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Every year millions of students apply to colleges and universities across Canada. Many prospective students pursue a post-secondary education to open up career and networking opportunities. However, financing an education can often be too costly to pay without loans.
In fact, there are more than 1.7 million student borrowers in Canada, and according to Statistics Canada the average student debtor owes at least $26,075. Financing an education is no small feat, luckily, there are many federal and provincial government loans to help you meet your educational and personal goals.
Additionally, private student loans offered by banks and private lenders are also available if you are a mature student, planning on studying abroad or just need further assistance. For more on student loans, how to apply for them, and your options for repayment, keep reading.
Government student loans in Canada are offered by the federal government through the National Student Loan Centre (NSLC) and further assistance is offered by provincial governments.
Student loans are a type of loan offered to those pursuing post-secondary education at either a college or university. These types of loans are meant to help cover the financial burden of higher education and are often used to cover the cost of tuition, books, housing, food, and other student living expenses. Government student loans differ from regular personal loans given by banks or private lenders, with the main difference being the repayment terms and interest rates.
Federal and provincial government student loans tend to have interest rates much lower than traditional loans granted by banks and private lenders. Moreover, when the time comes to repay your loan, payments are often automatically deferred until you graduate. Once you’ve graduated you will typically be given a 6-month ‘grace period’ where repayment is not required. This period is meant to give you time to settle into your post-grad life, find a job, and save up. However, some provinces may require you to start paying the interest fees on your loans immediately following your graduation.
As mentioned, there are many different ways you can get a student loan in Canada. While some are funded through the Government of Canada others are provided through financial institutions and private lenders.
You can apply for a CSLP through the National Student Loan Centre (NSLC) if you want to continue your education full-time or part-time. A student can acquire a loan to cover up to 60% of their tuition fees through the CSLP.
To be eligible for this loan, you must first meet certain criteria such as:
Part-time students have slightly different requirements, such as:
Make sure to check the local and federal student loan websites to see if your province of residence has any further requirements to qualify.
Banks provide a variety of loans including home loans, car loans, and personal loans. Similarly, you can use a bank to get a student loan to pay for your college or university tuition. Banks provide you with loans that must be repaid monthly over a set period of time. However, some banks provide special terms such as interest-only payments during school and after graduation up to a certain number of years. Since your bank loan would be repaid in monthly installments, it is best to borrow only what you need to keep your payments manageable.
Do note, that banks often have high requirements, so qualifying for a student loan may be difficult. However, if you have good credit and stable finances, you may be able to take advantage of their low-interest rates and flexible terms.
If you’re unable to qualify for a student loan with a bank, you can look into private lenders. These lenders have flexible requirements and accept a variety of students with different financial backgrounds. However, these lenders usually charge high-interest rates and don’t usually provide the same terms as banks and government-funded loans. There’s no grace period and payments are usually due each month after taking out the loan.
Another way to acquire a non-government student loan is through a personal line of credit, often known as a student line of credit. These types of loans do not require you to define how the money will be used. With a student line of credit, you can withdraw money from your line of credit up to your credit limit. Principal payments can be made at any time, however, you are expected to make monthly interest-only payments on the amount borrowed. Keep in mind that lines of credit through banks or other private lenders tend to have higher interest rates.
Another thing to keep in mind is that for certain lines of credit, you’ll need a cosigner. Typically, the cosigner would be your parent or guardian. Non-government lenders tend to require co-signers as it reduces the risk for lenders in the case of no payment. Additionally, having a co-signer might also result in a more affordable interest rate for you. Just make sure that before signing on the dotted line, read the terms and conditions of the line of credit. Ensure that you are also aware of the payback timeline, criteria, and interest rate.
Just as there are student loans offered by the federal government, there are also student loans offered through the provincial governments. The requirements, terms, interest, and repayment for provincial loans vary from province to province. The interest rate and attributes for each province are explained in the table below.
Territorial/Province Student Loan Providers | Interest Rate | Official Website |
Alberta | Fixed: Prime (CIBC) + 2%Variable: Prime (CIBC) + 1%*Alberta Loans are based on the prime rate set by Canadian Imperial Bank of Commerce (CIBC) | studentaid.alberta.ca |
British Columbia | Fixed: Prime + 2%Variable: Prime | https://studentaidbc.ca/ |
Manitoba | 0% | www.edu.gov.mb.ca |
New Brunswick | Fixed: Prime + 2%Variable: Prime | www2.gnb.ca |
Newfoundland & Labrador | N/A | www.gov.nl.ca/education/studentaid |
Northwest Territories | Prime – 1.0% | www.ece.gov.nt.ca/ |
Nova Scotia | 0.0% | https://novascotia.ca/studentassistance/ |
Nunavut | Prime – 1.0% | https://www.gov.nu.ca/student-funding |
Ontario | Prime – 1.0% | https://www.ontario.ca/page/osap-ontario-student-assistance-program |
Prince Edward Island | 0.0% | www.princeedwardisland.ca/en/topic/student-loans-bursaries-grants-and-awards |
Québec | Prime + 0.5% | https://www.quebec.ca/en/education/student-financial-assistance/ |
Saskatchewan | Fixed: Prime + 2%Variable: Prime | www.saskatchewan.ca/studentloans |
Yukon | Prime + 2% | yukon.ca/en/education-and-schools-student-financial-support |
The eligibility criteria for the Canada Student Grants Program are stringent, and not everyone who meets them is guaranteed the grant money. The reason why eligibility does not secure a grant is that the grant has a maximum amount of recipients to which the money can be awarded. Some grants may only select one individual, whilst other grants select several, and at times hundreds.
