Student Loans: Canadian Universities' Financial Aid Options

Canada is one of the top five destinations for students looking to study abroad, attracting over 90,000 international students each year. The country offers a high-quality education, an open and tolerant culture, and a range of opportunities. However, studying in Canada can be expensive, and many students rely on loans to help cover the costs. So, do Canadian universities offer student loans?

International students' eligibility for Canadian student loans

Canada welcomes over 90,000 international students each year, making it one of the top five destinations for studying abroad. The country offers a high-quality education, an open and tolerant culture, and a wide range of opportunities. However, international students in Canada are generally expected to finance their studies themselves. While scholarships, grants, and personal funds may cover some of the costs, many international students rely on student loans to cover the remaining expenses.

Federal Student Loans

The Canada Student Loan Program is a federal option for international students who need a repayable loan. While these loans are primarily available to Canadian citizens, some international students with protected status, such as refugees, are eligible. To check your eligibility for a federal Canada Student Loan, you can visit the Government of Canada website.

Private Student Loans

The primary loan source for international students in Canada is through private lenders. Private student loans do not require ties to the government or a cosigner. Lenders will consider factors such as academic success, career path, home country, expected graduation date, and the school attended. It is important to research different lenders and their eligibility requirements, interest rates, and repayment terms.

Student Line of Credit

If you don't qualify for government assistance or scholarships and the amount you receive is insufficient, you can consider a student line of credit from financial institutions. These loans often have lower interest rates than other types of credit lines.

Scholarships and Bursaries

In addition to loans, international students in Canada are eligible for various scholarships and bursaries, which do not need to be repaid. These include the Quebec government's merit scholarships for international students and the merit scholarship program for foreign students (PBEEE) offered by the Fonds de recherche du Québec.

Private student loans

Eligibility for private student loans is assessed in the same way as for any loan, with a repayment limit and an interest rate dependent on the bank's assessment of risk. Private lenders often have more lenient eligibility requirements than banks and credit unions, but it's important to be aware of the cost of borrowing before applying. Private student loans may have high rates and fees, so it's important to do your research and only deal with reputable lenders.

There are two types of private student loans: student lines of credit and personal loans. Student lines of credit are commonly offered by banks and provide access to a pre-approved credit limit whenever you need funds, but you only pay interest on the money you use. Personal loans typically range from $500 to $50,000 and can be obtained from banks, credit unions, or private lenders. However, personal loans usually have higher interest rates than government loans and often require immediate repayment.

When considering a private student loan, it's important to shop around and compare loans based on fees, interest rates, and repayment incentives or flexible terms. Understanding the Annual Percentage Rate (APR) is essential to ensure you get the best rate and don't end up paying more than expected over the life of the loan. It's also important to consider the repayment start date, as some loans may require repayment while you are still in school.

In summary, private student loans can be a helpful option for those who need additional funds to cover their education costs in Canada. However, it's important to carefully research and compare different loan options to ensure you understand the costs and eligibility requirements involved.

Provincial and territorial student loans

In Canada, provincial and territorial governments have jurisdiction over education and are responsible for providing assistance to students facing financial barriers in their pursuit of higher education. The availability and nature of provincial and territorial student loans vary across the country.

Provincial Loans Programs

Provincial loans programs in British Columbia, New Brunswick, Newfoundland and Labrador, Ontario (OSAP), and Saskatchewan are integrated with the Canada Student Loans Program. This means that the federal and provincial governments work together to provide student grants and loans.

Territorial Student Aid

In contrast, jurisdictions like Nunavut, the Northwest Territories, and Quebec operate their own student aid programs, independent of the Canada Student Loans Program.

Application Process

To access student financial assistance, individuals must apply through their province or territory of residence. The amount of funding received is determined by various factors, including the province or territory of residence, the presence of dependents, tuition fees, living expenses, and any disabilities.

Student Financial Assistance (SFA)

The Canadian government offers student financial assistance (SFA) with interest rates typically lower than those offered by other types of financing. The government also covers the interest accrued while the student is still in school. Additionally, students can benefit from a six-month grace period after graduating before they start repaying the principal and interest on their loans. The interest paid on these loans is also tax-deductible throughout the loan repayment period.

Repayment terms

Repayment Start Date

There is typically a six-month non-repayment period after graduation or leaving school before borrowers must start repaying their student loans. This grace period allows individuals to find employment and get financially settled before repayment begins. The six-month period starts after the final school term, reducing from full-time to part-time studies, or taking a break from school. During this time, individuals will receive information about their payment terms and options.

Repayment Schedule

The repayment schedule for student loans in Canada is generally set up automatically. Repayments are typically made monthly, and the amount is calculated based on the loan balance, interest rate, and repayment term. Borrowers can also customise their repayment details to accommodate their financial situation, such as changing the frequency of payments or adjusting the repayment amount.

Interest Rates

Student loans in Canada may have either fixed or variable interest rates. A fixed interest rate remains steady throughout the loan period, providing stability for borrowers. On the other hand, a variable interest rate can fluctuate based on economic conditions and the prime rate set by Canadian banks. Borrowers can choose to have a floating interest rate, which follows the current prime rate, or request a fixed interest rate for their student loans.

Multiple Loans

It is common for students in Canada to have both a provincial or territorial loan and a federal Canada student loan, each with its own repayment requirements. For instance, in Alberta, students typically have an Alberta student loan and a Canada student loan, managed through separate entities (Alberta MyLoan and the National Student Loans Service Centre, respectively). As a result, borrowers need to handle two debts and two payment schedules.

Repayment Assistance

Repayment assistance is available for those who need it. For instance, the Repayment Assistance Plan (RAP) offers support to borrowers under special circumstances, including those with disabilities or facing bankruptcy. Additionally, in certain cases, individuals may benefit from flexible options such as debt forgiveness or deferred repayment.

Scholarships and grants

Canadian students can apply for scholarships to study, research, or pursue professional development abroad. Here are some examples of scholarship programs available for Canadian students:

• The Canada-China Scholars' Exchange Program: This program offers scholarships to Canadians wishing to pursue short-term study, research, or Chinese language training at participating institutions in China.
• The Faculty Mobility for Partnership Building Program (FMPBP): This program provides grants for Canadian faculty members to build partnerships with international institutions.
• Banting Postdoctoral Fellowships: These fellowships are available for postdoctoral researchers in all disciplines.

International students can also find several scholarship opportunities to support their studies in Canada. Here are some examples:

• Study in Canada Scholarships: These scholarships provide international students with short-term exchange opportunities for study or research at Canadian post-secondary institutions.
• Emerging Leaders in the Americas Program: This program offers students from Latin America and the Caribbean short-term exchange opportunities for study or research at Canadian post-secondary institutions.
• Global Affairs Canada: Global Affairs Canada participates in major international scholarship programs and offers scholarships from various sources, including foreign governments and international organizations.

There are also scholarship programs that are open to both Canadian and international students:

• Loran Award: Offered in partnership with 25 Canadian universities, the Loran Award provides recipients with up to $100,000 over four years.
• Mackenzie King Scholarships: Graduate students can receive up to $8,500 through this scholarship program.
• Vanier Canada Graduate Scholarships: These scholarships are worth $50,000 per year for three years and are available to doctoral students.
• Pierre Elliott Trudeau Foundation Doctoral Scholarships: Doctoral students can receive up to $60,000 annually for three years through this scholarship program.

Frequently asked questions