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Everything You Need to Know About Student Loans in Canada

Post-secondary education is most likely one of the most expensive life experiences you’ll ever have. Since there are high costs that come with studying, you might be considering getting financing through a student loan.

Student loans are essentially debt, and with limited earning potential, it can be difficult repaying the loan. This is not a great way to be starting your adult life with enormous debt and can get very stressful for some.

Let’s look at an overview of how student loans work in Canada and how you can make the right decisions before signing any contracts with a lender.

Federal Student Loans In Canada

You will have two options to consider if you are looking at funding your university studies through the Canadian government, namely, applying for a grant or taking out a loan.

Taking out a loan with the Canada Student Loans Program should be your first option, as it enables the Canadian government to give funding to part-time and full-time students. The total amount of funding will rely on a percentage of your total education costs against how much you can reasonably afford from your personal finances.

The National Student Loans Service Centre (NSLSC) distributes all loans from the Canada Student Loans Program.

Your total education costs will get determined as follows:

  • Your university of choice
  • Full course load
  • Your intention to study part-time or full-time

Full-time students:

As a full-time student with a federal student loan, you can get up to 60% of your education funded. To get considered a full-time student, you need at least 60% of a full course load. There will be exceptions if you’re a student with a permanent disability.

Part-time students:

If you’re a part-time student, you can qualify for up to $10,000 in funds. You can show up anywhere between 20% to 59% of the time. There are exceptions if you have a permanent disability.

To be suitable for a federal student loan, you will need to meet the following requirements:

  • Be a Canadian citizen, permanent resident, or be a designated protected person.
  • Live in a province or territory that’s enrolled in the Canada Student Loans Program.
  • Maintain a suitable academic standard to continue receiving financial assistance.

If you’re 22 years or older and applying for the first time, you are required to pass a credit check, so ensure your lending history and credit score are satisfactory.

If you’ve already been approved for the full 60% as a full-time student but can’t afford the remaining 40%, you can apply for a Canada Student Grant. Unlike the Canada Student Loans Program, you don’t have to pay back the funds received from the Canada Student Grant.

There are seven grants available for you to apply for:

  1. Low-income families
  2. Middle-income families
  3. Persons with dependants
  4. Part-time studies
  5. Part-time studies with dependants
  6. Persons with permanent disabilities
  7. Equipment and services for persons with permanent disabilities

If you apply for financial assistance, your application will automatically get considered for a grant.

Provincial and Territory Student Loans in Canada

If you aren’t eligible for a grant and still need additional funding, you can apply for financing through provincial and territory student loans. It’s not always easy to get a student loan from both the federal government and provincial and territory aid. Your province or territory will have to be participants in the Canada Student Loans Program for you to get the maximum financial assistance, and not all of them do.

Please do your research before applying for territory or provincial student loans, as each area differs in its application processes. Depending on which area you apply from, you can qualify for funding through bursaries and scholarships.

Private Student Loans in Canada

If you are still short of funding, you can apply for a private student loan. It’s more expensive than the other options with high-interest rates, and you might have to start paying the loan while you’re still studying.

If this is the route you choose, start with a credit union or bank where you already have an account. They can be in a position to offer you special rates or loan terms that only apply to their members. Even though you have a financial institution you usually bank with, it won’t hurt to research and apply at other banks to get the best deal.

When you submit an application for a private student loan, the lender will require more information from you, such as:

  • Your income
  • Your credit score
  • Your borrowing history

This information will determine if you’re eligible for the loan, so ensure you’re in good financial standing before applying. If your credit score is low, the lender might require you to get someone to act as a co-signer before granting you the loan.

What Happens if You Get Approved for a Student Loan?

To apply for a federal and provincial loan, you’ll only need to complete one application. The funds that get approved will get deposited into either your bank account directly or straight into your post-secondary institution’s account.

Federal student loans only start accumulating interest after you have completed your studies, and you’ll receive a 6-month grace period following your graduation before you need to start paying the student loan back.


It can be daunting preparing for post-secondary studies, and you’ll have many decisions to make. Ensure you do ample research to determine how you will pay for your tuition. Because student loans are a long-term commitment, make sure you choose the right loan with the best terms for you.

If you’re unsure which route to take, speak to a guidance counselor at your high school or post-secondary institution where you will be applying to study. They are knowledgeable and can give you guidance on what’s best for you and your financial situation.

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