# lump sum payment of OSAP during repayment period



## joncnca (Jul 12, 2009)

hi all,

is there a way to make a lump sum payment to OSAP when you're already in the midst of the repayment period?

also, if the lump sum payment is made, does this affect your monthly payment amount, or it simply shortens the repayment period and increases principal payment portion? that is, i would still need to request revision of terms (monthly amount) to change the monthly amount?

thanks!


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## the-royal-mail (Dec 11, 2009)

Nope. Call them and make the payment and much like a car loan, the loan repayment will occur in less time. The monthly payment amount stays the same.


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## Jungle (Feb 17, 2010)

If I remember correctly, I made extra payments using online banking, under bill payments.


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## joncnca (Jul 12, 2009)

if the repayment occurs in less time, they should be charging less interest, right, since there is a smaller outstanding debt. or do they continue to charge interest on the the original principal amount, but for fewer months?

i've considered using the online banking, bill payments option, but wanted to double check if that's possible before i send them a large sum of money that may take months to get back, in case they won't allow me to repay ahead of schedule.


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## Ben (Apr 3, 2009)

Your regular payments will stay the same, unless you request otherwise. The lump sum will be applied against the principal directly. No, they do not keep charging interest on the original principal. Only the current principal matters. So, next month, because your principal is smaller, you'll pay less interest in that month. For future regular monthly payments then, more will go toward the principal, and less goes toward interest.

With regular lump sum payments, you will pay less interest by the the time the debt is reduced to zero, and it will go to zero faster.

I never bothered changing the monthly payment amount when I was repaying OSAP, just kept the lump sums flowing every month or so. If you are a good budgeter, this can work for you too. If you don't trust yourself not to spend the money, then increasing the payment (forced savings) could be a good plan too.


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## the-royal-mail (Dec 11, 2009)

> So, next month, because your principal is smaller, you'll pay less interest in that month. 

Be careful. That makes it sound like the actual payment amount will go down. OP needs to understand that payment amount that leaves your account every month does *NOT* change.


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## Ben (Apr 3, 2009)

Ben said:


> So, next month, because your principal is smaller, you'll pay less interest in that month. For future regular monthly payments then, more will go toward the principal, and less goes toward interest...


...with the monthly payment staying the same.

How's that?


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## the-royal-mail (Dec 11, 2009)

Perfect.


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## the-royal-mail (Dec 11, 2009)

And to the OP, I agree in that it would be best to call them and do this over the phone rather than to use online bill payments. There are many variables with what online banking does and doesn't do. I think it's best simply to call them.


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## Max (Apr 4, 2009)

Side Issue:

One thing I noticed on my OSAP loan was that there is a difference between the total amount borrowed and the beginning amount of the loan, which is the accrued interest during the "grace period" - 6 months after graduation. After paying off my loan completely, I added up all the interest statements from OSAP, and this grace period interest was nowhere to be found.

I ended up deducting the additional interest on my tax return (interest is interest whether they report it to you or not), and was never questioned by the CRA.

The question is when can you deduct it, since the interest is deductible on a cash basis, and it is hard to justify what portion of your monthly payments should be applied against "grace period" interest, and what should be applied against principal. To make it simple, I waited until I had fully pai off the loan before claiming it.


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