Ontario Overhauls OSAP: Grant Caps, Tuition Hikes, and What Students Need to Know

Grants Capped, Tuition Unfrozen

In a sweeping move set to upend the landscape of student financial aid, the Ontario government announced on February 12, 2026, a fundamental shift in the Ontario Student Assistance Program (OSAP). The most consequential change: starting in Fall 2026, grants will be capped at just 25% of a student's OSAP package—down from as high as 85%—with the remainder delivered as loans. For private career college students, grants are eliminated entirely. This, combined with the end of Ontario's seven-year tuition freeze, marks the most significant reboot of provincial student funding in over a decade.

For students, families, and postsecondary institutions, the message is clear: the cost of education is rising, and debt will now play a much larger role in funding it.

A Decade of Generous Aid Comes to an End

Ontario's reversal of its grant-first OSAP policy doesn't occur in a vacuum. Throughout the 2010s and early 2020s, successive governments expanded non-repayable grants as a way to make higher education more accessible, peaking during the late 2010s when grants could account for roughly 85% of a student's annual OSAP aid. As recently as 2019, policymakers touted this approach as a progressive model for boosting post-secondary participation and easing graduates' financial burdens.

But in recent years, Ontario's colleges and universities have suffered serious financial strains, exacerbated by frozen tuition (a 10% tuition cut in 2019 and a freeze in place for seven years), declining domestic enrollment, and a dip in international student numbers—once a reliable source of revenue. Many institutions, especially smaller universities and colleges, reported operating deficits and even program cuts and layoffs.

Against this backdrop, the government's new policy—pairing a $6.4 billion injection of support for institutions with a fundamental tightening of student aid generosity—signals a shift in priorities. Funding is being redirected to stabilize the sector and expand in-demand workforce programs (such as health care and technology), while the burden of affordability shifts away from the province and back onto individual students, particularly those from lower-income backgrounds.

Who Feels the Squeeze

For Students and Families

The impact is immediate and personal. Where a low- or middle-income student previously received a $10,000 OSAP package with $8,500 as grants (non-repayable), they will now get just $2,500 in grants and $7,500 in loans ($5,000 more in future debt). For students at private career colleges, the outcome is even starker: all aid will be loans, with no provincial grant support whatsoever.

This shift could mean fewer students from financially vulnerable backgrounds are willing or able to enroll in college or university, either out of apprehension regarding student debt or due to cash flow issues (since grants typically help pay for living expenses upfront).

The end of the tuition freeze compounds the issue. Starting in Fall 2026, institutions can raise fees by up to 2% per year for three years, after which increases track inflation. For a student at a university with current tuition of $7,000 per year, tuition alone may increase by roughly $420 over three years—not including hikes to fees or other costs.

For Nonprofits and Community Advocates

Organizations focused on access to education, poverty reduction, or workforce development will find their clients and target populations facing higher barriers to participation. Increased debt loads may deter adult learners, recent immigrants, and older workers wishing to retrain. Nonprofits may need to adapt their outreach and develop new financial literacy and debt management resources.

For Research Institutions

The new cap on grants and tuition increases create added recruitment challenges. Some programs—particularly those with high up-front costs or longer degree timelines—may see drops in applications from talented but lower-income students. This could affect the diversity of graduate researcher and scholar pipelines, potentially impacting equity, diversity, and inclusion (EDI) initiatives and the research enterprise more broadly.

For Small Businesses Partnering With Higher-Ed

Sectors relying on college and university talent pipelines (especially tech, healthcare, and skilled trades) may experience less robust recruiting or a shallower talent pool, as some students forgo or delay studies due to financial constraints.

Adapting to the New Rules

For current and prospective students:

• Review your OSAP eligibility and scenarios: Use the Ontario government’s OSAP estimator (or your institution’s financial aid calculator) to project your new aid package under the post-2026 rules.
• Explore alternative funding options: Seek out scholarships, bursaries, and work-study programs administered by your institution or third-party organizations. Many scholarships do not count against OSAP maximums.
• Plan for higher tuition and debt: Adjust personal budgets and financial planning for increased loan burdens and higher costs, and investigate loan repayment assistance options (Ontario RAP).

For nonprofits and advocates:

• Prepare updated resources to help clients understand and plan for the new funding landscape
• Advocate for additional targeted supports for students at risk of financial hardship

For institutional leaders:

• Update recruitment messaging and financial aid workshops to reflect the new grant/loan ratios and tuition schedules
• Prioritize application support for external scholarships and federal-level funding

Fall 2026 and Beyond

Over the coming months, institutions will publish their new tuition rates, and the detailed OSAP eligibility criteria and workflows will be finalized for Fall 2026. Monitor government and campus updates closely. The policy’s longer-term effects on enrollment, workforce participation, and student debt levels will be watched by advocates and policymakers alike—as well as by rival jurisdictions attracting Ontario students.

Need help reworking your grant-seeking strategy in light of these changes? Granted AI makes it easier to identify and pursue funding opportunities that help bridge the affordability gap.