You may be in your final years of high school, looking for a career change, or simply want to increase your existing level of education. Whichever scenario you align yourself with, the odds are you are faced with one, powerful question: “How will I be able to pay for the next level of education?”
Continued education is by no means an inexpensive journey and the decision to further your own skillset must be tackled with great caution. According to a recent report from Statistics Canada, tuition fees in Canada rose by an average of 3.3 percent for undergraduate domestic students and 6.3 percent for international undergraduates in 2018/2019. As a Canadian student, you can expect to pay roughly $6,838 per year for an undergraduate degree and $7,086 per year for a graduate degree. Taking this one step further, Statistics Canada places the average postgraduate tuition fee at $16,497 in 2018/2019.
Although these numbers are far from insignificant, it is always important to remember that pursuing advanced education is an investment in your own success and even though these numbers may intimidate you, the long-term goal is to increase your own earning potential, gain access to a wider pool of job and career options, and simply make yourself extra unique.
Majority of students who decide to enroll in further education will typically turn to taking out student loans allowing them the possibility of paying these tuition costs. What exactly are student loans, how are they broken down and do they impact your own credit?
What options do I have when taking out a student loan?
There are essentially two categories of student loans that exist; government and private. Government student loans are designed in a way that each province has its own form of financial aid that it offers to its residents. The process of receiving this form of financial aid is not based off of your credit but rather, simply requires that you are currently enrolled in a registered education program with proof of enrollment. As long as you are currently enrolled, you simply need to complete their on-line application, provide personal information about yourself and your financial situation, and boom!
Government student loans are typically broken up into two groupings; loans and grants. The loan portion is, as its name suggests, a loan that needs to be paid beginning upon graduation. The grant portion is what the government provides to you based off your marital, financial and dependent status. If you are on the lower income pool with children, it is likely that you can qualify for student grants which do not ever need to be paid back. It is designed to help you manage throughout your education journey while providing you with a financial cushion to ensure that you can maximize your efforts to focus on your education.
Private student loans are loans that are offered either by installment lenders or through a bank. Typically, if you have maxed out government aid options, banks do offer education loans or lines of credits. However, some banks will only offer you larger amounts of money depending on what it is you are going in to. For example, if you are pursuing a degree in medicine, accounting, dentistry, law, business, or pharmacy, you have the option to take out larger loans to accommodate the increased cost of such programs. In addition, some banks convert your student line of credit into a loan one year after your graduation.
There seems to be a common misconception that zero interest is charged for student loans. Is that really the case? NO. While it is true that for the duration of your study period interest is not being accumulated, the moment you graduate interest begins to accrue. Furthermore, although you are given a 6-month grace period where there is no requirement to make payments, keep in mind that interest is still being accrued here!
Many people are under the impression that the interest charged on student loans is slim to none, is that the case? Once again, unfortunately that is not the reality. Government student loans will typically offer you two options. There is a floating interest rate of 6.45% which is the current prime rate +2.5%. The second option is a fixed interest rate of 8.95% which is the current prime rate + 5%.
However, the process of applying for the above two options of traditional student loans is by no means a quick or simple process and sometimes you may need access to funds immediately. A reputable company such as Magical Credit may be exactly what you need to receive additional funds to help you throughout your journey. If you are interested in quick funds without the hassle, what are you waiting for? Visit Magical Credit today and get your funds as easy as 1-2-3!
By Kimberly MacDonald, Financial Advisor