Welcome to the first part of my four-part series on student loans in Canada. Today I’ll be covering the basics of government student loans. I’ll cover what you can use government student loans for, what variables impact how much of a student loan you can receive, and the basic process of a loan being approved.
What can I use my government student loans to pay for?
There are three main things you can use your federal or provincial student loans to pay for:
- Your tuition. Your tuition is the cost you pay to attend your classes at a university, college, or another learning institute.
- Your textbooks. Depending on the kind of program you’re in, textbooks can run you hundreds of dollars!
- Living expenses. This may mean the cost of residence and a meal plan if you select to live on-campus or rent for an apartment or house, as well as groceries if you select to live off-campus.
What factors determine how much of a government student loan I’m eligible for?
The government takes into account all of the following when assessing the size of your student loan:
- Income. If you are a student still living with your parents, they’ll consider your parents’ income. If you’re an independent adult, they’ll consider your income and your partner’s income.
- Attendance. You will be eligible for a larger loan if you plan to attend school full-time instead of part-time.
- The type of post-secondary education you’re planning to pursue. University tends to be more expensive than college, and programs vary in their costs wildly.
- Other sources of income. If you have access to funds in an RESP or other savings accounts, you may be eligible for fewer student loans.
- If you have any dependents. Having dependents can increase the amount of student loans you’re eligible for.
- Extenuating circumstances, such as a parent being ill and unable to support you financially.
How does the basic loan approval process work?
It works as follows:
- Collect all your information together.
- Fill in the necessary paperwork. You should only need to submit one application for federal and provincial loans, but double-check to be sure!
- If you’re approved for a loan, your money may be deposited in your bank account, or it may go directly to your post-secondary institution.
Government-issued loans do not accumulate interest while you’re a student. With federal loans, you’ll have six months before you have to start paying your loans back. The same grace period usually applies for provincial loans, but check with your loan servicer to be sure.
The Takeaway
It can be a lot of work to apply for a loan! Before starting the process, be sure you’re clear on what you can reasonably expect to receive in student loans.
