Your federal loan is 0%, but OSAP's Ontario portion charges prime + 1%. What to pay first, and how to fund it.
This in-depth guide covers everything you need to know about canada student loans and osap: how to pay off faster. Based on verified income data and real-world case studies from our database of 138 side hustle tactics.
To pay off student loans in Canada faster, send your extra money to the debt that still charges interest and leave the federal part on its normal schedule. Since April 1, 2023 the Canada Student Loan portion has carried no interest, while the Ontario portion of OSAP charges prime plus 1%, about 5.45% with the big banks' typical prime at 4.45% in mid-October 2026. Clear any credit card or bank student line of credit first, then the provincial portion, and apply for the Repayment Assistance Plan if the payments do not fit your income yet.
Maybe it looks like this. Your first salary lands, and before you have bought anything nice, rent takes half of it. Groceries cost more than they did in first year. Then the NSLSC email arrives with a repayment schedule of 114 payments, and you do the maths on the bus: you will be in your thirties before this is gone. Friends who skipped school, or whose parents paid, seem to be a few steps ahead, and it can feel like your generation was handed a bill that nobody else had to pay.
Here is the part most graduates miss. In much of Canada, a big share of that balance now costs you nothing to carry, and a smaller share is quietly charging interest every month. Knowing which is which changes where every extra dollar should go, and it means a modest side income can take years off the part that actually costs you money.
This page covers how the loans work in 2026, the help available if you are struggling, whether to pay early at all, the arithmetic, and side work that fits around a full-time job.
How Canadian student loans work in 2026
Most borrowers hold two loans that look like one. The federal Canada Student Loan comes from the Government of Canada. The provincial or territorial loan comes from your province. Both enter repayment after a 6-month non-repayment period that starts when you finish your final term, drop to part-time, or leave school.
The federal portion is interest-free. The NSLSC confirms the Government of Canada permanently eliminated the accumulation of interest on all Canada Student Loans from April 1, 2023, including loans already in repayment. You still owe any interest that built up before then.
Some provincial portions still charge interest. As of October 2026, the NSLSC lists these rates in its frequently asked questions and glossary:
| Province | Provincial portion interest |
|---|
| Ontario (OSAP) | Floating, prime plus 1%. No fixed option |
| Saskatchewan | Floating at prime, or a one-time switch to fixed at prime plus 2.5% |
| British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador | No interest |
| Alberta | CIBC prime, repaid separately through MyLoan, with a 12-month interest-free grace period |
| Nova Scotia | 0% for eligible graduates who stay in the province, with no annual reapplication since April 2026 |
Prince Edward Island loans are also repaid separately, and Quebec, Nunavut and the Northwest Territories run their own systems, according to Canada.ca. Check those rates with your province directly.
OSAP has one extra catch. The Ontario portion charges interest during your six-month grace period, and that interest is added to your principal. On C$7,000 at 5.45%, that is about C$190 over six months. The NSLSC says you can pay that interest on or before your first payment date instead of letting it join the balance.
A student line of credit is a different animal. It is a bank product at a variable rate tied to the bank's prime. Scotiabank, for example, publishes prime plus 0.50% for its student line, with interest-only payments for 12 months after your studies end. The Financial Consumer Agency of Canada (FCAC) points out that the Repayment Assistance Plan does not apply to money borrowed this way.
If the payments do not fit your income
Sort this out before any side hustle. A missed payment costs you far more than a slow payoff.
The Repayment Assistance Plan (RAP)
Under federal RAP, you may owe nothing for six months if your gross family income is under a monthly threshold. For a single person with no dependants the federal threshold is C$3,866 a month, about C$46,400 a year (page updated July 31, 2026). Above that you may still qualify for a reduced payment, which the CSFA Program says is capped at 10% of monthly family income. You apply through your NSLSC account and reapply every six months.
The provincial part can work differently. Ontario's own RAP has a lower zero-payment threshold: C$2,083 a month for a single borrower, about C$25,000 a year. So you can owe nothing on the federal portion and still owe an affordable payment on the Ontario portion. While you are in Ontario's interest relief stage, the province covers any monthly interest your payment does not.
Revision of Terms
If you can pay something but the standard schedule is too steep, change the terms. On Canada.ca you can stretch repayment up to 174 months to shrink the payment. Ontario lets you extend from 9½ to 14½ years, lower payments for a short period, or make interest-only payments for up to 12 months over the life of the loan. Ontario's own illustration: C$20,000 at 5% costs C$226 a month over 9½ years and C$167 over 14½. On the interest-bearing portion, a longer term costs more in total, so treat the lower payment as a floor and pay above it in good months.
Forgiveness you might qualify for
Canada Student Loan Forgiveness pays down the federal portion for people working in rural areas or communities of 30,000 people or fewer in listed jobs. As of June 2026 that covers up to C$30,000 over five years for nurses, teachers, social workers, midwives and physiotherapists, and up to C$60,000 for family doctors, dentists, psychologists and pharmacists. If this is you, do not prepay the federal portion, because you would be paying off money the government would have paid for you.
