In these times when there is a financial crisis and school tuition rates have constantly increased, parents and students have to resort to financial aid for their child’s education. There are student loan programs that are being offered by both the government and private financial institutions.
The federal government of Canada has a student loan program, and depending on the province or territory of residence, the provincial or territorial government likewise has its own student loan program. Banks and other financial institutions likewise have their respective student loan packages which have their own advantages and disadvantages.
In applying for a student loan, the student or his or her parent should consider various factors.
8 Things to Consider when Applying for Student Loans
- First, the student or parent should be clear on what extent of financial assistance is needed. Some government student loans support only a portion of the needed amount as it expects that the borrower will shoulder a part as well.
- Second, depending on the province or territory that the borrower is a resident of, the available student loan programs differ.
- Third, there is a restriction on the course load that the government is willing to extend a loan to.
- Fourth, there are limitations if education is to be secured abroad, and not all student loan programs allow this.
- Fifth, the borrower’s credit rating is highly taken into account when applying for a student loan with financial institutions.
- Sixth, loan release is more borrower-friendly for banks as they provide for a revolving credit line that allows release of the fund only when needed.
- Seventh, interest on the loan is comparatively lower with the government and interest is computed and accrued only after the student has graduated or left school, which is not the case for other financial institutions, which levy interest as soon as the loan is released.
- Eighth, loan payment to the government begins on the seventh month after graduation compared to a private financial institution that requires periodic payment immediately after the loan is released.
Lastly, the loan application, processing, and approval procedures vary, depending on the financial body from whom the student loan is to be secured. Be sure to keep this in mind.