Debt Reduction in Repayment (DRR)

In this section . . . 

• Purpose of DRR and how it works
• DRR Programs

Canada DRR:

• Where to get information and assistance

• Purpose
• Value
• Eligibility
• Conditions
• Application Procedures, including application form and supporting documentation
• Notification
• Payments
• Help

Purpose of DRR

Debt reduction in repayment  programs assist borrowers facing exceptional long-term financial difficulty by reducing their outstanding student loan principal, thereby lowering their monthly loan payments. 

How DRR Works

Generally, DRR is available to assist students who have been out of school for at least five years and have exhausted all available periods of interest relief. If you receive assistance through a debt reduction in repayment program, a DRR reduction is applied against your outstanding student loan debt (interest and principal) so that your monthly loan payments are reduced. Payments are not paid directly to you. Payments are sent to the financial institution holding your student loan(s).

DRR Programs

Both the Government of Ontario and the Government of Canada offer DRR programs. The type of student loan you hold will dictate whether you are eligible for the Ontario and/or Canada DRR program(s).

• If you have a Canada-Ontario Integrated Student Loan -  DRR will not be available until 2006 since assistance is not given until students have been out of school for at least five years. 
• If you have a Canada Student Loan, you may apply to the Canada DRR program 
• If you have an Ontario Student Loan, you may apply to the Ontario DRR program

Canada DRR Program

For information on debt reduction on Canada Student Loans contact the financial institution (i.e., bank) currently holding your previous Canada Student Loans. They should be able to assist you with the application procedure as well as provide you with program details. You may also check out the canlearn website.

Ontario DRR Program

Purpose 

The Ontario Debt Reduction in Repayment (DRR) program assists borrowers facing exceptional long-term financial difficulty by reducing their outstanding Ontario Student Loan principal, thereby lowering their monthly loan payments. The Ontario DRR program is available to borrowers who have exhausted all available periods of interest relief and have been out of school for at least five years. Ontario DRR is available on Ontario Student Loans only. 

Value

If you are eligible, you may receive up to three reductions on your outstanding Ontario Student Loan principal during your lifetime. 

• First reduction of up to $4,300
• Second reduction of up to $2,200
• Third reduction of up to $2,200

Eligibility 

To be considered for the Ontario Debt Reduction in Repayment program you must meet the following eligibility requirements:

• You have entered into a Consolidated Agreement for your Ontario Student Loan. If you have not entered into a Consolidation Agreement, contact the financial institution holding your Ontario Student Loan.
• You currently reside in Canada. For purposes of this application, individuals who are Canadian Military personnel stationed abroad and individuals participating in an international internship program are considered to be residing in Canada.
• You have exhausted all interest relief assistance available from the Government of Ontario.
• You are NOT  in default on your Ontario Student Loan(s). If you are in default on your Canada Student Loan(s) and/or other provincial student loans, you may continue to be eligible.
• You have not been a full-time student for at least 60 months before applying for this program>
• You have waited one year before applying for a second or a third DRR from the Government of Ontario.
• You have not already received three payments through the Ontario DRR program.
• You are not considered ineligible for an Ontario DRR payment (e.g., due to misrepresentation or conviction of a criminal offence relating to a student loan(s).
• Your total monthly student loan payments are greater than the monthly payment amount in the DRR Monthly Income Table corresponding with your family size and gross monthly family income.

Please note your eligibility for Ontario DRR is not affected by any previous application or receipt of a payment or payments from the Canada DRR program.

Conditions 

If you receive an Ontario DRR payment, you will not be eligible to receive assistance from the following programs: 

• Interest Relief,
• Continuation of Interest Free Status, 
• Canada-Ontario Integrated Student Loan, and 
• all grants, scholarships, fellowships, and bursaries administered by OSAP.

If you repay the entire outstanding Ontario Student Loan principal and interest, you will then be able to apply for the above programs.

Application Procedures

To apply, you must print and complete the Ontario Debt Reduction in Repayment form. Click here for a copy of the application and Instructions sheet. It is available for printing from this website only. Submit the completed form and all required supporting documentation to the financial institution (i.e., bank) holding your Ontario Student Loan(s).

