Will 5 years on OSAP's Interest Relief result in a one-time, permanent loan reduction on the order of 50%?
I was told by a friend that if you qualify for OSAP's Interest Relief for 5 consecutive years, then OSAP will offer to perform a one-time permanent Loan Reduction. This Loan Reduction, as I'm told, is something to the order of a 50% reduction.
My question is: How much truth is there to this statement?
At first glance, I seems silly for them to just chop your loan in half. However, this would be reasonable if it means they'll actually see something, instead of you perpetually staying on Interest Relief.
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Not quite. Stage 2 of Repayment Assistance, as described here says:
This stage occurs after Stage 1, that is, after you have received RAP Stage 1 Interest Relief for a minimum of 60 months or you have been out of school for ten years, whichever comes first.
...
During RAP Stage 2, you will make no payment or a monthly affordable payment, depending on your income and family size. Your affordable payment, if any, will go first towards paying down your loan principal and, if large enough, the remainder will go towards paying monthly interest. The Governments of Canada and Ontario cover all monthly interest and principal amounts not covered by your payment.
So, if your affordable amount is [CO].00, the Government(s) will pay both your principal and interest until your financial situation changes.
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