The cost of post-secondary education has been increasing over the past few decades, and while some believe that you can’t put a price on education, it seems like many institutions have – and with some hefty price tags at that. According to CIBC, the average cost of schooling in Canada can be as high as $80,000. Thankfully, student loans and grants exist to make going to post-secondary a bit easier.
Here’s what you need to know about student loans before applying for them.
In Canada, there are two options courtesy of the federal government that can help fund your post-secondary education. The first is school loans through the Canada Student Loan Program, and the second is grants from the Canada Student Grants Program.
Student loans are available for both part- and full-time students, and require an application that assesses whether or not you meet the government’s requirements for financial needs. If you are qualified, you could potentially receive up to 60% of the cost of your tuition. There’s also a maximum amount overall that you are able to receive through loans, which can change from year to year. Once you’ve completed your schooling, the sum of your loan is owed to the government, plus interest.
The Canada Student Grants Program also requires you to show that you are in financial need. If your application is approved, you may receive grant money. Unlike student loans, you do not have to repay what you’re given after you graduate.
Depending on where you live, different provinces also offer different types of financial assistance. For example, Ontario offers the Ontario Student Assistance Program, which is also available for part- and full-time students, depending on his or her eligibility.
There is also the option of seeking financial aid through private student loans from a financial institution. Lines of credit specifically for this purpose (that is, for students) exist at most if not all financial institutions, and generally offer much lower interest rates with more time for students to repay the debt.
With that said, the interest on government student loans is tax deductible – it can actually be claimed as an income deduction, and ultimately lowers the income you are required to pay tax on. With a student loan line of credit, however, you are disqualified for the tax deduction. The government also introduced a new change to their student loans last year, where students do not have to repay their debts until they start earning at least $25,000.
The most important takeaway is that you should always assess your situation before you decide on one over the other. If you are expecting to earn a good salary post-graduation, then perhaps a line of credit from a financial institution is the way to go. Do the math and make sure you can repay the loan, and keep in mind: just because one particular loan has the lowest interest rate, it doesn’t mean that it’s the best loan for you.
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