Ontario’s overhaul of the Ontario Student Assistance Program took effect August 1, and the headline numbers are already circulating: the maximum share of aid delivered as grants dropped from 85 per cent to 25 per cent, meaning most students now receive at least 75 per cent of their assistance as a loan rather than money they don’t have to pay back. What’s largely missing from the coverage so far is that this isn’t a simple grant-to-loan swap. A meaningful chunk of that new loan balance accrues interest — a detail that changes the real cost of the policy far more than the headline ratio suggests.
What Changed, and Who Felt It First
The shift applies to anyone starting a program on or after August 1, 2026, and it landed alongside the end of a tuition freeze that had held domestic fees flat since a 10 per cent cut in 2019-20. Colleges and universities can now raise tuition by up to two per cent a year for three years. One University of Toronto graduate student told reporters this week he expects to work 25 to 30 hours a week during the school year and may need to rely on a food bank, after 85 per cent of his $19,500 aid package arrived as loans rather than grants. Ontario’s own updated OSAP calculator shows a typical $9,500 package that once paid out $3,100 in grants and $6,000 in loans now pays roughly $2,300 in grants and $7,200 in loans. Private career college students face the sharpest change: starting this academic year, they receive no provincial grant at all.
The Detail the Coverage Left Out: Interest
Federal Canada Student Loans have carried zero interest since April 2023, a policy Ottawa has kept in place through the 2026-27 year alongside a boosted weekly loan cap. The provincial OSAP loan is different. It charges prime plus 1 per cent, and that interest begins accruing during the six-month grace period after a student leaves school — not just once formal repayment starts. With prime at 4.45 per cent, that puts the provincial portion at roughly 5.45 per cent. Because the new rules push a larger share of every aid package into that provincial loan bucket, the share of a student’s debt that quietly compounds interest before they’ve earned their first post-graduation paycheque has grown right along with it. None of the coverage of this week’s student reaction stories mentioned the interest rate at all.
How Ontario Now Stacks Up Against the Rest of Canada
The comparison matters because Ontario isn’t the only model available. Alberta eliminated interest on its provincial student loans in 2022, meaning an Alberta student’s provincial debt costs nothing extra to carry even as it sits unpaid. Quebec runs a separate integrated system, the AFE, layered under generally lower tuition, which softens the effect of any grant-to-loan shift before it starts. British Columbia’s provincial aid is bundled with the federal application but hasn’t moved to Ontario’s low grant ceiling. Ontario students are now absorbing a tuition increase, a sharply reduced grant ceiling, and an interest-bearing provincial loan simultaneously — a combination none of the other three largest provinces currently applies all at once.
A Second Reversal in Six Years
This is also the second major swing in Ontario post-secondary policy since 2019, when the province cut tuition 10 per cent and froze it, partly funded by grant reductions at the time. The province says the new $6.4-billion, four-year funding commitment will stabilize institutions’ finances after years of a frozen tuition base — but that money flows to schools, not to the students now carrying more interest-bearing debt. The open question the current reporting hasn’t addressed: whether Ontario will revisit the interest charge on its provincial loan portion the way Alberta did, especially as the province’s own numbers show the debt gap widening most for graduate and private-college students. For now, that gap is real, it compounds, and it isn’t disclosed in the same conversation as the headline grant cut.
via CP24 / The Canadian Press: Ontario students brace for ‘vast amount’ of debt amid OSAP changes, tuition increases. Second source: CBC News.
