Old Student Loans 1994 vs. 2006 Graduation

Question: My case is a bit particular. I’ve started my studies in 1992 at a college, got OSAP (Ontario and Canada Portions) loans, everything was fine until 2 yrs after in 1994 that I had to leave my studies due to a family emergency. I was away for college, after 1 year the collection letters started to come asking for $ 500/month pymts that I could not really have afforded at that time, I did not pay.

My credit history suffered a lot, but I still wanted to finish my degree some day. I was working all these years at bad paying jobs and really struggling. By late 1999, I decided to take some part time courses at my college, so they could count towards my diploma and degree (I had the option to get both). I kept studying part time throughout 2000, 2001, 2002 and finally in 2003 I received my College Diploma. Please note, that it was in 1994 where I received the last dollar from OSAP loans. All courses after that, I paid from my pocket either by using my little savings and using my credit cards.

Since I wanted to get a Bachelors Degree, I kept studying part time and took some courses at Seneca, Humber, Centennial College so I can get transfer credits for DeVry (which no longer exists in ON). In 2006, I went to Calgary, Alberta and Finally finished my Bachelor’s Degree in Business which is recognized by the Govt of Alberta.

Since OSAP stopped helping me in 1994, could I ask the courts to discharge my debts ?
– Or will they take 2006 as my final study date ??
– The Canada Student Loan portion $ 15,799.10 is being handled by Human Resources Dev. Canada. Will they settle for less ?

-The Ont portion $ 12,663.51 Balance is handled by a collection agency working on the Gov’ts behalf, tehy say they can accept 90% of that in full and close the account. – Can they accept less ?

I owe $ 28,000 between Canada and Ontario Student Loans, about $10,000 or more is interest accumulated. My Tax refunds are being seized by C.R.A.

Please advice.


Student Loan Discharge

Despite the complicated structure of how you received your student loans, the ability to discharge student loans in a bankruptcy is the same:

If you go bankrupt in Canada, government guaranteed student loans are automatically discharged if you file bankruptcy more than seven years after you ceased to be a student.  The date you received the loans is not relevant.  Since you graduated in 2006, that’s the date the “seven year clock” starts, so your student loans would not be automatically discharged in a bankruptcy unless you wait until 2013 to go bankrupt.

It is possible to go bankrupt and then apply to court after 5 years in cases of extreme hardship if you are unable to repay your student loans.

In your case, you should contact OSAP and confirm your end of study date, and then your best option may be to simply work with them to make a reasonable repayment plan.  Since the federal government is already taking your tax refunds it is unlikely that they will take any further action.  You could also consult a credit counsellor, trustee or lawyer for further advice on your specific information.  The Canada Student Loans in Bankruptcy web site also contains more information.

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