Prioritizing OSAP vs. LOC Repayment

[LawStudent12345678910]

Hello, 

I was wondering if anyone had any advice on post-law school loan repayment. I'm a 3L in Ontario. I'll be graduating with ~$60,000 in OSAP loans, and around the same amount on a Student LOC. Would it make the most financial sense to consolidate the debt and move the OSAP loans onto the LOC before OSAP interest starts, due to the lower interest rate? I'm unsure on the smartest way to proceed. I'd love to hear your thoughts. Thanks in advance to anyone who replies.

[BlockedQuebecois]

You likely want to just go pay a financial adviser or accountant to crunch the numbers for you if you are asking this. There are a lot of considerations, including: 

1. The effective interest rate of your government student loans, which will be a blended rate of your provincial interest rate and the current 0% federal interest rate;
2. Your income and job security, as that will affect your ability and potential future need to access repayment assistance; 
3. Your level of risk tolerance, as your OSAP loan can likely be made a fixed rate while your PSLOC is almost certainly floating; 
4. The tax break for interest on government student loans; and 
5. Your expected repayment timeline.

You could crunch all the numbers fairly easily in excel if you wanted to and knew all the relevant factors, but I imagine if you’re asking this sort of question here you’re likely better off just getting professional advice. Particularly as it is unlikely to be too expensive 

[myth000]

27 minutes ago, LawStudent12345678910 said:

Hello, 

I was wondering if anyone had any advice on post-law school loan repayment. I'm a 3L in Ontario. I'll be graduating with ~$60,000 in OSAP loans, and around the same amount on a Student LOC. Would it make the most financial sense to consolidate the debt and move the OSAP loans onto the LOC before OSAP interest starts, due to the lower interest rate? I'm unsure on the smartest way to proceed. I'd love to hear your thoughts. Thanks in advance to anyone who replies.

LOC doesn't give you a break if you become unemployed for any reason.  OSAP has repayment assistance.  That's another consideration I would add to the Blocked's answer.

[BlockedQuebecois]

6 minutes ago, myth000 said:

LOC doesn't give you a break if you become unemployed for any reason.  OSAP has repayment assistance.  That's another consideration I would add to the Blocked's answer.

That’s my second numbered point. 

[LawStudent12345678910]

Makes sense, thank you both for your replies.

[Wolfe]

It usually makes sense to pay of your LOC before OSAP but YMMV. 

[Garfield]

I know someone who paid off a large chunk of the provincial portion (on which interest currently accrues) of his OSAP loan by cheque. He also said the agent he spoke to indicated that you can only do this once. 

[hiccups]

I heard student loan payment going to be halted until 2023 because of COVID, in which case you can just focus on paying LOC.