Student Loans

Would I qualify for a reduced payment in Canada?

What the Repayment Assistance Plan asks for at a given family income and household size, federally and, in Ontario, on the provincial half of the same loan.

Before tax. Never written into the address bar.
Federal portion, monthlyNothing

The federal threshold for a household of 1 is $3,866.00 a month. You are at or below it, so no payment is asked for on the federal half.

Ontario portion, monthly$640.00

Ontario runs its own thresholds and its own cap. The threshold here is $2,083.00 a month against the federal $3,866.00, and the cap is 20% rather than 10%.

One application, two different answers

On this income you owe nothing federally and $640.00 a month on the Ontario half of the same loan. Ontario says so on its own page, and it catches people out: the letter saying your federal payment is zero is not saying your payment is zero.

  • $3,866.00Federal threshold for this household
  • 10%Federal cap
  • $2,083.00Ontario threshold
  • 20%Ontario cap
  • 5.45%Interest on the provincial half

What this figure is

A ceiling, not a bill. The government publishes the zero-payment thresholds and the cap on the affordable payment, and says the payment scales gradually between them without publishing the formula for the middle. So above the threshold this shows the most you could be asked for. Your servicer may ask for less.

You have to reapply every six months. The plan lapses if you do not, and the horizon it guarantees, fifteen years or ten with a disability, only holds while you stay continuously enrolled in it.

The thing to know first

Canada's Repayment Assistance Plan and the United States plan with the same initials are almost nothing alike. This one reads gross family income against thresholds indexed by household size and caps the payment at a tenth of income.

One application, sometimes two answers

In an integrated province you make a single application and the federal and provincial halves of the loan are assessed separately. Ontario sets its thresholds at roughly half the federal ones and caps the affordable payment at a fifth of income rather than a tenth, so it is entirely normal to owe nothing federally and still owe Ontario a payment on the same loan. Ontario says as much on its own page. British Columbia aligned with the federal rules in August 2023, so there the two halves agree.

Stage one and stage two

For the first sixty months, or until you are ten years out of school, the government covers the interest your payment does not. After that it covers principal as well, which is what brings the loan to zero inside the fifteen-year guarantee, or ten years for a borrower with a disability.

There is a catch worth knowing before you start. Once the federal government has made a principal payment for you, you cannot receive further Canada Student Grants or Loans until the existing ones are repaid. That does not apply to the disability version of the plan.

Sources

  1. Repayment Assistance Plan, Employment and Social Development Canada. Checked on . Backs the federal zero-payment monthly income thresholds by family size; the 10% cap on the affordable payment; the six-month application period; the 15-year horizon, and 10 years for a borrower with a disability.
  2. Pay back OSAP, Government of Ontario. Checked on . Backs Ontario's separate zero-payment thresholds; Ontario's 20% cap on the affordable payment; the Stage 1 and Stage 2 structure; interest on the Ontario portion at prime plus one percent.
  3. The Repayment Assistance Plan (backgrounder), Employment and Social Development Canada. Checked on . Backs the reduction of the affordable payment cap from 20% to 10% in November 2022.

The rules behind this calculator were last checked on .

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