The Ontario Government Changes OSAP: Why RESPs are More Important than Ever
The Ontario government has announced a number of big changes to OSAP that are leaving students concerned about how they’ll pay for post-secondary education. The changes aren’t just leaving Ontario students concerned, they’re leaving students concerned across the country. Could your province make similar changes and how can you protect yourself against changes like these happening in your province? Read on to find out.
What is OSAP?
In case you’re unfamiliar with OSAP, it stands for the Ontario Student Assistance Program. It’s a provincial financial aid program that offers grants and loans to help Ontario students pay for their post-secondary education. Each year thousands of students across Ontario rely on OSAP to help make the dream of college or university a reality, but those dreams may no longer become a reality for some students after the changes announced by the Ontario government.
What’s Changed About OSAP?
The new Conservative government in Ontario is scrapping the Liberal’s free tuition grants. It’s replacing them with 10% off tuition. Students will still be receiving grants in the 2019-20 school year, but the way they’re being distributed and collected by OSAP will differ.
OSAP is focusing on low-income families, leaving middle-income families to shoulder more of the financial burden. Under the newly-revamped OSAP, only families who are “in financial need” will get OSAP. This will result in fewer Ontario students receiving OSAP, especially when it comes to the Ontario Student Grant.
The Ontario government is lowering the family income threshold needed to qualify for the Ontario Student Grant. This in effect means that the amount a family earns has been lowered, making it tougher for students to be eligible for government grants.
But that’s not all. The grant-to-loan ratio is changing to a minimum 50% loan from Ontario for post-secondary students. This means that no student should receive more grants than loans.
Despite students receiving more grants than loans, perhaps the most controversial change was to the six-month grace period. The Ontario government is getting rid of the six-month interest-free grace period. The grace period gave students six months to find a job after graduating before they had to start repaying their student loans.
Students will now be charged interest the moment they graduate from college or university, whether they have a job lined up or not. This puts a lot of pressure on students in their final year in college and university to find a job immediately after they graduate. They might take a job they don’t necessarily like just for a paycheque.
Many Ontario students are concerned that the 10% off tuition won’t be enough. It won’t help them afford university when the free tuition and six-month interest-free grace period is what helped them attend post-secondary education in the first place. It’s hard to argue with that.
Why the OSAP Changes Matter to Students in the Rest of Canada
You’re probably wondering why the changes in Ontario matter to you if you’re living in another province?
Although these changes don’t directly impact you, they set a dangerous precedent for provincial governments in the rest of Canada. With Ontario, Canada’s most populous province, eliminating free tuition, this could leave the doors open for other provinces to cut back on grants and loans to students as well. What’s to stop Alberta, B.C., or another provincial government from following Ontario’s lead?
Rather than relying on government funding, which is never guaranteed, a far better way to provide a bright financial future for your children is by investing in an RESP. By opening and investing in an RESP, the money will be waiting there for your daughter or son when they’re ready to attend college or university.
Your child won’t have to worry about obtaining a student line of credit or loan from a bank at a higher interest rate if the government decides to cut back on grants and loans right before they start their post-secondary journey. An RESP helps provide that peace of mind so your child can focus on what really matters: getting the best grades possible.
There’s no better time than the present to open and start contributing to an RESP!