Get the Best Student Loans in Canada for 2023
There are currently over 2 million students in Canada are the majority of them rely on some form of loan or financial aid in order to help them cover tuition and the costs of living. Government loans are very helpful but they may not cover all of the costs and not everyone is eligible for them.
This guide will explain what student loans are and what the difference between public and private ones are, how much you could borrow and help you find the combination of financial aid that is right for you.
What is a student loan?
A student loan is an amount of money borrowed by someone engaged in full or part-time studies. In Canada, there are a number of ways to finance further education with both public loans and grants and private loans.
Everyone who is a citizen or full-time resident in Canada can apply for a student loan from either the government, their province or both. Some people on lower incomes may also be able to apply for government or local grants as well.
If you have maxed out your student loans, or are ineligible for one for another reason you can take out a private student loan, known as an educational line of credit. Eligibility for these is assessed like any loan, with a repayment limit and an interest rate dependent on the bank's assessment of risk.
Who can get a student loan?
If you are a citizen or a full-time resident of Canada, you can apply to the Canada Student Loans Program. The loans are available for part-time or full-time studies at accredited institutions.
You must meet the following criteria to apply:
- your territory or province must be part of the Canada Student Loans Program
- you can prove financial hardship
- you must enroll in at least a 60% course load for a full-time student and of 20% course load for part-time students
- if you have permanent disabilities you must be enrolled in at least 40% course load for full-time and part-time students
- if you are aged 22 or older you must pass a credit check
- you must not have surpasses the maximum lifetime amount of financial help
- you must not fall below a satisfactory academic level
Your ability to access federal student loans depends on where you live. All provinces and territories also have their own student aid programs.
| Province | Can you access federal aid? | What is the local student aid program? |
|---|---|---|
| Alberta | Alberta Student Aid | |
| British Columbia | British Columbia Student Aid | |
| Manitoba | Manitoba Student Aid | |
| New Brunswick | New Brunswick Student Financial Services | |
| Newfoundland and Labrador | Newfoundland and Labrador Student Aid | |
| Northwest Territories |
| Northwest Territories Student Financial Assistance |
| Nova Scotia | Nova Scotia Student Assistance | |
| Nunavut | Financial Assistance for Nunavut Students | |
| Ontario | Ontario Student Assistance Program | |
| Prince Edward Island | Prince Edward Island Student Financial Services | |
| Quebec | Quebec Student Financial Assistance | |
| Saskatchewan | Student Financial Assistance Branch | |
| Yukon | Yukon Student Financial Services |
How much is a student loan?
A government loan from the Canadian Student Loans program will cover 60% of your assessed need The remaining 40% can be covered by local loans awarded by your province or territory or private student financing. Your assessed need may not cover all of the expenses you will have if you are living alone.
How is your assessed need calculated?
Your assessed need is calculated with a simple formula:
Keep in mind
Assessed need = allowable costs - resources
This means that the loan program will calculate all the expenses relating to your studies that they assist with and will decide how much of that you can personally pay.
Good to know
The maximum lifetime limit for students is 340 weeks for full-time students, 400 weeks for doctorate students, and $10 000 for part-time students
Have you surpassed your maximum limit? Take a look at our personal loan calculator to see how much you could borrow.
Who can get a student grant?
The Canada Student Grants Program offers financial aid you do not need to repay. These are available to all Canadian citizens and full-time residents except Quebec, Nunavut, and the Northwest Territories which have their aid programs (see table above).
Let’s take a look at what the criteria are and what’s available for full-time students:
| Criteria | Low-income applicants | Applicants | Applicants with dependants |
|---|---|---|---|
| Eligibility for student grant |
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| Amount available for student grant |
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| How to apply for a student grant | Automatic with the loan application | Automatic with the loan application | Automatic with the loan application |
So let’s take an example.
Keep in mind
Amelia is 22 and from a middle-income background. She is about to start studying art history at the University of Toronto, which has fees of $11 420. She has a 1-year-old girl, Michelle, and is a single parent. She enrolls full-time and is resident in Toronto so she will receive $705 per week through the Ontario Student Assistant Program (OSAP). By applying to this she automatically applies to the Canadian Student Grants Program and she could receive a federal grant of $9,200. in addition, she would be eligible for a Canada Student Loans amount of $11,900.
How big a student loan do you need?
As you can see there is help from several sources and it worth researching what is available in your province specifically as provisions vary.
