Hey, don't give up. I'm in the same boat and am getting myself back up. Had a 3.9 gpa in first year and then marks dropped to 70-ish in second year when my (chronic) anxiety and agoraphobia took a turn for the worse. I've had severe anxiety ever since I was in elementary school, but have developed strategies to cope with them to make sure my performance at school remains unaffected.
Things that helped: - I ended up taking my third year off to work full-time in the gov't and also take 5 weeks off to backpack around the world. This ended up being a fantastic decision as I overcame aspects of my agoraphobia and had time to take a much needed breather from school. It wasn't easy, but I have definitely benefited from this and feel like I'm well enough to get back to school (and own it!). It's great that you're doing a PEY, since you'll have some money to pay off your OSAP loans later (this will surely also give you some relief) and gaining work experience will definitely help you align yourself with your career goals and see that school is just a stepping stone onto greater things.
Talk to someone at CAPS and be treated. Everyone goes through tough patches and it will really help to have someone to talk to, and who can develop a specific treatment plan that will help you.
Continue developing a course of action with accessibility services that will minimize the impact that your mental illness has on your studies. Whether it be note-taking services, breaks during exams, or a longer time frame to complete assignments, having those strategies will permit you to perform in an optimal way.
Also talk to your registrar and college counselors -- they will be able to see the bigger picture and give you advice on what you should do next and answer any questions you may have about concerns about grades/graduation/etc.
If you drop down to PT status, OSAP will put you on Academic Probation (which means they will monitor your academic performance for a year or so, but you still are able to apply for loans). If, during that year you are on probation, you don't achieve a certain gpa / drop many courses / switch majors often / etc, which are things that "concern" OSAP (in their eyes), they might stop providing you with funding. Probation period is just a warning though. But yeah, talk to your registrar if you want to know more.
Good luck!