How do I get a Bank Loan for my Education?
Post-secondary education is not cheap, and unfortunately many students do not have the funding to go throughout their educational careers without going into debt. In Canada, an average post-secondary education can total to around $80,000, which is extremely daunting. But luckily, government loans and bank student loans are not too complicated to apply for. Interest premiums are not too bad with these compared to other types of loans. Some students tend to approach the subject of bank student loans when they are having difficulty acquiring government student loans, have hit their limit with them, or need more money than the government can allocate. But this entirely depends on the individual.
Bank loans offer flexible credit limits, which come in handy when unexpected expenses come up: Dental surprises…extra expensive textbooks…travel expenses…it’s a rough side effect of getting an education. Student bank loans have lower interest rates than credit card accounts, in fact some people open these types of accounts in order to work through credit card debt. Some rates are determined based on programs of study, qualification and budget—this is something you work out with your bank advisor and also your parents if needed.
Bank student loans usually have decent repayment plans—you will have more time to pay back a bank loan than your typical government student loan. Although, some government student loans provide repayment assistance plans for those who can’t make payments right away. More time to repay helps graduates to enter more smoothly into the work force and work through any post-university complications. Back to bank student loans, once you have finished school you usually have up to two years before you must start making payments, depending on which Canadian bank you use.
What you will need to apply
When applying for a bank student loan you must first provide confirmation that you are enrolled at a post-secondary educational institution in Canada. Usually banks require an estimate of your education costs. This will include tuition for the year, supplies, housing rent costs, fees, food, and travel fees for when you visit family for the holidays. You will also need to present a list of your financial resources—this includes scholarships or bursaries you might have won, any government funding you currently have and any employment you currently have. Banks require proof that you are a Canadian citizen or a permanent resident.
Unlike the government student loan process, banks give credit checks. This is one issue that comes up for students with not-so-great-credit, or limited credit history. So, prepare to have a co-signer—that is someone with good credit that signs to take responsibility and vouch for the student.
It is always good to consider your options when making the serious decision to go into debt for the sake of education, and one of those options is government student loans. The federal government provides loans for post-secondary education, and has grants available for those from low-income families.
Sources: www.rbcroyalbank.com, www.cibc.com