If you’re an international student in Canada, you already know that education is expensive.
That’s where student loans come in. Securing a student loan as an international student is possible and a viable solution to these financial challenges.
Understanding the process can help you navigate the system and secure your needed funding.
Understanding the eligibility criteria is crucial before applying for a student loan.
It’ll inform your decision-making, prepare you for the sometimes lengthy application process (and avoid costly mistakes).
Here are the primary eligibility factors lenders and institutions consider:
To apply for most student loans, you need a valid study permit.
This permit allows you to stay in Canada for your studies and serves as proof that you’re legally in the country.
With a study permit, your loan options are unlimited, as it demonstrates to lenders that you’re a legitimate student in Canada.
If you’ve applied for permanent residency (or already have it), your chances of securing a loan increase significantly.
To reduce their risk of non-payment, many lenders prefer permanent residents or Canadian citizens.
If you’re still an international student without permanent residency, you may need a co-signer (more on that later).
In Canada, your credit history is important to getting approved for a loan.
As an international student, however, you must build a credit history in Canada.
Some lenders will take this into account, but many will still require you to have a creditworthy co-signer.
You have several loan options, but, again, international students often face more restrictions than Canadian citizens.
Here’s a breakdown of the types of loans you can apply for:
Many Canadian banks and private lenders offer loans to international students, but they often require a co-signer with a strong credit history in Canada (as mentioned above).
Private loans can cover tuition, living expenses, and other costs. However, the interest rates can be significantly higher, costing you much more money, and the loan terms vary greatly between lenders. So, there’s a lot of comparison shopping to do.
Some universities and colleges have loan programs specifically for international students.
These loans offer more flexible terms, and some don’t require a co-signer. If you’re enrolled at a large institution, check with their financial aid office to see if they offer any in-house loan programs.
The Office of Financial Assistance is a fantastic resource for any of your financial needs.
Unfortunately, international students don’t qualify for federal student loans the Canadian government offers.
Only citizens and permanent residents can access these loans.
However, some provinces may provide funding options, so do your research.
If you haven’t figured it out already, having a co-signer is essential for loan approval for many international students.
Here are the details:
A co-signer agrees to repay the loan if you can’t. In other words, they must trust you a lot.
Usually, your co-signer must be a Canadian citizen or permanent resident with a good credit history and a stable income. Lenders will consider their financial situation before approving the loan.
Remember, having a co-signer improves your chances of getting a loan because it lowers the lender’s risk. If your co-signer has excellent credit, you may even qualify for a lower interest rate.
Conversely, if your co-signer has poor credit, it can increase the interest rate or result in loan denial. So, be sure to find the best co-signer for you.
Interest rates can make or break a loan, so it’s important to understand your options:
You can choose between fixed and variable interest rates when applying for a student loan.
A fixed rate stays the same for the entire loan term, while a variable rate can fluctuate based on the market and Canada’s economic outlook.
Fixed rates offer stability, but variable rates may save money if and when interest rates drop. As of the date of publication, interest rates are dropping regularly.
Interest rates vary widely between lenders. Canadian banks typically offer more competitive rates than private lenders, but you’ll still need to shop around.
Always compare the rates and terms of multiple lenders before signing anything.
Beyond student loans, there are other ways to finance your education as an international student:
Many universities and private organizations offer grants and scholarships specifically for international students.
The problem with either is that the competition can be stiff, but it’s worth applying to as many as possible to increase your chances of receiving financial aid that doesn’t need to be repaid.
Some universities provide financial aid in the form of bursaries or work-study programs.
These programs help students cover the cost of living and study materials.
Check with your school’s financial aid office to see if you’re eligible for these options. (As I said, these offices are an incredible resource.)
Most universities offer financial counselling services if you’re unsure about your financial situation. These services can help you create a budget, explore your loan options, and plan for future expenses.
Applying for a student loan involves more than just meeting financial criteria. You also need to be aware of the legal and immigration rules that apply:
The IRCC has specific rules about how long you can study in Canada and how much you can work while studying. These rules can impact your ability to repay a student loan. Stay updated on these regulations, especially if you plan to work part-time during your studies.
Taking out a loan won’t directly affect your immigration status, but falling behind on payments can lead to financial difficulties that could jeopardize your future residency applications. If you’re considering applying for permanent residency in Canada, ensure you’re financially prepared.
If you’re a refugee or a protected person in Canada, you may be eligible for certain financial protections and government assistance programs. These programs can help cover your education costs without needing private loans.
Securing a student loan as an international student can be challenging, but it’s possible. Do your best to meet the eligibility criteria, find a co-signer (with good credit), and compare interest rates and loan terms carefully.
Remember, there are other financial aid options like scholarships and grants. With careful planning, you can finance your education and focus on achieving your academic goals in Canada.
