While many students hope to get a grant or scholarship that won't be paid back, these types of college funding are not available to everyone. Even if a scholarship is granted, the amount may not be sufficient to cover all expenses such as rent, tuition, supplies, and textbooks. Low interest student loans are an alternative type of college financing.
College loans are different from other types of debt. They can be deferred or paid at a latter date. The loan payment starts after graduation, and there is a grace period of 6 - 9 months. These loans are typically offered with a lower interest rate compared to credit cards, personal loans, and other types of debt. The interest adds up to the principal after graduation. At the same time, low interest is not equal to interest-free. The interest is paid together with the principal and is compounded interest. The student may owe a much larger amount of money than expected.
A good way to find about low interest loan offers is your university's financial aid office. Those who have been admitted already have higher chances of being approved. Depending on the lender, the repayment terms can be based on the borrower's earnings rather than on the amount borrowed. Surplus earnings can be kept in a high-yield deposit account rather than used to pay off the outstanding debt.
Some financial institutions offer extended terms of payment and low initial payments. Many students find these options attractive, but it is wise to abstain from borrowing under these terms. The loan will be more expensive to service in the long run because interest accumulates. Choosing an affordable payment plan is most important because late and missed payments will affect your credit score. If penalties apply, the loan will cost you more.
The Canada Student Loan Program provides affordable loans to students. The federal government provides financing while the provinces can run their own programs, thus providing additional financing. Students may also apply for a commercial loan with their bank of choice. Scotiabank, for example, offers personal lines of credit to students who can provide proof of enrollment. The Bank of Montreal also offers lines of credit to cover tuition, housing, textbooks, and other expenses. University/ postsecondary students can borrow up to $15,000 during their first year in college and up to $45,000 in total. Students pay interest on the amount they have borrowed while in college, plus one more year after graduation. Canadian citizens and landed immigrants can apply for funding if enrolled full-time for a period of 12 or more weeks.
Our loans guide, will assist you in finding more about student loans in Canada.
