4 min read

How Much Money from Student Loans can you get in Canada

Written By

Clay Shiffman

Higher education allows students to learn valuable skills and gain experience. In the ever-evolving landscape of higher education and competition in the workforce, getting a student loan is a financial essential for many post-secondary students in financing their academic journey.

In this guide, we discuss the various types of student loans, eligibility criteria, the application process, and how much you can get. We also explore the repayment process and maximum lifetime limits to give you a comprehensive understanding of your options.

Types of student loans

Canada Student Loans come in various forms, each with eligibility criteria, terms, and conditions. Here are common student loans available for students in Canada.

Federal student loans

Federal loans are administered by the federal government through the Canada Student Loans Program (CSLP). These are available to Canadian citizens, permanent residents, and protected persons who demonstrate financial need when pursuing post-secondary education. Federal loans provide financial assistance to qualifying students enrolled in full-time or part-time students at designated post-secondary institutions across Canada.

Provincial and territorial loans

Each province and territory has a student loan program to supplement federal funding. These loans are tailored to the specific needs of residents and students studying with the province or territory. Eligibility criteria, loan amounts, and repayment terms may vary.

Integrated loans

Some provinces offer integrated student loans, which combine federal and provincial funding in a single application. This streamlined approach simplifies the application process and ensures students receive the maximum financial assistance based on their situations.

Grants and scholarships

Grants and scholarships are alternatives to student loans, providing financial assistance to help students cover the cost of education. Unlike loans, grants and scholarships typically don't need to be repaid. Many government agencies, educational institutions, private organizations, and foundations offer grants and scholarships based on academic merit, financial need, community involvement, field of study, and other factors.

Private student loans

Private student loans are offered by banks, credit unions, and other financial institutions. Students can use these loans to supplement government funding or cover educational expenses not met by other financial aid programs. However, private loans may have higher interest rates and less flexible repayment terms than government loans.

Line of credit

Some financial institutions offer lines of credit specifically for students. Similar to private student loans, lines of credit can fund educational expenses but require the borrower to make monthly interest payments. They may have stricter credit requirements as well.

Registered Education Savings Plan

The Registered Education Savings Plan (RESP) is a tax-advantaged savings vehicle to help Canadian parents and guardians save for their children's post-secondary education. Contributions in the RESP grow tax-deferred until withdrawal, meaning the investment earnings are not taxed as long as they stay in the account.

One of the perks of RESPs is the ability to receive government grants. The Canada Education Savings Grant (CESC) matches a percentage of RESP contributions up to a limit. Low and middle-income families may qualify for the Canada Learning Bond (CLB), which provides an initial grand and additional grants for each year of eligibility.

RESPs offer flexibility to contribute and invest within the portfolio. You can make regular contributions or as lump sums, and investments can choose from a range of investment options, including mutual funds, stocks, bonds, and Guaranteed Investment Certificates (GICs).

While there are no annual RESP contribution limits, there's a lifetime contribution limit per beneficiary. As of 2022, the lifetime contribution limit is $50,000. Contributions exceeding this limit are subject to penalties. Unused contributions can be returned to the contributor tax-free, while investment earnings and government grants are subject to rules and tax implications.

When the beneficiary enrolls in post-secondary education, the RESP makes Educational Assistance Payments (EAPs). EAPs consist of the investment earnings and government grants accumulated within the plan and are taxable income.

Canada Student Financial Assistance Program (CSFA Program)

The CSFA Program is a government initiative that provides financial assistance to eligible Canadian post-secondary students. It is jointly administered by the federal government and participating provinces and territories. The program offers loans, grants, and repayment assistance options to help students cover tuition, books, living expenses, and other educational fees.

Under the Canada Student Financial Assistance Program, qualifying students can apply for Canada Student Loans, which are low-interest lows provided by the federal government. In addition to the loans, the program offers Canada Student Grants, which the students don't need to repay.

These grants have various eligibility criteria and types, such as students with persistent or prolonged disability, part-time students, and students with dependents.

The CSFA Program offers repayment assistance options to help students manage their debt after graduation. It includes the Repayment Assistance Plan (RAP), which adjusts the monthly loan payments based on income and family size, making repayments more manageable for borrowers with financial hardships. Students with financial needs may also be eligible for interest relief on their Canada Student Loans. This temporary measure allows borrowers to postpone or reduce their loan payments for a specified period.

Who is eligible for the Canada Student Loans Program?

Eligibility for the Canada Student Loans Program depends on several factors, including citizenship, residency status, enrolment in a qualifying post-secondary program, financial need, and academic progress.

Citizenship

Applicants must be Canadian citizens, permanent residents, or protected persons to qualify for Canada Student Loans. International students and temporary residents are generally not eligible for federal student loans but may qualify for other financial assistance offered by their province or territory.