What happens if you stop paying
Missing payments damages your credit, and the federal system is blunt about the rest. After 9 months of missed payments, the federal part goes to the Canada Revenue Agency for collection and you lose access to student aid. The CRA can then automatically apply your tax refund and benefits such as the GST/HST credit to Canada Student Loan debt. Filing for bankruptcy within 7 years of finishing school will not cancel a Canada Student Loan.
An OSAP loan defaults after 270 days. Ontario says the Ministry of Finance can then place liens, garnish wages and bank accounts, and take your tax refund and benefits such as the Ontario Trillium Benefit.
There is a way back. You can bring a federal loan back into good standing by paying the outstanding interest and the equivalent of 4 monthly payments, or by adding the unpaid interest to the balance once and making the 4 payments. If you are already behind, that is the first job for any side income.
Should you pay off OSAP early?
Pay the interest-bearing portion early if you can. The federal portion is a different question, because it costs you 0%. Paying it early buys you an earlier end date and nothing else. Here is a sensible order for spare money:
- Stay current on every payment.
- Build a small emergency fund. Without one, the next dental bill goes on a credit card.
- Clear credit card balances. The FCAC's example uses 19% for regular purchases and 22% for cash advances, about three and a half times the cost of the OSAP Ontario portion. The credit card payoff guide covers how.
- Then the student line of credit and the provincial portion, highest rate first.
- Then savings, not the 0% federal loan. Once only interest-free debt is left, extra money usually does more in a TFSA (the 2026 dollar limit is C$7,000) or a First Home Savings Account, which gives you C$8,000 of room in the year you open it.
One detail changes the order between step 4's two debts. Interest you pay on a government student loan can be claimed as a non-refundable credit on line 31900, carried forward up to five years if you owe no tax yet. Interest on a bank line of credit cannot. So when the two rates are close, pay the line of credit first.
Two cases where you should not prepay at all: you are working toward Canada Student Loan Forgiveness, or you have been on RAP for years and the government has started paying your principal. RAP's second stage starts after 60 months or 10 years out of school, and prepaying then mostly saves the government money.
The maths, with a hypothetical C$29,600 of student debt
A hypothetical example: you finished a degree in Ontario owing three things.
- Federal Canada Student Loan: C$14,600, close to the C$14,602 average federal balance at leaving school in 2023 to 2024. 0% interest, paid over 114 months (9½ years) at about C$128 a month.
- Ontario portion: C$7,000 at 5.45% (prime plus 1%), over 114 months at about C$79 a month.
- Student line of credit: C$8,000 at 6.45%, a round illustrative number (prime plus 2%), paid over 10 years at about C$91 a month. Your bank's rate may be higher or lower.
That is about C$298 a month in required payments. The simulation charges each month's interest on each balance, takes the required payments, then sends the extra to the line of credit, then the Ontario portion, then the federal loan. When a debt is gone, its payment moves to the next one.
| Extra each month | Line of credit gone | Ontario portion gone | Everything gone | Total interest | Interest saved |
|---|
| C$0 | about 9 years 8 months | 9 years 6 months | about 9 years 8 months | about C$4,850 | none |
| C$150 | about 3 years 1 month | about 4 years 6 months | about 5 years 11 months | about C$2,070 | about C$2,790 |
| C$300 | about 1 year 10 months | about 2 years 11 months | about 4 years 4 months | about C$1,330 | about C$3,520 |
Aim matters as much as amount. Send the same C$300 to the federal portion first and total interest comes to about C$2,910, roughly C$1,580 more than the right order, for the same money out of your pocket. Every dollar on a 0% loan saves 0%.
Look at the C$300 row again. Within about three years of your first payment, every loan charging you interest is gone. From then on, you could keep paying the federal loan at C$128 a month and send the rest to a TFSA or FHSA instead. What would three years of that look like in your account?
Ontario's rate floats with prime. NSLSC keeps your payment the same when rates change and shifts how much goes to principal, so a rate rise would stretch these timelines a little. The site's debt payoff calculator runs the same month-by-month maths for your own balances; the maths works in any currency.
Make the extra money land on the right debt
Extra payments are allowed at any time, on top of your regular payment. In repayment, NSLSC applies a payment to outstanding interest first, then principal. Payments made during the non-repayment period go straight to principal.
NSLSC's public pages do not say how a lump sum is split between the federal and Ontario portions of an integrated loan. Before your first extra payment, call NSLSC (1-888-815-4514, the number Ontario lists), ask for it to go to the Ontario portion, and check your account afterwards to confirm the Ontario balance fell by the full amount. For a line of credit, pay through your bank and confirm the payment reduced principal.
Side hustles that work in Canada
Side income in Canada is self-employment income. The CRA says gig workers must report it on Form T2125 with their return, and names platforms such as Fiverr, Uber Eats and SkipTheDishes. You may also owe CPP contributions on those earnings. You do not need to register for GST/HST until taxable sales pass the C$30,000 small supplier threshold over four calendar quarters. Ridesharing is the exception: drivers must register from the first fare, so it is left off this list.
