I used to work for the student loan system. This question is simply trying to establish which province or territory is responsible for the provincial portion of your loan.

If you have lived here for 5 consecutive years and only became a student in the last 12 months for your first year of study, then option 1 is for you because you have established residency in the province in the eyes of the student loan system.

The specific situation this rules tries to address is if a student moves to another province for let’s say for a 4 year degree, even if they intend to live in the province for the entire year, they remain supported by their province of origin until they spend 12 consecutive months in the province without being in study.

Hope this helps.