Q. Let’s talk about how student loans are made available.

A. The objective of Ontario Student Assistance Program is to help students from lower income families meet the cost of a post-secondary education. Its purpose is to supplement, not to replace, the financial resources that you and your family are expected to contribute.

Q. Okay, so you have to bring something to the table.

A. Exactly. It is important that people understand from the very beginning that they have the responsibility to pay their loan back. Taxpayers are not going to pay your student loan for you.

Many measures have been put into place to make sure that students understand that responsibility. There are credit checks that they have to go through and other steps to make sure the taxpayer dollars are protected.

Q. So how do I qualify for OSAP?

A. To be considered for assistance you have to be a Canadian citizen or a permanent resident of Canada. For Ontario, you must have lived in Ontario for the 12 consecutive months immediately before the start of your most recent period of full-time study.

If the student has not been living in Ontario, there are cases where a partner or parent can meet the eligibility requirements for them.

Q. Are looking stability of residence?

A. Yes. And you also have to be enrolled or planning to be enrolled in an approved post-secondary institution. You have 30 days to negotiate your loan once you’ve been accepted. So you have to be pretty sure that you are in somewhere. If you miss that 30-day period, you start from square one.

Q. You talked about the fact that the loan is actually a supplement. What does OSAP expect students to arrive at the table with?

A. The formula, which cannot be disclosed, takes into consideration many of the assets and other things that students have. Of course, the more assistance you need, the higher it goes.

There are maximums on OSAP. The maximum is $275 per week for a single student with no dependants. A student who is married or in a common-law relationship who is a sole support parent can receive up to $500 per week. Another expectation is that the student’s parents must contribute towards the cost education.

Q. Contribute how much?

A. For a family of four with an annual income of $40,000, there is an expectation that the parent would contribute $100 towards the post-secondary education.

Q. $100 per week?

A. No, $100 total.

Q. Okay, so it is not a huge amount. Let’s talk about the repayment policy.

A. After students have finished their studies, there is a six-month grace period where they can choose to start paying off the loan or not. After six months, there is an expectation that they’ll begin to repay the loan.

Right now there are two repayment plans: one for the Ontario Student Loan and one for the Canada Student Loan. The Ontario Student Loan is Prime plus 1%. The Canada Student Loan is Prime plus 2.5%. So there are two repayment plans right now.

Q. What if you don’t start paying off the loan? What if you don’t have a job yet for example?

A. There are measures for people with low or no income. There is a period that the taxpayer will pay the interest on the loan and there [are circumstances where] the government will examine your financial situation and you may qualify for interest relief.

Q. It used to be that you could discharge your student loans along with all your other debts. Now, while you can declare bankruptcy you won’t actually end up discharging your student loan debt.

A. That’s right. The loan will stay.

Q. There’s also new legislation before the House of Commons right now on student loans, isn’t there?

A. We are looking at an agreement to harmonize the federal and provincial plans. We want to eliminate all the administrative hoops students jump through.

In the future, students will be dealing with one administrative body. They’ll have one loan, one repayment and one body that they have to talk to instead of two.

Q. Let’s talk about collection procedures.

A. The student must miss three payments or be 90 days or more in arrears. The bank would submit a claim to the Ministry with documentation to prove that the loan is in arrears. The Government of Ontario would pay off the student loan.

@page_break@The student would now owe the Ontario government the money. They would then assign the debt to a collection agency and the collection agency would try to collect the loan from the student for about two years and if they are unsuccessful then we will attempt to begin collection through the Canada Customs and Revenue Agency and tax refunds to the student.

Q. It’s a long process, isn’t it?

A. It is but it is a fair process. We give the students every opportunity to pay back their loan because we believe that’s what they really want to do.

Q. What’s your default rate?

A. The overall average for the default rate for 1998 was 22.1%, for 1999 it was 18.2% and for 2000 it was 15.7%.

Q. So some of the measures that have been taken are making a difference.

A. Absolutely. We are also looking at fraud control measures within the government where we are developing an information sharing agreement so that we can identify and take appropriate action in situations where students are inappropriately receiving social assistance and student loans at the same time. And we are doing income verification with CCRA.

Q. What are the misconceptions that students have about this whole process and how it works?

A. Some students honestly think they don’t have to repay their loan. And it is important that they do understand that they must repay their loan and that the taxpayers not going to let them off the hook.

Q. Anything students can do to make the whole process work that much more smoothly and to get the most bang for their time invested?

A. Students must learn early how to manage their loan debts. At the beginning of their course of studies they’ll receive 60% of their loan and the remaining 40% of their loan will come half way through the study period. So it is very important that students plan and budget carefully.

The loan is only meant to supplement so there is an expectation that they’ll have summer employment or part-time job while they are at school or some other means of income.

Q. It seems students are graduating with way too much debt. They have so much debt they couldn’t possibly dig themselves out.

A. We have what we call the Ontario Student Opportunities Grant which says that no student will incur more than $7,000 of debt, this is in Ontario Student Loan or Canada Student Loan debt a year.

So if you qualify for a loan that is $11,000 or $12,000, if you complete your course of studies and you continue your studies, we will relieve $5,000 of that. So you will not incur more than $7,000 per year.

Q. Wow, I didn’t know about that.

A. You have to meet the criteria. You have to be demonstrating that you are going to continue your studies. You have to be enrolled, you have to be in good standing.

Q. Do all the provinces do this or is this only Ontario?

A. I think that most provinces have some sort of debt relief for students while they are studying. But that’s Ontario’s loan. We’re also looking at income contingent measures [such as] income-based debt remission for students who are really in financial need.