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How to get student loans in Canada

Learn about your student loan options from government aid to personal loans.

Looking for government aid? Government loans and grants
Looking at personal financing? Compare personal loans

Financing your education can be a challenge. From government loans and grants to bank lines of credit and registered savings plans, the number of choices can seem overwhelming and, frankly, scary. We walk you through how student loans work – from borrowing while in school, to repaying once you graduate, to refinancing your loans down the road.

How do student loans in Canada work?

There are two main types of financial aid for students in Canada: government loans and grants and private loans and lines of credit.

  • Government loans and grants. Student loans from the government have a fixed or fluctuating interest rate and start accumulating interest as soon as you graduate. Grants are funds from the government that you do not have pay back.
  • Private loans and lines of credits. These can come from banks, credit unions or online lenders. Interest is typically higher (but not always) than with a government loan and starts accumulating as soon as you take money out. You’ll often have to start making payments on your loan from the moment it gets issued or after a grace period after your studies, depending on the lender.

Both government and private student loans work just like installment loans, where the money you borrow is paid back in monthly installments over a set period of time. The way your student loan will work will depend on whether you take out a government or private loan. Sometimes, you may even need to take out a combination of the two, if your government loan doesn’t cover all of your expenses.

Should I go into debt for school?

Red hand stop sign Around 40-50% of students go into debt to pay for their education. But the appeal of getting cash now can potentially blur the reality of having to pay it off later. Canadians collectively owe more than $25 billion in government student loans alone (which doesn’t even include private loans).

The average university student is said to graduate around $26,000.00 in the hole. On top of that is the grim reality that a degree or diploma doesn’t have to same power to land you a job as it might’ve had decades ago. Don’t rack up debt without really thinking about it – make sure you know exactly what you’re getting into. Take the following steps to decide if going into debt is right for you:

Government loans and grants

Students can get both loans and grants from the government. Eligible students can receive 2 separate loans: a federal loan (Canada Student Loan) and a loan from the provincial/territorial in which they reside. Despite being separate, both loans are disbursed together and repaid through a combined monthly payment plan, so you won’t have to worry about managing 2 separate sets of funding. Canada Student Loans are administered through the National Student Loans Service Centre (NSLSC).

Interest rates on government loans are very competitive, and you have the option of choosing either a floating or a fixed interest rate. All student loans have a floating interest rate by default, but you can change to a fixed-rate once you enter repayment on your student loans. However, once you’ve made this switch, you can’t change back to a floating rate.

What’s the difference between student loans and a grant?

Short answer – student loans have to be paid back, but grants don’t. A loan is usually paid back with interest, meaning you pay extra for the convenience of borrowing money you don’t have at the moment. A grant is free money. You can keep it without any fees and without having to pay it back.

What provincial loans and grants are available?

As mentioned, government student loans are a combination of 2 separate loans: Canada Student Loans (from the federal government) and provincial/territorial loans. Grants are also handled separately at the federal and provincial levels. The amount you’ll receive varies depending on each province/territory’s terms, policies and budget decisions.

To find out more about funding in the province or territory in which you reside, check out the relevant student aid office below:

AlbertaNunavut
British ColumbiaOntario
ManitobaPrince Edward Island
New BrunswickQuebec
Newfoundland and LabradorSaskatchewan
Northwest TerritoriesYukon
Nova Scotia

Learn more about government student loans and grants

Private funding

Banks, credit unions and online lenders all offer financing solutions you can tap into as a student. While the government typically offers a greater range of funding options designed especially for students, loans from private lenders are usually quicker and more flexible. However, it may be harder to qualify.

Just finished law or med school? There might be a student loan for you.

Even if you’re in between study terms, many banks and other financial institutions offer preferred financing for medical and law students to cover postgraduate expenses. Financing options often involve student lines of credit ranging from $80,000 to around $150,000.

Law students who need help covering the cost of studying for and taking the bar might want to look into financial options for taking the bar exam.

Student lines of credit

Student lines of credit are commonly used as an alternative when you don’t qualify for government loans or need more money. Issued by banks and credit unions, a line of credit is an amount you’re approved to borrow and can be accessed via online banking or in person at a local branch. (You can’t access these funds with a a debit or credit card.)

