OSAP in medical school?

[Guest krismd]

Hi All,

 

Just a general question for all of you who are already in med school. I'm going to Ottawa in the fall and am just trying to weight out my financial options. :rolleyes Obviously, I've read from your postings that RBC is one of the best for LOCs so I have an appointment booked with them. I'm just wondering, however, is there any advantage to me getting OSAP on top of the $150,000 that I'll be getting from RBC? I think I may have read somewhere about certain scholarships/bursaries that are only for students receiving OSAP...is this true?

 

Any help with this, or financial suggestions, would be much appreciated!

 

Thanks!

 

Kris

[Guest wassabi101]

Hey Kris,

 

I don't know if OSAP works differently from Quebec govnt loans (that I also get besides my line of credit) but the big reason to get govnt aid is that:

 

-receiving some makes you eligible for bursaries from the govnt and bursaries from your school (it's an indicator of financial need for most)

-govnt aid is interest free while you're in med school whereas a line of credit is not, so you try to use more from govnt aid than from your line of credit as much as possible

 

Hope that helps! Perhaps someone can confirm that these points are valid specifically for Ontario govnt loans?

 

Cheers,

wassabi

[Guest aneliz]

I would definitely apply for OSAP... as outlined above, it is the 'marker' of financial need in terms of getting bursaries and scholarships. As well, it is interest free while you are in school, so you end up paying less interest on your LOC (because you aren't using as much principal). Also, Ontario 'forgives' some of your student loans if they are above a certain amount per year... something that RBC definitely doesn't do...and don't forget about the millenium scholarships too... $3000 of free money you aren't entitled to if you don't apply for OSAP.

[Guest Kirsteen]

Hey there,

 

Also, if you've got a line of credit and OSAP simultaneously, if you don't technically need all of the funds from both, you can use your interest-free OSAP money to pay down your line of credit while you're in school and possibly incur less interest, overall.

 

Cheers,

Kirsteen

[Guest try2dstress]

does anyone know how OSAP considers money in an RRSP when evaluating your financial need? my grandparents/parents set up some RRSP for me that I'm not supposed to touch...but I have no other income. Would I be required to withdraw from my RRSP for tuition before I'd be considered for OSAP?

[Guest blinknoodle]

Yes, OSAP does ask for your assets in RRSPs.

 

However, I don't know how much you have stashed away in your RRSPs. If you have never worked, or worked in academia where they love to pay you through the scholarship option, you wouldn't have been able to contribute very much anyhow.

 

The only way to see how OSAP values your RRSPs is to fill out the application!

[Guest aneliz]

Yes, OSAP does consider RRSP's as assets... and they do expect that you will touch them under the government's "lifetime learning plan". Under this plan you can withdraw the money taxfree from the RRSP but you need to pay it back within 10 years.

 

There are several of my classmates that had to almost totally deplete their RRSP's during med school for income.

[Guest satsumargirl]

For the RRSPs it depends on how much you have invested and how long you have been out of high school. OSAP will let you put away $2000 a year since being done high school that you don't need to touch. So if you did 4 years of undergrad anything over $8000 would be counted against you.

 

I am not sue how you grandparents set up the funds (and I am not expert in the various ways of doing this) but say they somehow have it set up that you would need to reach a certain age before accessing them (if that is possible) then they may not count at all. My contributions to HOOPP pension plan aren't counted against me since they cannot be accessed even if I wanted to access them. So that might be something to look into.

 

Cheers

Sats

[Guest Matt66GT]

Kris,

 

definitely apply for OSAP - the things that will make you or break you are:

 

(1) if you own or lease a car and how much it's worth.

(2) if you have any RRSPs.

(3) how much money you made after tax in the last year.

 

You can sign up and do it online - it took me 15 minutes or so. They will give you an online estimate after participating.

 

I know many of the med schools qualify their own students for need based bursaries based on what they get from OSAP. So don't skip it or you'll be SOL from your school.

 

Regarding RRSPs.........

 

Ask your banker about the Lifelong Learning Program - aforementioned by aneliz.

