Government Loans

Like anything else administered by the government, the student loans program is a long and complicated process. Your eligibility for a loan depends upon many factors, including your summer and part-time income, your parents’ income, Registered Savings Plans (RSPs) and Registered Education Savings Plans (RESPs) in your name, the number of siblings in your family, and a host of other numbers. These numbers are thrown into a government computer and out comes a response that says how much money you are eligible to receive. Although as many as one half of students don’t get help from their parents, this fact does not enter into the equation when the government determines your eligibility for a loan.

Your provincial government determines your eligibility for a student loan. Check out the following websites for more detailed information:

Nova Scotia
New Brunswick
Newfoundland and Labrador
Prince Edward Island
Quebec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
Yukon
North West Territories
Nunavut

Bank Loans

The government is not the only way to get money for your studies. Banks also issue loans called student lines of credit. In order to qualify, you need to be enrolled in a post-secondary institution.

Loans from banks differ quite a bit from government loans, but they tend to be a good option if you need additional funding or if you are ineligible for a government loan.

Government:

1. No collateral needed.

2. Moderate to high interest rates (depending on your institution).

3. 17% tax credit on interest paid each year.

Bank

1. Need some collateral (house or car, for example) or need to have someone co-sign the loan (often parents)

2. Good interest rates. Some institutions offer a grace period, but only on paying back the principal of the loan.

3. No tax credit.

Visit the websites of some financial institutions in order to learn more about student lines of credit.

CIBC
Scotia Bank
Royal Bank of Canada
Bank of Montreal
TD Canada Trust

Canadian Student Grant Program

If you qualify for a government-assisted student loan, you will automatically be considered for one of these grants. Students with a low income will receive $2,000 for the eight month school year (which works out to $250/month) and this money will be given to them up front. Students with a medium need for financial aid will receive $800 for the year ($100/month). This new program will give the provinces more freedom when delivering financial aid. It will also encourage more people to complete post-secondary education since the grant will be guaranteed every year until the educational program is complete. (Maclean’s Online)