In Canada, there are two main categories of government student loans. These are the Canada Student Loans Program, which is run by the federal government, and the student loan programs being offered by the governments of a particular province or territories.
Government student loans are provided to those who need financial assistance and meet the other eligibility requirements. The application process for a government student loan is fairly easy and straightforward.
Online application is encouraged for full-time students, as this will make the assessment process faster. The government imposes a lifetime limit on how long one can be eligible to take out a loan.
Other sources of loans
Aside from the government, there are other loan providers that extend their services to those who are in need of student loans. These private financial institutions offer either regular loans or lines of credit. The regular loans that these private lenders offer to students are just the regular personal consumer loans that are catered to specific needs of students.
Lines of credit, on the other hand, are a preset amount that a student can withdraw from when needed. Withdrawals are whatever amount the student needs at a particular time. Interest will only accrue on the money that was withdrawn.
Students who wish to take out additional loans from private lenders should take note of the difference compared to the government loan program.
First of all is the interest. Private lenders may charge higher interest rates compared to the interest from government student loans.
For full-time students, interest does not accrue on the balance unless they have graduated, left school, or reached their lifetime limit. Private lenders on the other hand start charging the interest while the student is still in school.
The government does not require a guarantor when a student avails of their student loans program (The only exception here is in British Columbia where students younger than 19 years of age need a guarantor when applying for a B.C. Student Loan). When you borrow from a private institution, most of them will require a guarantor.
Lastly, in terms of repayment, the government gives students a six-month grace period after leaving school before payment is required. With non-government loans, the payments start immediately after the loan was received.