For full-time students, amounts generally fall between $10,000-$20,000 per year up to a maximum amount based on your level of study, i.e. certificate, diploma, degree, masters or doctorate. Credit limits will be lower for part-time students.

If you don’t touch the money, then you have no repayment obligations and aren’t charged any interest. But as soon as you withdraw from a line of credit, the amount withdrawn becomes a debt owed to your financial institution – interest immediately begins to accrue and you’re automatically required to make monthly repayments. Be aware that having a student line of credit could affect how much you’re eligible to receive from other sources like scholarships, bursaries and government loans.

Government loans vs. student lines of credit

Not sure whether a government loan or a student lines of credit is right for you? Here are the most important differences between the 2 options: most provinces and territories, you’ll get a lower interest rate with government loans, but student lines of credit offer flexible, plus you only pay for what you use. See more differences in the table below.

Compare regular lines of credit

Before applying, be sure that you meet the eligibility requirements.

Name Product Interest Rate Loan Amount Loan Term Requirements Credit Score Link
Cash Money Line of Credit
46.93%
$100 (in store), $500 (online) - $10,000
6 - 60 months
No min. income or employment requirements
Min. credit score: 560
Go to site
More Info
Cash Money offers line of credit loans up to $10,000 for AB, BC, NS, ON and SK residents. (Residents of MB or NB can apply in-store only.)
LendDirect Line of Credit
19.99% - 46.93%
$100 - $15,000
No end dates
Min. income of $1,500 /month
Min. credit score: 560
Go to site
More Info
Borrow up to $15,000, based on your income and credit history, with a line of credit from LendDirect.
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Compare up to 4 providers

Non-government student loans

Most students who need financing turn to government loans or student lines of credit. Because these are designed just for students, you can usually get a lower interest rate and more favourable repayment terms. However, if you don’t qualify for either option or need extra funds, you could apply for a personal loan from a bank, credit union or online lender. Your options for personal loans may be limited if you’re still hitting the books and not bringing in much income. But many banks and lenders accept cosigners, which can help you qualify for stronger rates and better terms than you’d find on your own.

Compare personal loans now

Personal loans

Personal loans typically range from $2,000.00 – $50,000.00, and interest rates that can vary from 3.00%-36.00%. Your rate is based on your income, credit score, existing debt load and other factors. Terms generally last 1-7 years. Because interest accumulates over time, a shorter term will cost less but come with higher principal payments, while a longer term will cost more but come with lower principle payments.

Pros

  • Flexible spending. You aren’t restricted on what you can use the money for.
  • Many lenders to choose from. Banks, credit unions, online lenders and other private financial institutions offer personal loans, so you can shop around and find the best deal for you.

Cons

  • Requires an income (and/or a cosigner). Working while in school can be challenging. Plus, your income may be too low to apply without a cosigner, in which case, someone else has to assume the risk of your debt.
  • (Usually) Higher interest rates than traditional student loans.
  • Not designed for students. Unlike traditional student loans, you usually have to start paying back personal loans right away – payments don’t go down during the school year, and you won’t get a grace period upon graduation.

Compare personal loans

In order to apply for a personal loan, you’ll need to meet the eligibility requirements.

