What Are Federal Student Loans in Canada?
The Federal Government of Canada has two student loan programs that can help you pay for your education. These programs are called the Canada Student Loan Program (CSLP) and the Canadian Student Grants Program (CSGP).
Canada Student Loan Program (CSLP)
The CSLP is a government-backed loan program that provides funding for both part-time and full-time students in Canada. With the CSLP program, the Canadian government will finance up to 50% of your entire tuition. The government will pay all of the associated costs and interest rates but you’ll be required to repay them all six months after you graduate. The six months grace period is intended to give you time to find a job and start making some money before paying back the loan.
Canada Student Grants Program (CSGP)
The CSGP is another government program that provides grants to students who are pursuing higher education. With the CSGP, the government will also provide you with financial assistance but unlike the CSLP, you are not required to repay any of the money back. It is a form of a scholarship grant given to Canadians who are financially disadvantaged. CSGP is also designed for single parents, differently abled students, and women who are pursuing doctorate degrees in certain fields of study.
Can You Apply for Private Loans if You Are a Student With Bad Credit?
Unfortunately, private lenders usually don’t provide loans to students, in general. One of the basic requirements of alternative financing is that you have a steady source of income from a full-time job. Students are too much of a risk to private lenders because there’s a very high chance that they might default on their loans.
The only way for students to get a private loan is to get a co-signer with a good credit rating sign on the loan agreement. Basically, a co-signer is someone who agrees to take responsibility for your loan if you default on it.
One of the biggest disadvantages of private loans is they often come with exorbitant interest rates. They are only suitable for short-term financing and are not meant to be used as a long-term solution.
Are You Eligible for Federal Government Loans/Grants if You Have Bad Credit?
The government evaluates each application using a different set of criteria, which means that regardless of your credit score, you could still qualify for student loans and grants from the Canadian government. Your chances of getting approved for loans and grants increase if you belong to a certain demographic group. For example, students from low-income families are more likely to be eligible for student loans than students from high-income families.
What is Student Loan Forgiveness in Canada?
If you are struggling to pay off your student loans, you may be eligible for loan forgiveness. Loan forgiveness programs vary depending on which Canadian territory you are located in but the concept is simple – the Federal Government can give further deductions on your loan if you qualify for the program.
In addition, the six-month student loan repayment grace period can also be extended for up to ten times if you have a salary of less than $25,000. So, it’s best to apply for loan forgiveness or extension if you are having trouble paying off your student loans.
Conclusion
Students who are looking for loans to finance their tertiary education should first apply for the CSLP and CSGP programs before applying for private loans. This will ensure that you get the most amount of financial support from the government while avoiding the exorbitant interest rates that come with loans from alternative lending institutions.
Aunt Piggyy
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