Before you are taking out a loan: Information about back-to-school financial support in Canada

Knowing your options now will provide help to graduate on a much stronger financial footing.

Student loans in Canada

In Canada, you generally have two options for borrowing: government programs or private financial institutions. According to the RBC survey, 62% of scholars say they depend on two or more sources to finance their education – including government loans, scholarships, family support, bank cards and student loans. But only 30% say they understand the differences between the choices.

The government route: Canada Student Financial Assistance Program

Through the Canada Student Financial Assistance Program, the federal government works with provinces and territories to supply two sorts of assistance:

There isn’t any interest charged on the federal portion of Canadian student loans. However, interest may apply to provincial or territorial shares. Some regions even offer loan forgiveness programs for eligible students.

Eligibility for these programs varies Province or area of ​​residence. Always check along with your school’s financial aid office first.

The private route: banks and financial institutions

If you reach the limit or should not eligible for presidency funding, you could have to contact a bank. Interest rates on bank loans are often higher than on government loans.

Unlike government options, personal loans often require almost immediate repayment (typically on a 30-day cycle). Unfortunately, personal loans typically don’t offer interest-free periods or loan forgiveness.

Further options for financing your studies

Loans should not your only option. With non-repayable fundsyou would not have to pay back the cash you received. This includes:

The article continues below promoting

• Scholarshipsthat are awarded based on demonstrated financial need. Ask your school’s financial aid office for a listing.
• Grantswhich are sometimes based on need, but other considerations corresponding to academic merit can also play a task. They can also be linked to specific population groups (e.g. older students, students with disabilities or students in certain sectors).
• Scholarshipsawarded to students based on academic achievement, corresponding to a certain grade point average (GPA). Sometimes they’re reserved for certain groups, corresponding to female STEM students or students from a particular region of the country.
• Registered Education Savings Plans (RESPS)which require prior planning but may also help ensure you will have money for post-secondary school while also providing tax advantages. Any adult can open an RESP to get monetary savings for a baby’s post-secondary education and, in some cases, receive additional government funding through the Canada Learning Bond (CLB) and the Canada Education Savings Grant (CESG).

If you receive repayable funds, you’ll have to pay the a refund with interest. These options include:

• Student credit lineswhich can help you borrow what you wish (as much as a certain limit) and pay interest only on the quantity you truly use. A line of credit could be useful as security if you will have access to other funds, corresponding to from a job.
• Credit cardsthat are convenient and widely accepted, but should only be used as a final resort resulting from their extremely high rates of interest.

Between tuition and books, accommodation and living expenses, the prices add up quickly. Luckily, there are many options available to Canadian students – and a few are even free. Slightly forethought can go a good distance, so consider this your first homework task.

About Keph Senett

Keph Senett writes about personal finance from a community-building perspective. Their goal is to clarify and actionable knowledge accessible to everyone.