Tapping Into Student Loans

Courtesy of Dynamic Mutual Funds, Posted 06 Jun 2014

Once your high school student's application to university or college is submitted, the nervous waiting for acceptance letters begins. And while students wait to find out what university or college they got into, many parents are wondering how these very important post-secondary educations are going to be paid for.

University costs about $5,000 per year for courses alone. If your child is going out-of-town for school you can add another $10,000 for accommodation and meals. A basic four-year program can cost $60,000.

In addition to contributing money earned from part-time and summer jobs, students can also apply for help from a number of loan and grant programs. In fact, in Ontario about 55% of post secondary students receive some type of loan.

The Canada Student Loans Program provides loans and grants to Canadians attending a University, College, Trade School, or Vocational School, if they need help financing their education. There are also provincial programs.

Depending on what province you live in you may have to apply for two loans. Certain provinces like Ontario have integrated their provincial programs with the federal one.

Loans are awarded on the basis of financial need. For example, a single student could receive up to $350 per week or $11,900 per year from the Canada-Ontario integrated student loan. The amount of loan your child will get depends on the child's income, the parent's income, how much the program will cost and how much the student can pay towards those costs. Students have to start paying the loans back six months after they leave school. Interest rates are different for provincial and national portions of the loan.

Students can also apply for grants that do not have to be paid back. Changes in the 2008 budget introduced a consolidated Canada Student Grant for the 2009 school year which will pay students from low-income families $250 each month while students from middle-class families receive $100 per month. These grants do not have to be repaid.

A post secondary education can be a very important investment in a teenager's life. There are many different ways to pay for that education. Planning early always helps. Speak to your financial advisor about Registered Education Savings Plans and the Canada Education Savings Grant. If post-secondary school is looming, contact the various organizations that offer loans, grants and scholarships so that if your children want to extend their studies, they can.