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OSAP just flipped from grant to loan — what fall 2026 actually costs

Ontario's student grant cap dropped from 85% to 25% for study periods starting August 1. Here's what the same OSAP award now looks like as debt, and what it costs to pay back.

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Ontario didn't cut how much OSAP a student gets. It changed what kind of money it is — and that's the part that follows you for a decade.

What changed on August 1

For study periods starting on or after August 1, 2026, the Ontario Student Grant is capped at 25% of your provincial aid, down from a maximum of 85%. The other 75%-plus arrives as a repayable loan.

  • The federal side holds for now: Ottawa extended the enhanced Canada Student Grant of up to $4,200/year for full-time students and the $300-per-week loan limit through 2026–27. Both are extensions of temporary top-ups, not a permanent baseline.
  • Private career college students are excluded from the provincial grant entirely — 100% of their provincial aid is loan.
  • Ontario's years-long tuition freeze also ended, with increases of up to 2% a year now permitted for the next three years.

The award letter total may look familiar. Read the grant/loan split, not the bottom line — that's where the change hides.

The same award, priced as debt

Take a student receiving $8,000 a year in provincial aid. Illustrative, but the arithmetic is the point:

  • Old rule (85% grant): $6,800 grant, $1,200 loan.
  • New rule (25% grant): $2,000 grant, $6,000 loan.
  • Difference: $4,800 more debt per year — $19,200 over a four-year degree.

The Ontario portion of an OSAP loan carries prime + 1% once repayment starts. With prime near 4.45%, that's roughly 5.45%. On OSAP's standard 9½-year repayment schedule, $19,200 works out to about $216 a month and roughly $5,400 in interest.

Stretching to the maximum 14½ years drops the payment to about $160 — and raises total interest to roughly $8,600.

The parts that soften it — and one that doesn't

  • Federal loans are interest-free. The Canada portion has charged 0% since April 2023, so only the Ontario slice compounds.
  • But the grace period isn't free. You don't make payments for six months after you leave full-time studies — yet Ontario charges interest on the Ontario portion during those six months, and adds it to your principal. You start repayment owing more than you borrowed.
  • The Repayment Assistance Plan caps payments based on family income and size — never more than 20% of family income — but you must re-apply every six months.
  • The Student Access Guarantee obliges public colleges and universities to cover a documented shortfall when OSAP doesn't. Ask your financial aid office directly; it isn't automatic.

What to do before September

  1. Open the award letter and find the grant line. Budget against the grant, borrow the loan deliberately.
  2. Apply for the Student Access Guarantee if there's a gap. It's the only money here that isn't repayable.
  3. Size the repayment before you sign it, not at graduation. A $216 monthly payment against a starting salary is a very different number after tax — check what that salary actually clears with the take-home pay calculator, and what a given field typically pays with occupation wages.

The takeaway

A grant you never repay and a loan at prime + 1% are not the same dollar. For a four-year student, this change is worth roughly $19,000 in new debt and another $5,400 in interest on a normal repayment schedule. The award total didn't move. The price did.

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