Compared to the centralized system for financial aid in the United States, the Canadian landscape can look a little crazy and confusing. Because Canadian citizens typically support colleges and universities with a larger percentage of tax revenue than Americans, many quality Canadian schools offer tuition at substantially lower rates. At the same time, some Canadian students must still find ways to bridge the gap between their savings and their anticipated cost of attending college.
Students who meet specific qualifications may receive Canada Study Grants direct from the government. To earn Canada Study Grants, you must meet at least one of the following criteria:
- You are permanently disabled.
- You require exceptional financial assistance.
- You have children.
- You are a woman, enrolled in certain doctoral studies.
The government issues Canada Study Grants in amounts ranging from $2,000 to $8,000 per school year, depending on a student's financial need and qualifying circumstances. If you fail to complete your degree program, or if you leave school early for any reason, you must repay your Canada Study Grants.
The federal government and provincial governments earmark funds each year to help Canadian students overcome financial need and attend the college or university of their choice. Bursaries are awards that do not have to be repaid by students. Bursaries are distributed by the government to needy students on the basis of academic excellence or demonstrated acts of remarkable citizenship.
Private foundations and community organizations administer smaller scholarship funds throughout Canada. Usually, these scholarships reward students who meet certain eligibility conditions, such as ethnicity, community involvement, academic achievement, or residency in a particular community.
Although provincial or territorial financial aid organizations can connect you to private scholarship foundations and competitions, you should also use relationships in your own community to uncover opportunities to earn or win extra money for college. Talk to your local bank manager, church leaders, and politicians about scholarship competitions they may have heard about in your area.
The Canadian government splits the burden of providing subsidized student loans with provincial aid organizations. Qualifying students receive 60% of their loan amount as a disbursement from their Canada Student Loan, with a maximum benefit of $165 per week of enrollment. The remaining loan balance is disbursed by local organizations, sometimes working in conjunction with private lenders. It is not uncommon for Canadian students to hold simultaneous student loans from multiple lenders, each of whom has contributed a small amount to cover the cost of attending college.
Canadian colleges and universities receive matching funds from the government to subsidize a small number of on-campus work/study jobs. Like any part-time job, a work/study position requires you to show up on time and perform your job well. Most work/study positions are entry-level positions that involve helping full-time university staff handle day-to-day tasks.
Colleges and universities determine the number of work/study positions that they will fund each year. A school's financial aid office will pre-qualify students to apply for work/study positions. However, many Canadian students report that the number of eligible students usually outstrips the pool of available jobs within the first few weeks of the school year.
Therefore, experts recommend that you make connections on campus and apply for open work/study positions as early in the semester as possible. Expect to work the same job for the entire school year, since very few work/study students leave their positions midway through the year.
Who is eligible for financial aid?
To qualify for financial aid, students must be citizens or permanent residents of the province in which they apply for student assistance. Provincial or territorial financial aid organizations will verify a student's residency, age, and other eligibility factors during the application process.
Canadian citizens that intend to travel overseas to attend a college or university, including participating in distance learning classes, must first enroll in a Canadian institution's exchange program in order to qualify for financial aid. This option exists to help Canadian students that want to study obscure subjects, as well as residents of remote provinces who cannot easily obtain specialty courses at their local institutions. Each college and university in Canada places its own limits on the number of credits that can be transferred from overseas programs, so check with admissions counselors from a few different schools to weigh your options.
Canadian students may not apply financial aid awards from the Canadian government or from provincial governments toward overseas study without enrolling in an accredited exchange program.
Steps to Applying
Contact the support organization that oversees student financial aid for your province or territory. Although each organization uses slightly different application processes, they all allow you to apply for nearly the entire range of available financial aid options using a single form. It will take approximately four to six weeks for your regional financial aid organization to process your application and coordinate your awards with the federal government.
When the support organization reviews your application and verifies your financial need, the organization will match you up with loans, bursaries and grants for which you appear eligible. To apply for scholarships, contact sponsoring organizations directly and follow their instructions. Financial aid counselors at your chosen college or university can help you identify potential sources of private education funding.
How do you determine if you are a dependent?
Financial aid awards in Canada can sometimes vary depending on your dependent status. Under Canadian law, you can be considered a dependent if you are:
- Under the age of 22, without a spouse or common-law partner.
- Above the age of 22 but attending a college or a university full time and financially dependent on at least one parent since before the age of 22.
- Above the age of 22 but financially dependent on at least one parent because of a mental or physical disability since before the age of 22.
Tax Benefits and Financial Incentives for Parents
Canadian parents can take advantage of numerous chances to grow a college fund using a Registered Education Savings Plan. Parents can deposit up to $4,000 into the RESP for each of their children every year. Over the course of a child's lifetime, parents may contribute as much as $42,000.
As with other investments, RESPs earn significant interest, especially when parents open the account very early in their child's life. Though the interest on these special savings accounts is taxable, the interest may be applied to the student's income when the student withdraws funds to pay for college. Therefore, since interest is taxed at the student's tax rate, which is probably zero if the student does not work more than a small, part-time job, the interest often passes through to the student with little or no tax burden.
As if Registered Education Savings Plans were not already attractive enough, a related grant program sweetens the pot by matching part of each parent's annual contribution. Through the Canada Education Savings Grant, the federal government matches up to twenty percent of the first $2,000 deposited into a RESP each year.
When parents reach the annual grant maximum of $400 every year, they could potentially add an extra $7,200 to their child's college savings over the course of a student's primary and secondary education. If a parent fails to make the maximum contribution one year, but makes steady contributions, their child's RESP award can carry through to the next year, potentially earning that future student a benefit of up to $800 in a single year.
If the beneficiary of a CESG does not attend a college or university, he or she must withdraw the grant money from their RESP in order to repay the government. Withdrawals of CESG funds from the RESP are taxable as income to the student, which means they usually pass through with little or no tax under the student's tax rate.
Tax Implications for Students
The Canadian government provides additional benefits for graduates who make timely payments on their outstanding student loans. Loan recipients can deduct from their taxable income any interest payments made on federal or provincial loans. Graduates cannot, however, deduct the interest payments made on loans to private lenders or to family members.
Canada Study Grants and bursaries over $3,000 are considered taxable, and should be reported just like income on your next tax return. If you receive a grant, you will be issued a T4A form to provide as documentation when filing your taxes.
Government Aid Websites, by Province
Each one of Canada's provinces maintains its own support organizations and financial aid opportunities for citizens and permanent residents. Visit the sites for your home province, as well as any of the provinces in which you're considering applying for a degree program:
- British Columbia
- New Brunswick
- Newfoundland & Labrador
- Northwest Territories
- Nova Scotia
- Prince Edward Island
For More Information
- CanLearn - the official financial aid hub for the Federal Government of Canada.
- Canadian Scholarship Finder - use this government database to hunt down sources of free money for college.
- Financial Planner - plug your figures into this interactive tool to discover your potential college expenses.