The site's guides quote ranges in US dollars and include people working far more hours than you will. Plan with the smaller figures below. If your employment contract has a conflict-of-interest clause, read it before taking clients in your own field.
Your first C$100 to C$150 a month
Paid user testing costs nothing to start, and the site's guide puts it at US$50 to US$800 a month, with first payments in one to two weeks. The ceiling depends on how many studies you qualify for, so check each platform accepts Canadian residents and treat C$100 a month as the honest target alongside a job.
Pet sitting and boarding starts at US$0 to US$300, and the guide puts the range at US$300 to US$5,000 a month, with boarding at US$30 to US$65 a night. Two weekend boarding bookings (four nights) a month covers the C$150 row. Check your lease or condo rules before hosting dogs.
C$300 a month: use what you just studied
Online tutoring is the natural fit for a new graduate. The guide's range is US$1,000 to US$10,000 a month for serious hours. Three to four hours a week with high school students in your subject is a realistic way to reach C$300.
Teaching a language online suits bilingual Canadians: English and French are both in demand. The guide puts fixed-rate platforms at about US$10.20 an hour and marketplaces at US$15 to US$40 before commission, with a range of US$200 to US$6,000 a month. Plan for C$200 to C$300.
More than C$300 a month
Food delivery multi-apping can pay within the first month and the guide's range is US$1,000 to US$6,000 a month. In Canada, delivery is not ridesharing, so the CRA's own example shows delivery income under C$30,000 needs no GST/HST registration. Count fuel and wear on your car before you count the earnings.
Upwork and Fiverr suit a skill you can sell remotely: writing, design, data work. The guide puts it at US$300 to US$8,000 a month, one to three months to profit. Use the hourly rate calculator and platform fees tool so your rate covers the platform's cut.
If you want any of these planned day by day, RichTactic Pro has a 30-day plan for each side hustle route, message templates and a private group. It is one payment with a 30-day money-back guarantee.
A weekly plan around a full-time job
Week 1
- Monday evening (30 minutes): log in to NSLSC and your bank. Write down each balance, rate and payment.
- Tuesday: if your income is low, start the RAP application. If you have an OSAP grace-period interest balance, plan to pay it before your first payment date.
- Wednesday and Thursday (1 hour each): set up profiles for one or two hustles.
- Saturday (3 hours): first bookings, first test sessions or first delivery shift.
- Sunday (15 minutes): move what you earned into a separate account.
Weeks 2 to 4: six to eight hours a week, in two weeknight blocks and one weekend block. Call NSLSC once about directing extra payments.
Every month, the day after payday: keep a share of side income for tax, then send the rest to the target debt. Check the balance fell.
Every six months: reapply for RAP if you are on it, and ask whether your hours are still worth it.
Set it up so it runs without willpower
- One account for side income. Every payment from a platform lands there.
- Tax first. Nobody withholds tax on side income. Keep a share of every payment aside until you file, and use the CRA's gig economy page for what to report and which expenses you can claim.
- A fixed date. Pay extra the day after your NSLSC payment comes out, so it never competes with rent.
- Keep your tax receipts. NSLSC issues an income tax receipt for interest paid each year. Claim it on line 31900.
Mistakes to avoid
- Hustling while ignoring RAP. If you qualify for a zero payment, take it, then use side income for your emergency fund and the line of credit.
- Moving government loans into a bank loan. You lose RAP, forgiveness and the line 31900 credit. CRA says you cannot claim interest on student loans combined or renegotiated with another loan.
- Debt settlement and credit repair companies. The FCAC warns that most operate for profit, may charge fees even when creditors refuse, and may sell loans that "don't reduce your existing debts". It also warns about companies that present their services as part of a government program. RAP and Revision of Terms are free through NSLSC. For real debt trouble, the FCAC points to not-for-profit agencies through Credit Counselling Canada.
- Borrowing to start a hustle. Every route above starts at US$0 to US$300.
- Courses that cost more than a year of the extra payment. If a course costs C$1,000 to teach you to earn C$300 a month, you have added debt.
- Paying ahead on the 0% portion while a card charges 19%.
Your first step today
- Log in to NSLSC and note which part of your balance is federal and which is provincial, with each rate.
- If money is tight, apply for RAP tonight. If not, list your debts by rate, highest first.
- Pick one side hustle above and open its guide.
- Decide your extra amount: C$150 or C$300.
If C$300 a month clears every interest-charging loan in about three years, which hustle will you start this week?
If you have other debts too, the series on paying off debt with a side hustle shows which to tackle first, and the US student loan guide covers American and UK loans.
This is general information, not financial, legal or tax advice. Rules and rates change and your situation may differ, so confirm anything you rely on with NSLSC, your provincial student aid office, the official source linked above, or a free not-for-profit credit counsellor.