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Credit is the exchange of goods or services for a promise to pay in the future.
Before using credit or borrowing money, review the following:
We’ve compared three common forms of student credit:
Take time to familiarize yourself with the details of each so that you can select the option that’s right for you, if needed.
Disclaimer: This information is for general comparative informational purposes only. Economics conditions and personal circumstances may impact these factors. Please contact the National Student Loan Service Centre and or your financial institution for more information.
A government-funded financial aid program consisting of grants and loans provided by both by the Ontario and federal government.
A type of loan that lets you borrow money repeatedly up to a preset limit.
A type of loan that lends you a limited amount of money.
Available to Ontario residents who are: Canadian citizens, permanent residents or protected persons who are enrolled in full- or part-time studies at an approved public or private postsecondary school. For more information on specific eligibility requirements, visit the Learn About OSAP website.
Be prepared to provide proof of enrolment as a full- or part-time student at a recognized Canadian postsecondary institution. A parent or guardian may need to co-sign your line of credit application. By co-signing your application, they are also responsible for the debt should you be unable to pay it back.
Be prepared to provide proof of enrolment as a full- or part-time student at a recognized Canadian postsecondary institution.
Having trouble choosing a card? Consider using the Credit Card Selector Tool from the Financial Consumer Agency of Canada to compare features of different credit cards.
OSAP funding is based on several factors including education expenses and personal financial situation. For more information and to see how much funding you could be eligible for, visit the OSAP website.
Financial institutions may access your income and potentially your co-signer's income (if applicable).
Financial institutions tend to not require a large income or proof of income which makes them great first cards for you to establish credit history.
If you graduated high school within the last four years, your family financial status may be accessed to determine the amount of funding you’re eligible for. Parents are not financially responsible for the loan. For more information, visit the OSAP website.
A parent or guardian may need to co-sign your line of credit application. By co-signing your application, they are responsible for the debt should you be unable to pay it back.
Parental support is generally not required when applying for a student credit card.
Interest-free status is granted to full-time students while they compete their studies. During this time, no interest accrues on your student loan. For more information on interest rates, visit the Pay Back OSAP website.
Interest will accrue as funds are used. You must pay at least the interest, even while in school. Interest rates vary. Contact your financial institution for more information.
Interest rates vary, but are generally in the high-10s to low-20s per cent range. If full balance of the credit card is not paid by the due date, interest will accrue daily. Contact your financial institution for more information.
No payments are required for six months after your last confirmed study period. During this time you will be notified by the National Student Loan Service Centre (NSLSC) of: how much you owe, your total number of payments, the date of your first payment and the interest used to calculate your payment. Payments are made to the NSLSC (not OSAP).
Use OSAP’s repayment calculator to find out what your monthly payments will be when you leave school. For more information on repayment, visit the Pay Back OSAP website.
Additionally, the NSLSC offers online webinars on demand to educate you about your loans in general (Orientation Presentation) and about what to do when it is time to repay your student loan including the repayment process, tips on how to save on interest, and what to do in the event that you are having difficulty making payments (Repayment Presentation)
Once you graduate, most financial institutions allow you to continue paying only the interest for a grace period of six to 12 months. After that time, you are required to start paying back the money you borrowed (the principal) and the interest until debt is paid back in full.
Payment is required monthly by a set due date. If the entire balance of the credit card is not paid by the due date, interest will accrue daily. For more information on credit card payments, visit the Financial Consumer Agency of Canada's paying off your credit card webpage.
Are you currently carrying a balance on your credit card and wondering how long it’ll take to pay off? Consider using the Credit Card Payment Calculator from the Financial Consumer Agency of Canada.
You are required to fill out an OSAP application each academic year.
If you are in good standing, there is no need to reapply – a student line of credit lasts for the duration of your studies.
If you are in good standing, there is no need to reapply – a student credit card lasts for the duration of your studies.
If you are having trouble paying back your student loans, you can apply for the Repayment Assistance Plan to make reduced monthly payments or no payments. Use the Government of Canada’s Repayment Assistance Estimator to see if you could be eligible.
There is no payment support available if you are unable to pay your debt.
There is no payment support available if you are unable to pay your debt.
Student credit cards often offer cardholders incentives, some of which may include:
In terms of repaying debt we often lose sight of that fact that we are actually building our wealth. The interest charges on our loans and credit cards can significantly increase our debt load in the same way that interest gained on investments can accelerate our wealth.
Many believe that paying off debt comes before investing and that building wealth and paying off debt shouldn’t occur simultaneously, but the fact is that the two tasks are absolutely compatible! For every single dollar you pay toward your debt, you are indeed increasing your net worth by that same dollar amount and even more.
How does that work? Because for every dollar of debt you pay off, the amount of interest you pay to the bank/creditor goes down, and that means more money in your own pocket.
Let’s use an example. Suppose you have a net worth of $100,000, but you also have outstanding loans. Your goal is to save $500 a month and put these extra funds towards this loan. In as little as six months you paid off $3,000 of your debt and your current net worth is $103,000, a gain equal to the amount of debt you’ve paid off. That’s an increase in net worth of roughly 3%.
The bonus is as you continue to pay down your debt, your net worth continues to increase, you pay less interest to your creditor and debt reduction really begins to ramp up (in the same way growth builds in your investments).
A warning: Debt that is continually revolving, as in credit card debt, has serious implications for debt elimination. Credit card debt and cash advances have very high interest rates, and just like your investments, the higher the interest rate and amount owing the faster that debt will grow. Credit cards are not recommended for debt that will take a long time to retire. Credit options, like loans where the rates and monthly payments are fixed, are more effective because these parameters help mitigate the consequences of compounding issues.
Bankruptcy: A legal process that can provide relief to individuals who are unable to pay their debts.
Consumer proposals: A legal process similar to bankruptcy except they help a personal pay off debt through settlement agreements.
For more information on settling your debts, finding a Licensed Insolvency Trustee or accessing bankruptcy records, visit the Government of Canada's Bankruptcy website.