Name Product Interest Rate Loan Amount Loan Term Requirements Credit Score Link
LoanConnect Personal Loan
Secured from 1.90%, Unsecured from 9.90%-46.96%
$500 - $50,000
3 - 120 months
Currents debts must total less than 60% of income
Min. credit score: 300
Go to site
More Info
An online broker who helps inform clients towards better finances. Get pre-approved by different lenders for unsecured or secured loans in 5 minutes with any credit score.
ConsumerCapital Personal Loan
19.99% - 32.99%
$1,500 - $12,500
24 - 60 months
Min. income of $1,900 /month, 6+ months employed
Min. credit score: 540
Go to site
More Info
An online lender that provides fast unsecured personal loans. Complete an application in less than 10 minutes and get a decision within 24 hours.
Spring Financial Personal Loan
17.99% - 46.96%
$500 - $15,000
9 - 48 months
No min. income or employment requirements
Min. credit score: 400
Go to site
More Info
An online lender offering unsecured personal loans and credit builder loans. Those filing for bankruptcy or a consumer proposal can also apply. If you're not eligible for an unsecured loan, you may be offered a loan to help rebuild your credit.
goPeer Personal Loan
8.00% - 31.00%
$1,000 - $25,000
36 - 60 months
Min. income of $15,000 /year
Min. credit score: 600
Go to site
More Info
Canada's first regulated consumer peer-to-peer lending platform offering unsecured loans. Connects creditworthy Canadians looking for a loan with Canadians looking to invest. goPeer strives to offer the most competitive interest rates. Apply in minutes and get a response within 24 hours.
FlexMoney Personal Loan
18.90% - 46.93%
$500 - $15,000
6 - 60 months
Min. income of $2,000 /month, 3+ months employed
Min. credit score: 500
Go to site
More Info
An online lender offering flexible unsecured loans. Apply in less than 10 minutes and if approved, receive financing in as little as 24 hours. Pay off your loan at any time.
Loans Canada Personal Loan
Secured from 2.00%, Unsecured from 8.00% to 46.96%
$300 - $50,000
3 - 60 months
No min. income or employment requirements
Min. credit score: 300
Go to site
More Info
An online broker with the largest lender network in Canada. Get matched for free with lenders offering both unsecured and secured loans through one quick application regardless of your financial situation.
SkyCap Financial Personal Loan
12.99% - 39.99%
$500 - $10,000
9 - 36 months
Min. income of $1,200 /month, stable employment
Min. credit score: 550
Go to site
More Info
An online lender offering unsecured personal loans to borrowers with a wide range of credit scores. Apply in less than 5 minutes and if approved, receive financing in as little as 24 hours.
Mogo Personal Loan
5.90% - 46.96%
$200 - $35,000
6 - 60 months
Min. income of $13,000 /year
Min. credit score: 540


Mogo offers a 100-day money-back guarantee. If you're not happy with your loan, pay back the principal and get your 100 days of paid interest and fees back.
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More Info
An online lender who aims for a hassle-free process through same-day unsecured loan approval and funding. Get a loan fast and track your credit score for free.
Fairstone Personal Loan (Unsecured)
26.99% - 39.99%
$500 - $20,000
6 - 60 months
Able to make monthly repayments on your loan
Min. credit score: 560
Go to site
More Info
An online lender with a team dedicated to professional service. Get a quote for an unsecured loan without impacting your credit score. Receive funds within as little as 24 hours. No prepayment fees.
Loan Away Personal Loan
19.90% - 45.90%
$1,000 - $5,000
6 - 36 months
No min. income or employment requirements
Min. credit score: 300
Go to site
More Info
A lender that approves unsecured loans in as little as 20 minutes. Get affordable monthly repayments with any credit score.
Fairstone Personal Loan (Secured)
19.99% - 23.99%
$5,000 - $50,000
36 - 120 months
Must be a homeowner
Min. credit score: 560
Go to site
More Info
Use your home equity to get a secured loan up to $50,000 with flexible repayment options and a long loan term. Get a quote without impacting your credit score.
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Am I eligible for a personal loan?

Many students haven’t yet built a strong credit history, which often comes with steadier footing after graduation. Because they require steady employment, a minimum income and more, college students might want to bring on a parent as a cosigner. Or, parents might prefer taking out a personal loan in their name.

You’ll need to meet common eligibility requirements that include:

  • Steady income
  • Good or excellent credit
  • A strong credit history
  • The age of majority in your province (18 or 19 years old)
  • Canadian citizen or permanent resident
  • Debt-to-income ratio (DTI) below 36% (a DTI between 37% and 42% may be acceptable)

Why is it difficult to get a personal loan as a student?

There are a couple of reasons why it might be challenging to take out a personal loan as a student:

  • No credit. Unless you’ve taken out loans or credit cards before, you won’t have a credit history. This will make it harder to borrow since lenders won’t be able to prove you have a good track record of repaying your loans on time.
  • Little income. If you’re a student, you probably don’t have much money coming in. This can be a problem for some lenders, who may expect you to show proof of income to be sure you can make payments on your loan.
  • Bad credit. If you’ve missed payments on previous loans or credit cards (especially if you have very little credit history), your credit score might be too low to qualify for a loan.
  • Lack of assets. Assuming you’re younger than 25, chances are you may not have any assets to put up against your loan. This means you won’t be able to qualify for a secured loan and it can be much more difficult to get unsecured loans for large amounts.