You may apply and receive up to a maximum of three Ontario DRR payments. You may submit your first application form at any time provided it has been 60 months from your last study period end date. In addition, there must be at least a 12-month gap between applications for DRR. For example, if you received the first DRR payment in March 2005, you cannot apply for a second DRR until March 2006.

Definition of a Loan in Good Standing

Your student loan is considered to be in "good standing" when you are actively making payments. Your student loan is not in good standing if the financial institution that held your loan has returned the loan to the government, due to failure to make required payments. 

Required Supporting Documentation

Proof of Gross Family Income

You must provide proof of actual gross family income for you (and your spouse, if applicable) for the twelve-month period ending with the month prior to the month you signed the application (e.g., if you signed an application on November 15, 2004, you must provide proof of income for the period November 2003 through October 2004).

You must include income from the following sources:

• employment income
• pension income (i.e., CPP, QPP, and superannuation)
• child and/or spousal support payments
• alimony
• separation or maintenance payments
• monetary gifts
• lottery winnings
• government benefits (i.e. Employment Insurance, Workers' Compensation, Ontario Works, Ontario Disability Support Program)
• cashed-in RRSPs
• cashed-in investments
• drawings
• and any other income (i.e., awards, scholarships, fellowships, bursaries, and grants; and interest, investment and/or trust fund income)

Acceptable documentation includes:

• photocopies of pay or direct deposit statements
• letter from employer (on official letterhead) indicating income for the 12-month period prior to your application
• pension income statement
• photocopies of government benefits statements (i.e., Employment Insurance, Workers' Compensation, Ontario Works, Ontario Disability Support Program) or a letter from a Case Worker
• federal Notice of Assessment or T4 for the previous year plus any of the above documentation for the current year months prior to the month the application was completed.

Applicants on interest relief: 
If you received Ontario Student Loans Interest Relief for the 12 months prior to the date of your DRR application, you are required to provide proof of income for only the month prior to the month of the DRR application. Use your one-month income multiplied by 12 and enter it in Section 1. 

Zero income:
If you indicated total family income as zero ($0), you must provide a letter from either the family member that is supporting you or a third party. This letter must indicate how your living expenses are being met. 

Self-employed income:
If you (and/or your spouse, if applicable) are self-employed, you must provide your (and/or your spouse’s, if applicable) federal Notice of Assessment (T1) or income tax return for the previous calendar year; and a business income and expense statement for the 12 month period prior to the month the application was completed.

Proof of Spouse's Student Loan Payments (if applicable)

If you are married or in a common-law relationship* and your spouse has outstanding student loans, you must provide supporting documentation indicating the monthly loan payments.

Acceptable documentation include the most recent student loan statement(s) or current bank statement confirming your spouse’s total monthly loan payments on his or her Canada Student Loan(s), Canada-Ontario Integrated Student Loan(s), and any other provincial or territorial student loan(s), as applicable.

* For the purposes of this application, you are living in a common-law relationship if a) you and your spouse have been living together in a conjugal relationship for at least three years, or b) you and your spouse are living together in a conjugal relationship and are raising any children of whom you both are the natural or adoptive parents.

Proof of Applicant's Other Student Loans

If you have student loan(s) from another Canadian province or territory, you must provide supporting documentation indicating your monthly loan payments.

Acceptable documentation includes the most recent student loan statement(s) or current bank statement confirming your total monthly loan payments on any outstanding student loan(s).

Notification

The ministry will notify you by mail of your approval or denial for Ontario DRR. If approved, the amount of the payment will be indicated. You will be informed of the reasons if your application has been denied.

Payments

Ontario DRR payments to reduce your Ontario Student Loan are not paid directly to you. Payments are sent to the financial institution holding your Ontario Student Loan, which first applies the payment against any outstanding interest. Your financial institution then applies the remaining amount against the outstanding principal on your Ontario Student Loan, thereby reducing your monthly loan payment. 

If your reduced monthly loan payments are still not affordable, you may be eligible for further DRR payments; however, you must wait one year before applying for a further DRR. Your financial institution may be able to lower your monthly loan payments until you receive another DRR payment. Contact your financial institution for further details.

Help

Questions should be directed to the financial institution holding your Ontario Student Loan(s).