If you need help paying for your post-secondary education, student loans give you the money now and you pay it back later.
Borrowing money is called taking out a loan. Not only do you have to pay the money back, but you have to pay extra for the privilege of borrowing. The extra money you pay is called interest.
Borrowing money to pay for your post-secondary education may not cover all your costs. You may also need to:
- Work and save money to pay for school
- Apply for free money in the form of scholarships, bursaries, and grants
Here are your options for borrowing money as a student:
Government student loan
You may be eligible for a student loan from the Alberta government, the Canadian government, or both. You only have to apply once through Alberta Student Aid to be considered for both loans.
Full-time and part-time students can apply for student loans. In this video, Kristina talks about her experience applying for a student loan:
Studying Agriculture at a Rural College (2:26)
Kristina is an agriculture student at a rural public college. She discusses her experience choosing a college and living in a student residence.
Government student loans offer unique benefits:
- For full-time students: loans remain interest-free and payment-free while you’re in school. When you graduate or leave full-time studies, you have a six-month grace period before you have to start making payments. During this time your loan will not gain interest.
- For part-time students: interest will not accrue on your part-time loan during the study period. Principal and interest will need to be repaid seven months after you are no longer a student. If you are returning to school part-time and already have Alberta student loans for full-time studies, you can return them to interest-free and payment-free status by notifying your lender of your part-time status [pdf]. If you have Canada student loans from previous full-time study, interest will accrue and payments are expected while you are studying part-time.
When you apply for student loans, you are automatically considered for grants. Grants are free money that you do not have to pay back.
If you have problems repaying your government loans, there’s help. You may be able to negotiate your repayment terms or access government repayment assistance programs. Speak with your school’s ﬁnancial aid ofﬁce for more information.
Student line of credit
You can also consider borrowing from a bank, credit union, or treasury branch. These institutions offer student lines of credit. They may call these “student loans,” but lines of credit are a bit different.
When you take out a loan, you receive all the money at once. A line of credit allows you to take out money as you need it, up to the limit you’ve negotiated with the bank.
Student lines of credit also differ from government student loans in other ways. For example:
- If you don’t have a job or credit history, you’ll probably need someone to co-sign the line of credit for you. This “co-signer” is someone who agrees to pay the loan if you can’t.
- You start paying interest on anything you borrow right away, whether or not you’re enrolled in full-time studies.
- The bank decides what the interest rate is, not the government.
- Depending on the terms, you may not need to start paying down the principal until up to 24 months after you graduate. But interest will continue to be added on each month.
- If you have trouble paying back the loan, you can’t access repayment assistance programs offered by the government.
- When you ﬁle your income tax, you can’t claim a tax credit on the interest portion of the amount you pay on your loan. (This tax credit is only available if you have government student loans.)
Book an appointment to visit your local bank or apply online. Make sure you have your paper or digital school documents on hand to speed up the process.
Learn more about student lines of credit.
Student credit card
In addition to student lines of credit, many banks offer student credit cards. These are usually no-fee credit cards with low credit limits.
Credit cards work like a line of credit, and allow you to borrow up to the limit. They usually offer a 21-day grace period for you to pay what you borrowed back in full without charging interest. But be aware, they can have interest rates of 20% or more if you do not pay the balance in full each month.
A student credit card can help you manage day-to-day expenses while building your personal credit rating. Always pay your credit card bills on time, and try to only spend what you can afford to fully repay by the due date.
Talk to your bank to see if they offer a student credit card, and to learn how to use one responsibly.
Borrowing from family and friends
You may be able to borrow money from a family member or friend willing to provide a loan. A loan means that they expect you to pay them back.
Make sure you have a plan for how you’ll repay this person. You may want to write up an agreement stating how much money you’re borrowing, and your timeline for paying it back.
Tips for borrowing money
Whether you take out a loan from a government or bank, consider these tips:
- Apply early. You should apply at least 60 days before your classes start so you have time to figure out your finances.
- Ensure you have a Social Insurance Number and an Alberta Student Number.
- Remember that your own resources are considered to decide if you’re eligible.
- Remember that you’re legally responsible for repaying your student loan just as you would be for any other type of loan. This applies whether or not you complete your studies, are satisﬁed with your education, or land a job after.
- Remember that the less money you borrow and the faster you pay it off, the less interest you’ll pay and the more you’ll keep in your pocket.