Grants typically assess your financial needs, in which case the amount would be dependent on your financial situation. While some grants may have a specific set amount given to one individual, other ones may allocate the total sum amongst multiple recipients. For people with disabilities or those who have dependables, like children, additional grants are offered for further assistance.
Loans, bursaries, and scholarships are all intended to help you alleviate the financial burden of pursuing higher education.
A bursary is a financial aid package for college students who may have trouble affording the cost of secondary education. Although many bursaries include academic requirements, their main goal is to assist students who lack the financial means to cover their tuition costs. In addition, when submitting an application for a bursary, you normally need to explain why you need the money.
On the other hand, student loans, especially those from the government, typically do not require a certain academic standing or community involvement to be granted.
Student loans are a useful option for students and can help cover the cost of tuition, room and board, but they also come with a variety of other benefits:
Student loans can be expensive to repay, which is why it’s so important to consider all of the possible disadvantages when choosing a student loan:
One of the best things about bursaries and scholarships is that you are not required to pay back the amount allocated to you. Bursaries and scholarships are also often given to students with high achieving marks or those who excel in a sport, the arts, humanitarian and environmental causes, or community services. If you are involved in any of the aforementioned activities, then bursaries and scholarships can be financially beneficial and a representation of your talents. Many use their scholarship award as a testimony to their skills when applying for a job or a Masters or PhD program following their undergraduate studies.
You’ll also benefit from the following when funding your education with bursaries or scholarships:
The major downside of bursaries is that they can be highly selective and can rely heavily on academic merit.
Furthermore, those who apply for bursaries and scholarships will likely experience the following disadvantages:
Depending on the type of loan you apply for the requirements and application process will vary.
To apply for a private student loan you can either contact a private personal loan lender or seek the loan services of a bank. Most private lenders and banks will require supporting documents to authorize the loan.
To demonstrate your ability to make repayments, you will most likely need to provide the following:
You must submit your application well in advance of the start of your academic year if you choose to use a government-backed student loan to pay for your education. As opposed to a loan where you may apply once and is automatically reissued each school year, government loans require you to reapply ahead of each school year. You can check the application deadlines on the website of the province where you reside.
To qualify for student loans, requirements vary from province to province. In general, you will most likely be asked to provide the following:
Loans backed by the government are less difficult to repay as interest rates are lower, and are not expected to be paid back until 6-months following your graduation. Furthermore, the government provides students a six-month grace period after graduating before requiring repayment of the loan.
This six-month term is interest-free, which means you’ll be able to pay off your principal loan straight away. Moreover, you can start making payments while you are still in school. Doing so can be great as early payment reduces the total amount of debt owed and speeds up the payback process.
Government loans also have a fixed interest rate which can be altered to a variable interest rate depending on your needs. All in all, the whole repayment process is quite simple. Once you’ve graduated, the government will send you a letter describing your loan, interest, and payback plan. Your repayment plan and accumulated interest depends on the loan amount which you received throughout your studies, and thus varies for each individual.
If you’re strapped for cash and worried about repayment, students can apply for “forgiveness programmes” from the government. Specific qualifying criteria vary by location, however, you may be able to have a portion of your debt forgiven.
Provincial and territorial repayment plans and repayment assistance vary.
In British Columbia and Yukon, accessing and repayment of student loans differ from other Canadian provinces and territories. When the repayment process begins, all government-issued loans are repaid through the federal government under the National Student Loan Service Centre (NSLSC). However, in the case of B.C, student loans are repaid through the province of British Columbia.
Meanwhile, in Yukon, the Department of Education administers the Canada Student Loan and Grant Programs on behalf of the Government of Canada. Meaning that the government of Yukon does not offer additional student loans, but instead facilitates student loans on behalf of the federal government.
Pursuing higher education can be stressful when you’re worried about your finances and ability to afford your tuition, books and cost of living. Fortunately, there are many options available to help alleviate these stress factors, allowing you to focus on your studies. If you’re looking for funding, make sure to do your research and explore all options to see what you qualify for.
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