However, is government help enough? In the example above Amelia would receive aid from the OSAP, the Canadian Student Grants Program, and the Canadian Student Loans Program. The amounts break down like this:
| Aid | Amount |
|---|---|
| OSAP | $705 / week for 15 week student year = $10,575 |
| Canadian Student Grants | $9,200 |
| Canadian Student Loans | $11,900 |
Therefore Amelia would receive a total of $31,675, out of which she has to pay her tuition fees of $11,420, leaving her with $20,255. The cheapest rent for a two-bed for Amelia and her daughter in Toronto is around $1,500 a month or $18,000 a year. This leaves Amelia with just $2,255 to cover expenses.
If Amelia has savings or can work alongside pursuing her studies she may be able to cover the weekly expense of food, transport, and any medical emergencies. If she cannot, however, she may be able to take out a private student loan, known as a student line of credit or an education line of credit to cover costs.
Good to know
Take a look at the top of this page to see how much you could borrow.
What is a student line of credit?
A student line of credit is a borrowing option specifically for students offered by some banks. A line of credit works a little differently than a loan. It's more similar to a credit card. You can borrow some or all of it. As it is paid back, you can reborrow up to the built-in max. Have a line of credit for $5,000, but only use $1,500? Good news! You only have to repay the $1,500 that you spent plus interest.
Let's compare student loans and lines of credit:
Good to know
For example, Mark 27 from Vancouver takes out a personal loan of $10,000. He can spend the money, invest it or just keep it in a bank account. When the loan is up he will have to repay the full $10,000.
Veronica, 19, takes out a student line of credit for $10,000. She spends $8,000 of it and doesn’t use the remainder so she will only have to pay back $8,000.
A student line of credit, also known as an education line of credit, can be a safer way to borrow money, especially for a younger person, that does not put them at risk of spiralling into debt.
Good to know
With a student loan, you do not start paying interest on the amount to borrow until you receive your degree. With a student line of credit, interest begins accruing as soon as you use the money.
Let’s take a look at what banks are offering:
| Institution | Max amount of credit | Interest rate | Features |
|---|---|---|---|
| BMO student line of credit | $80,000 | 4.7% (4.45% while studying) | Interest-only payments while studying |
| CIBC student line of credit | $350,000 | 4.7% | Security optional |
| RBC student line of credit | $200,000 | 5.7% | Two years starting graduating before start repaying the principal |
| Scotia Bank student line of credit | $40,000 | 4.7% | Interest-only payments while studying |
| TD student line of credit | $80,000 | 5.7% | Interest-only payments while studying |
If you are interested in taking out a student line of credit take a look at the top of this page and find out how much you could borrow.
Watch out!
Line of credit interest rates are linked to banks’ prime rates and these are variable and may be raised.
A student line of credit vs student credit card?
A student credit can be very useful if there is an unforeseen emergency or a need to get funds quickly as it is a way of borrowing money without an application process. However, a credit card is not a good solution to being under-financed. It does not have the safety limits that a line of credit has and can lead you into a debt spiral.
That said, it is a useful thing to have in addition to a line of credit as it can solve one-off payments, like an emergency trip to the dentist.
Student line of credit
Pros
- Limit prevents debt from getting out of control
- Can only pay interest until graduated
- Interest rates may be lower than government loans
Cons
- Upper limit not flexible
- Interest rates are available and may go up
Student credit card
Pros
- Prepared for emergencies
- Builds up your credit score
Cons
- Higher interest than traditional credit cards
- Low credit limits
Take a look at our guide to student credit cards.
Are there loans for international students?
The government-managed student loans and grants are only available for Canadian citizens and full-time Canadian residents.
However, if you are an international student you may be able to take out a personal loan to finance your studies. Take a look at our personal loan calculator to help yourself find the right deal.
Are there alternative ways to fund education?
As well as grants and loans, the Canadian government offers a wide range of scholarships in different subjects as well as funding for postgraduate education. It is worth researching and seeing if there could be help specifically for you!
If you are thinking bout the education of your children or grandchildren, one of the best ways to save money for their education is through a Registered Education Savings Plan or RESP. This is a government program that invests your savings specifically so you can pay for education costs.
Some student line of credit banks will accept an RESP as security. A secured loan will typically offer lower interest rates as there is a decreased level of risk for the bank.
Interested in setting up an RESP or just taking a look at what investment deals one offers?