 

The stipulations are:

 

1 - You can withdraw 10,000 per calendar year, only TWICE for a total limit of 20,000. Anything over and above that you'll pay your MTR tax on before withdrawing.

 

2 - You have 10 years to pay it back, interest free, usually stipulated at 1/10th of the balance due yearly.

 

Some neat perks you can work with are:

 

1 - You're spouse or common-law partner can also tap into his/her RRSP for you if they have one, with the same above restrictions.

 

2 - You can still participate in the First Time Home Buyer's Plan

 

3- You can use the money for anything as long you're in school.

 

4 - You can participate as many times as you like - THIS IS THE BEST ONE - You can borrow 20K interest free from yourself, pay it back from a LOC, sign yourself back up again, lend yourself another 20K, etc.....It's a revolving loan from you to you paid off by your LOC, thus minimizing you're interest exposure.

 

Hope some of this helps.

[Guest Kirsteen]

Hi,

 

Per the above post, are you sure that you can participate in the Lifelong Learning Plan multiple times, i.e., withdraw more than $20K? As far as I was aware (per my accountant when I withdrew that amount for my MBA program), if you did so, then any amount over $20K would be taxed at whatever rate would be applicable to your tax bracket for that year. Even if you manage to "sign up" for another $20K from your banking institution, Revenue Canada will track this withdrawal using your SIN, and have no qualms approaching an individual x-number of years later to claim income tax owed. So if this is something that folks are considering I'd double-check that before launching into another withdrawal above the initial $20K.

 

Cheers,

Kirsteen

[Guest try2dstress]

wow, thanks all of you guys for your help with RRSP's...it's been really helpful and much appreciated

 

so i've been out of high school for circa 8 years (yikes...and sadly it does seem like that long...maybe even longer), so does that mean i could have 2x8=$16k in RRSP that I won't be penalized for in OSAP?

 

and what's the First Time Home Buyer's plan?

 

thanks again for all the valuable info!

[Guest krismd]

Thanks for the info all! Looks like OSAP is definitely in my future!

[Guest Kirsteen]

Hi,

 

The First Time Home Buyer's Plan was akin to the LLP in that it permitted you to withdraw funds from your RRSP when purchasing your first home. One of the bonuses of this plan is that it allowed you to save on land transfer tax, if that applied to your purchase. Again, like the LLP you were allowed to withdraw up to a certain amount and this was required to be paid back within a certain timeframe else your current income tax rate would be applied and you would be taxed on the amount withdrawn.

 

Cheers,

Kirsteen

[Guest try2dstress]

I'm not in this position, and probably won't be, but since we're talking about first time home buyers - out of curiousity do you get penalized by OSAP if you own the house that you live in?

[Guest Matt66GT]

In regards to OSAP and houses, OSAP is more concerned about what you own outright ie. RRSP, auto and any other significant assets so if you own your house outright (no mtg) that may have some bearing on what qualifies as need, although I'm not sure how much. Otherwise the bank really owns it and your mtg is more of an expense.

 

Kristeen -As far as the multiple use of the LLP, here is how it would work......

 

You would need an RRSP (not locked in) with over 20K in it.

 

Withdraw 10K on Year 1 day 1 (let's say it goes to tuition)

(interest exposure on 10k =0)

Withdraw 10K on Year 2 day 1 (let's say tuition as well)

(interest exposure on 20K =0)

 

Before Year 2, day 364 you open a LOC and pay back the 20K in full. (interest exposure = 20K at prime)

 

Now you've opened and closed your LLP balance.

 

As per CCRA "There is no limit to the amount of times you may participate over your lifetime. Starting the year after you bring your balance to zero, you may participate again with the 20K over a new qualifying period."

 

SO you're free to start another one, ONLY IF YOU HAVE COMPLETELY PAID OFF YOUR FIRST ONE IN THE PREVIOUS CALENDAR YEAR.