Personal loans vs. private student loans

It isn’t surprising that providers limit borrowers from using personal loans for educational expenses: Students just don’t have the same needs and ability to repay as your average borrower.

Key differences between personal loans and private student loans include:

  • Interest rates. Student loans often offer lower interest rates than personal loans — typically prime + 2-5%. On the other hand, personal loan interest rates may start at 9% and run as high as 36% or more.
  • Fees. Private student loans don’t often come with application, origination or prepayment fees. Yet these fees are common with personal loans.
  • Terms. Student loan repayment terms can range from 5 to 25 years. Personal loans come with much shorter terms of 1-7 years.
  • Repayment. Student loans offer perks like waiting up to 6 months after graduation before you start repayments, deferment or interest-only payments while you’re in school, as well as multiple deferment and forbearance options after. Personal loan repayments start right away and typically won’t allow you to pause payments if you hit a financial snag.
  • Loan amounts. Student loans often start at $5,000 and top off at your school’s total cost of attendance. Personal loans come in as low as $1,000 in some cases but rarely go above $100,000.
  • Cosigners. Almost all student loan providers allow you to apply with a cosigner, an option that isn’t always available with a personal loan.
  • Eligibility. The rigid requirements of personal loans could prevent many students from finding financing. Still, you might not be eligible for a provincial or even private student loan if you don’t attend an accredited institution and/or aren’t enrolled in an eligible program.
  • Tax benefits. There aren’t any tax advantages given specifically for paying back a personal loan. With a student loan, you might be able to deduct interest from your taxes. Not all types of student loans are eligible for this benefit, however, so you should check with the CRA to see which rules apply to your situation.

Should I take out a personal loan for school?

It depends on your circumstances and finances. Ask yourself the following questions to help you decide if a personal loan is right for you.

When to consider a personal loan

  • You’re employed and have good to excellent credit.
  • You can afford immediate repayments.
  • You have limited educational expenses and a creditworthy cosigner.
  • You aren’t eligible for public or private student loans.

When to look elsewhere

  • You’re eligible for a private or federal student loan.
  • You’re eligible for scholarships, grants or work-study.
  • You’re not employed, have poor credit and don’t have a cosigner.
  • You’re looking to borrow $35,000 or more.

How to compare loans for students

To decide on which loan is the right fit for you, it can help to look into some of the following factors:

  • Lowest rates. Low interest rates are the number one factor you should look for with your student loan. Government loans usually charge around 6.5–9% while private loans can fluctuate depending on the lender.
  • Best repayment terms. Look for a lender that has measures in place to help you if you can’t make repayments on time for some reason. For example, government loans will often offer repayment assistance plans to reduce your payments if you make below a certain income.
  • No fees. If your lender asks you to pay fees on your loan, chances are you should keep looking for a better offer.
  • Good customer service. If you opt for a private loan, then make sure the lender you settle on has a good reputation and solid online reviews.

Other sources of funding

Repaying your loan

After your study period ends, you have to begin paying back your loan. Often, student loan providers will give you a 6-12 month grace period to find a job and start earning money before your loan goes into full repayment mode.

The amount you pay is based on your loan agreement. Usually, your provider will contact you shortly before the repayment period begins with a notice detailing how much you need to pay and when payments are due – this may not always be the case, however, and ultimately, you’re responsible for making payments in full and on time. If you don’t, you could incur extra fees and other penalties.

Acceptable methods of payment may differ between providers, but often, lenders will debit directly from your account after you give them your bank account information. Alternatively, you may have to set up your lender as a “bill payee” on your online bank portal and transfer the money yourself. Lenders may also accept cheques, but you’ll have to contact your lender to find out for sure.

Tips to manage 5 different types of debt

What if I can’t afford repayments?

When life happens and unexpected circumstance hurt your ability to pay back your loans, you have options – especially if you have government student loans. Making payments on time and in full is key to maintaining a good credit score, which helps you in many areas of life like getting a car, buying a home, supporting a family and travelling.

1. Negotiate a better repayment plan with your lender

2. Refinance your student loans

3. Government repayment assistance plans (for federal and provincial student loans only)

Frequently asked questions


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