Back To Top

Graduates in blue and red gowns celebrate on stage at the Academy of Learning Career College convocation ceremony, holding diplomas as part of their educational achievement in Canada.

The Ins and Outs of Canadian Student Loans: Types, Eligibility, and Repayment Options

Are you a student attending college in Canada and in need of financial assistance? Student loans provide essential support for your education journey. Before applying, it’s crucial to understand interest rates, repayment options, and potential forgiveness programs.

At the Academy of Learning Career College, our financial aid representatives help students explore various funding options tailored to their specific needs and program choices. Don’t let financial concerns hold you back from pursuing your education goals.

What Are Student Loans?

A student loan is money the government or a bank lends to students. You have to pay it back later.

This money helps pay for:

  • Housing
  • Transportation
  • Books and supplies
  • Food
  • Other school costs

Many Academy of Learning students use loans so they can focus on their studies instead of worrying about money.

Types of Money for School

There are different types of money for school:

  • Government loans – You must pay these back after school
  • Government grants – Free money you don’t have to pay back
  • Bank loans – Money from banks you must pay back

Two graduates in black gowns and caps hold bouquets of flowers and teddy bears after their graduation ceremony, symbolizing the success of completing their studies at a Canadian college.

Types of Student Loans in Canada

There are three main ways to borrow money for school:

Bank loans come from banks like RBC, TD, or Scotiabank. You usually start paying these back right away.

Provincial loans come from your province’s government. Each province has its own program:

Private loans are extra money when government loans aren’t enough. Most students get a “student line of credit.” These usually need someone with good credit (like a parent) to co-sign.

How to Pay Back Government Student Loans

After you finish school, you’ll need to pay back your loans. There are different ways to do this:

Standard Repayment Plan

Who can use it? Anyone with a loan

Best for: People who want to pay off loans quickly

How it works: You make the same payment each month for about 10 years

Not good for: People who might qualify for loan forgiveness

Graduated Loan Repayment Plan

Who is eligible? All loan recipients

Best for: Those expecting salary increases after graduation

How it works: Lower initial payments that increase over a 10-year span

Not ideal for: Those eligible for loan forgiveness programs

Extended Repayment Plan

Who is eligible? Most borrowers qualify; those with federal direct loans or Federal Family Education Loans must borrow more than $30,000

Best for: Students with large loan balances

How it works: Choose between fixed or graduated payments over 25 years

Not ideal for: Those wanting to minimize interest payments

Pay as You Earn Repayment Plan (PAYE)

Who is eligible? Recipients of direct loan payments on or after October 1st, 2011

Best for: Graduates who can only afford lower monthly payments

How it works: Monthly payments of 10% of discretionary income

Not ideal for: Those with fluctuating income

Revised Pay as You Earn Repayment Plan (REPAYE)

Who is eligible? Eligibility depends on income verification

Best for: Those needing lower monthly payments

How it works: Pay 10% of monthly discretionary income

Not ideal for: Married couples filing joint tax returns, as spouse’s income affects eligibility

Income-Based Repayment Plan (IBR)

Who is eligible? Those with direct subsidized/unsubsidized loans, Federal Stafford loans, consolidation loans, and student PLUS loans who have high debt-to-income ratios

Best for: Graduates who need lower monthly payments

How it works: Pay 10-15% of discretionary monthly income for 20-25 years

Not ideal for: Those who can afford higher monthly payments

Income-Contingent Repayment Plan (ICR)

Who is eligible? Eligibility based on income verification

Best for: Those who want flexible payments higher than income-based plans but lower than standard plans

How it works: Pay either 20% of discretionary income or fixed amount over 12 years (whichever is less)

Not ideal for: Those with loans besides direct loans or married couples in higher tax brackets

Income-Sensitive Repayment Plan

Who is eligible? Those with a Federal Family Education Loan

Best for: FFEL borrowers seeking lower payments than standard plans

How it works: Monthly payments based on annual income over 15 years

Not ideal for: Those seeking loan forgiveness

A graduate in a black gown receives a diploma from faculty members in red robes during a formal convocation event at a Canadian career college.

Private Student Loan Repayment Options

Private loans have fewer repayment options:

  • Interest-only repayments: Pay only interest during school, then principal and interest after graduation.
  • Immediate repayment: Begin paying principal and interest immediately after receiving the loan.
  • Fixed payments: Make smaller fixed payments during school, then larger payments after graduation.
  • Full deferment: No payments during school, with principal and interest payments beginning after graduation.

When You Might Not Have to Pay Back Your Loans

Some students don’t have to pay back all of their loans. This is called “loan forgiveness.” You might qualify if:

  • You become a family doctor in a small town or remote area: Up to $40,000 forgiven ($8,000 per year for five years)
  • You become a nurse in an underserved community: Up to $20,000 forgiven ($4,000 per year for five years)
  • You have a severe permanent disability: Your entire loan might be forgiven
  • You have a permanent disability: You might get help with payments through the Repayment Assistance Plan for Borrowers with Disabilities (RAP-D)

Some provinces have their own forgiveness programs too. Our financial aid team can tell you about these options.

How to Apply for Canadian Student Loans

Here’s how to apply for a student loan:

  1. Create an account on the National Student Loans Service Centre (NSLSC) website
  2. Make sure you qualify based on your program and enrollment
  3. Gather your documents (tax papers, proof you’re Canadian)
  4. Fill out the application on your province’s student aid website
  5. Wait 4-6 weeks for approval
  6. Accept your loan and sign your Master Student Financial Assistance Agreement (MSFAA)

The Academy of Learning’s financial aid team can help you with each step of this process.

Four graduates dressed in black academic gowns and caps pose together indoors, marking the completion of their programs at a Canadian career college.

Why Choose the Academy of Learning

Academy of Learning Career College is Canada’s largest career college network. We have schools in seven provinces across Canada. We offer more than 30 programs that prepare you for real jobs. Many of our programs qualify for government funding and grants. This means you might not have to pay for all of your education yourself.

Contact us today to learn about our programs and how to pay for them. Don’t let money stop you from getting the training you need for a better job.