 

So Year 3, day 1 - withdraw 10k (int exp=20k@P2yrs, 10k@0)

Year 4, day 1 - withdraw 10k (int exp=20k@P2yrs, 20k@0)

 

Pay it back before year 4, day 364 (or in the 1/10th over 10yrs for the 2nd 20K) otherwise your interest exposure = 20K@prime2yrs, 20K@primestartnow

 

You can double down if your spouse/CL has the same RRSP.

 

Not unlike getting OSAP to finance an LOC, then using the LOC to block pay OSAP and paying it down. Just a mechanism for those of us with too many assets to qualify for OSAP......

 

 

Hope I cleared that up.....

[Guest jennymed]

what is the maximum amount of OSAP for this year?

 

Thanks

 

Jen

[Guest aneliz]

Maximum amount of OSAP depends on many things... are you single or married? kids or other dependents?

 

Max OSAP is calculated by the week... you multiply the number of weeks in your study period by the max per week to find the max for your student type.

 

It is usually ~15 000 for a single student with a 52 week study period (ie 52 weeks of classes - Mac)

[Guest satsumargirl]

OSAP does not count your primary residence against you.

 

The max OSAP for a single student went up last year and I think for the 9 months of med school here at Ottawa the max was around $15 000. I am not completely sure since I didn't qualify for the full amount. But I know people who got about that.

 

The OSAP webpage should have a chart that lists the weekly maximums depending on your status (single, kids etc...) and you can double check there. Or someone at your financial aid office can help. They helped me out alot!

[Guest Talon01]

How do I get around owning a car? Do I need to sell it to my mother so it doesn't show up on my application?

[Guest Kirsteen]

Hi there,

 

You need to officially have your name on no car ownership papers if you don't want OSAP to factor it into your application.

 

Cheers,

Kirsteen

[Guest jennymed]

Hello All

 

Now that I know about OSAP and LOC I need some advice from the experts.

 

1)The monthly interest on LOC is it deducted automatically from the total amount every month or do you have to remember to make a seperate payment?

 

2)Any advice on budgeting in medical school?

 

 

 

Sorry I am not very good at budgeting and have never had such a large LOC before.

 

Thanks

 

Jen

[Guest satsumargirl]

Talon....if u can put it under your Mom's name then that would help. Many people in our class have done that. If you can't, figure out how much your car is worth (I think OSAP uses the balck book? or maybe red I don't remember). But you will be affected by anything of your car's value over 5k (we are allowed to have a car worth 5k). And next year as we enter clerkship Ottawa will send a letter to OSAP saying that we require a car for school. And that will mean we can have a car worth 10k without being penalized. If you lease or own it is all the same to OSAP as well. Oh and my advice from the financial aid person was to underestimate the car's value. Since if it is worth more in their eyes they will change it. But if you overestimate and it is worth less in their eyes they will keep your estismate. Just some things to think about.

 

 

Jennymed,

 

With RBC they will automatically take the interest payment from your checking every month. You are essentially paying them with your LOC though

 

I think NB just keeps adding the interest to your LOC balance (not 100% sure) which would actually be more convenient since you don't have to remember to have transfered funds to your checking account.

[Guest Steve MD09]

With Scotiabank, there's only 1 account to deal with (a chequing account with the LOC as an overdraft), and they deduct the interest automatically.

 

With regards to budgeting, when you join the CMA, you can meet with an MD Management financial consultant to work out a budget plan.

[Guest LeonardCohen]

Hi,

Just while everyone's on the topic of OSAP, I thought I'd ask a question--what do you put in your OSAP application for "other sources of income?" Is it necessary, for instance, to put down your line of credit if you receive one? I'm going through the app process now, and I don't want to be accused of defrauding these guys because I didn't include the LOC, but if I do include it they probably won't give me any money (unless it doesn't count as "income" per se). Any thoughts?

[Guest aneliz]

Don't include your line of credit in your OSAP application... it is debt, not income. OSAP doesn't care if you have a line of credit. The idea is to get the max loan possible from the gov't (because you don't have to pay interest on it), get the max bursaries possible from your school (because you don't have to pay that back) and then use your LOC to fill in the inevitable gap between OSAP and bursaries and your expenses.