant and loan funding you receive through OSAP is based on a financial need calculation which considers your parent(s) prior year income. If you’re an independent student, your personal prior year income is considered instead.

Since grants are non-repayable funding based on financial need, the government needs to verify your financial situation. When it comes to Canadian taxable income, electronic verification is processed through the Canada Revenue Agency. For non-taxable and/or foreign income, you are asked to submit supporting documentation which is reviewed manually by OSAP.

Income verification is attempted before the school year starts, but sometimes it cannot be completed until after you begin your studies. Since you need your funding in September when classes begin for the Fall term, OSAP goes ahead and releases your grant and loan funding at that time, even if income verification has not been completed. OSAP then provides you with one year from the start of your study period to complete the income verification process.

If OSAP is unable to verify the income on your application by the end of the year, they convert all or part of your grants to loans because they were unable to confirm your eligibility to receive the grants.

Note: There are other cases in which OSAP will convert grants to loan such as when you withdraw from the study period after receiving your funding. This article only concerns cases due to lack of income verification.

I Received a Grant to Loan Message. What do I do?

If you received a grant to loan message on your 2020-21 OSAP application, it is because OSAP was unable to verify the income information you provided. OSAP has not actually converted your grants to loans at this point. OSAP gives you one year to verify your income before converting any grants, so if your studies started on September 9, 2020, you have until September 9, 2021 to take care of it.

To find out what income needs to be verified, log into the OSAP application portal and check the status of your 2020-21 OSAP application. On the Check Status page, you will now see this button:

Screen image of income verification status button on OSAP application website. Accompanying text reads "Grants converted to a loan: Your grant funding may be converted to a loan because we haven't been able to verify income on your application. Learn how income verification affects your grants."

Clicking it will take you to page that clearly identifies what needs to be verified and what you need to do. In many cases, the issue is that you (or your parents, or your spouse) have not properly filed your prior year Canadian tax return. If that is the case, complete them as soon as possible. OSAP will continue to attempt to verify this information automatically.

Another common issue is that you reported income on your OSAP application that was earned outside of Canada but have not provided the requested supporting documents. If this is the case, revisit your online OSAP application to find out what you must submit to satisfy the documentation requirements. OSAP cannot verify this information automatically; you must provide suitable proof of income.

Note: If you have submitted proof of income documents but are still receiving messages, check your OSAP Message Centre. OSAP may have sent you a message explaining why your documents were not accepted and what you need to provide.

Should you have any further questions or concerns, please do not hesitate to contact us.