Student loans in Canada: Everything you need to know

Post-secondary education is one of the most expensive times of your life. But it’s also an “investment” in yourself, providing you with knowledge and skills that will serve you well throughout your life. Since tuition and education costs are high, consider applying for a student grants and loan. However, you’ll have to repay this student loan at the end of your studies, in addition to paying interest. So going into debt isn’t always the best approach. Depending on your province of residence, the conditions and application process may differ. This guide provides an overview of how student loans work in Canada, so you can make the right financial decisions.

If you can’t afford the tuition fees for your post-secondary education, consider applying for financial assistance from the Government of Canada. This financial assistance includes student loans and grants.

Even if your parents have saved for your post-secondary education through an RESP, taking out a loan through the Canada Student Loans Program should be your first option. This program works in partnership with the provinces and territories (the process varies depending on your province of residence) to provide financial assistance in the form of scholarships and student loans.

You don’t have to pay back any grants you receive. In the case of student loans, you must repay them after your studies are completed. You may be eligible for several types of student grants and loans.

The National Student Loans Service Centre (NSLSC) distributes loans under the Canada Student Loans Program. The amount of financial assistance will depend on several factors, such as :

• Your province or territory of residence
• Your family income
• Your tuition fees
• Whether or not you have dependents
• If you are disabled or not
• Etc.

To estimate the amount of financial assistance you could receive, you can use this tool from the Government of Canada. Please note, however, that the tool does not take into account provincial student grants and loans.

To qualify for CSNPE student grants and loans, you must meet the following conditions:

• Be a Canadian citizen, permanent resident, or designated as a protected person.
• Live in a province or territory that participates in the Canada Student Financial Assistance Program.
• Demonstrate financial need (for full-time students, your financial assets and investments will be taken into consideration).
• Maintain a satisfactory academic level to continue receiving financial assistance in the form of a student grants and loans.
• Not have reached the lifetime maximum for student financial assistance

You must also be registered as a full-time or part-time student, defined as follows:

• Full-time student: you must take at least 60% of a full course load. However, there are exceptions for students with a disability (at least 40%).
• Part-time student: you must take between 20% and 59% of a full course load.

There are several student grants available for which you can apply, including :

• Full-time students
• Full-time students with dependents
• Part-time students
• Part-time students with dependents
• Students with disabilities
• Equipment and services for students with disabilities

Please note, however, that your eligibility for these grants will be assessed. In addition, there are lifetime maximums for student financial assistance, determined in number of weeks.

As mentioned earlier, your student loan starts accruing interest after you graduate. What’s more, you’re entitled to a grace period before you have to start repaying your student loan. The grace period lasts 6 months and begins when :

• You’ve completed your final term of study (whether you’ve graduated or not)
• Changing from full-time to part-time student status
• You leave or are absent from the school.

The Government of Canada offers a number of online tools to help you plan your finances while you study. For example:

• Student Aid Estimator: tool for estimating the amount you could receive from the Canada Student Financial Assistance Program.
• Loan Repayment Estimator: a tool for estimating the monthly payments you’ll need to make to repay your student loan.
  
• Loan repayment rate: tool for finding the repayment percentage of Canada Student Loans for a given year and educational institution.
• Designated programs and schools: a tool for exploring programs of study and educational institutions.

As previously mentioned, the Canada Student Loans Program works closely with the provinces and territories to provide financial assistance. This financial assistance comes in the form of scholarships and student loans, and varies according to your province of residence.

• For some provinces and territories, provincial financial assistance is available in addition to federal financial assistance.
• For other provinces and territories, provincial financial assistance is not available, but you do have access to federal financial assistance.
• Finally, for provinces and territories that manage their own student loan programs, federal financial assistance is not available. But you do have access to provincial student grants and loans.

Therefore, your application for a student grants and loans must be completed on the website of your provincial or territorial student assistance office. The list of provincial and territorial student assistance offices is available here.

Once you’ve submitted your application for student grants and loans, the student assistance service in your province or territory of residence will contact you to explain the next steps.

For example, Canada Student Grants and Loans are not available in Quebec, as the province of Quebec manages its own student aid program. Students residing in Quebec must apply for assistance through Quebec Student Financial Assistance.

Several scholarships and student loans are available, such as :

• Loans and bursaries for full-time studies
• Loans for part-time studies
• Special needs allowance
• Scholarships for interns
• Excellence scholarships for students in education programs
• Financial assistance for international students
• Student mobility grants

If you don’t qualify for federal or provincial student loans or grants, there are other options available to you. These include private student loans and student lines of credit. The conditions are different, and so are the repayment terms, but it’s an option you should consider for your post-secondary education.

If this is the route you choose, start by contacting your bank or credit union. They’ll be able to suggest the products they offer to suit your needs. That said, don’t hesitate to contact other financial institutions to compare student loans and lines of credit.

Typically, when you submit an application for a private student loan, the lender will ask you for more information, such as:

• Your income
• Your credit score
• Your borrowing history

This information will determine if you qualify for the loan. If possible, make sure you’re in good financial health before you apply. If you have a low credit score, the lender may ask you to find a co-signer before granting the loan. If you need help, don’t hesitate to follow our personal finance tips for students.