Residency

Applicants must meet residency requirements set by their province or territory. For example, students must be residents of the province or territory for a specified period to qualify for the student loans in that jurisdiction.

Enrolment in an eligible program

The Canada Student Loans Program requires applications to be enrolled in a designated post-secondary program at a recognized institution. Designated programs include full-time and part-time studies at universities, colleges, trade schools, and other eligible Canadian institutions.

Financial need

Financial need is key in determining eligibility for a Canada Student Loan. Applicants must demonstrate that they require student aid to cover the costs of their post-secondary education program, including tuition, textbooks, and housing. Financial need is assessed based on factors like income, family size, and other funding sources.

Satisfactory academic progress

Applicants must maintain satisfactory academic progress to remain eligible for the Canada Student Loan. It typically means maintaining a minimum course load and meeting academic performance standards set by their institution.

Maximum lifetime limit

There is a lifetime limit on the amount of student loans an individual can receive. As of 2022, the maximum limit is $210,000 for students enrolled in doctoral studies and $140,000 for other programs. Once you reach the limit, you may no longer be eligible for additional Canada Student Loans.

Default status

Applicants with outstanding student loan debt in default status may be ineligible for new Canada Student Loans until they resolve it. It may mean repaying the outstanding debt or applying for repayment assistance.

How much money do you qualify for?

The amount of loan you qualify for through the Canada Student Loans Program varies depending on the student's financial need, the cost of their post-secondary education, the province or territory of residence, and whether they are a part-time or full-time student.

There are maximum loan amounts a student can receive. These limits are determined by the federal government and are adjusted annually. The maximum loan amount for full-time students is around $10,000 to $12,000 per academic year as of 2022, while part-time students may qualify for lower amounts.

Review your loan options carefully and understand whether you meet the eligibility criteria for the options you want. Create a budget for your student loan to ensure you can manage the debt effectively and have a repayment strategy after school.

The application process for student financial assistance

The application process for student financial aid involves several steps and can vary depending on the province or territory of residence. Calculate your estimated educational expenses to determine how much loan you need. After you research the options available, choose the loan you want to apply for and confirm you meet the requirements, you can apply.

Collect the necessary documentation for the application process, such as identification documents, proof of citizenship or residency, and family income information. You may need to provide tax returns or pay stubs to prove you need student aid.

Once you apply, the relevant authorities review your form to determine your eligibility for the student aid programs. The assessment may include verifying the information on your application and requesting additional documentation. You'll receive a notification regarding the outcome of your application.

Carefully review the terms and conditions of your funding package before accepting. Funds are typically disbursed to your designated bank account or sent to your educational institution. It's essential to keep track of your loan balance and repayment obligations throughout your students.

Repayment process of student aid programs

The repayment process typically begins after a grace period of six months from completing your studies or when you are no longer a full-time student. No payments are required during the grace period, and interest may or may not accrue, depending on the loan. You'll get a notification regarding the repayment starting once the grace period ends.

Borrowers can make standard or income-driven repayments. Standard repayments are fixed monthly payments over a specified period until the loan is paid off. Income-drive repayments adjust monthly payments based on family income and size, such as the Repayment Assistance Plan offered by the Government of Canada. You can also make a lump sum to repay the student loan faster.

Interest may accrue on the outstanding balance during the repayment period. The interest rate may be fixed or variable, and borrowers are responsible for paying the principal amount and interest charges. A loan servicer, like the National Student Loans Service Centre (NSLSC), is responsible for administering and managing student loans and grants on behalf of the federal and provincial governments.

How much loan does an international student qualify for?

The loan amounts for international students vary depending on specific loan programs, residency status, and the educational institution's policies. You may have limited options through government programs but can get international student bank loans and other financial aid from educational institutions and private lenders.

International students can also explore other funding, like scholarships, grants, part-time work, and savings. Understanding personal finance tips for international students can also help them with budgeting in college and affording hidden costs they want to avoid.

Financing your higher education with KOHO

Financing your higher education can be daunting as the expenses pile up each year. With rising tuition and living costs, it's essential to budget for your student loan carefully to ensure you can cover everything.

KOHO offers several student-friendly services and resources to help students manage their money responsibly and maximize its value. From earning interest in a high-interest savings account to using a virtual credit card and overdraft protect coverage for everyday spending and emergencies, we have you covered throughout your post-secondary years.

You can also monitor your credit history with a free credit score to routinely track your progress. The earlier you start building credit with KOHO, the more time you have to improve your credit score.

Note: KOHO product information and/or features may have been updated since this blog post was published. Please refer to our KOHO Plans page for our most up to date account information!