Student Loans in Canada: A Guide to StudentAidBC, OSAP, and More

Understanding Student Financial Aid in Canada

Post-secondary education in Canada is a significant financial commitment. Tuition at Canadian universities ranges from approximately $5,000 to $15,000 per year for domestic students, depending on the program and institution. College programs are generally less expensive but still require substantial investment. On top of tuition, you need to budget for textbooks, supplies, transportation, and living expenses.

The Canadian government recognizes that many students and families cannot afford to pay for education out of pocket. That is why federal and provincial governments offer student financial aid programs that combine grants (money you do not repay) and loans (money you borrow and repay after graduating). As a permanent resident or protected person, you have the same access to these programs as Canadian citizens.

This guide explains how student financial aid works in Canada, with a focus on the two largest provincial programs: StudentAidBC and OSAP. Whether you are in British Columbia, Ontario, or another province, the principles are similar. For information about scholarships that do not need to be repaid, see our guide to scholarships and grants for newcomers.

Who Qualifies as a Newcomer?

To access government student financial aid in Canada, you generally need to meet these requirements:

Eligibility Requirements

• Immigration status: You must be a Canadian citizen, permanent resident, or protected person (convention refugee or person in need of protection). Temporary residents on work permits or study permits generally do not qualify for government student aid.
• Residency: You must be a resident of the province where you are applying. Each province has its own residency requirements, but generally you need to have lived in the province for at least 12 months before the start of your studies (not as a full-time student).
• Enrollment: You must be enrolled (or plan to enroll) in a program at a designated post-secondary institution. The program must be at least 12 weeks long for loan eligibility.
• Financial need: The amount of aid you receive is based on your financial need, which is calculated based on your income, assets, family size, and the cost of your education.

How the Application Process Works

In Canada, student financial aid is administered by the provinces and territories in partnership with the federal government. You submit one application through your province's student aid office, and you are automatically assessed for both federal and provincial funding.

StudentAidBC (British Columbia)

StudentAidBC is the student financial aid program for residents of British Columbia. When you apply through StudentAidBC, you are assessed for:

• Canada Student Grants (federal grants)
• BC Student Grants (provincial grants)
• Canada Student Loans (federal loans)
• BC Student Loans (provincial loans)

You apply online through the StudentAidBC website. The application opens several months before the start of each school year. You will need to provide information about your income, your family's income (if you are a dependent student), your education costs, and your enrollment details.

OSAP (Ontario)

The Ontario Student Assistance Program (OSAP) is Ontario's student financial aid program. Like StudentAidBC, OSAP provides a single application that assesses you for federal and provincial grants and loans. OSAP is known for its relatively generous grant funding, particularly for students from lower-income families. Many OSAP recipients receive a significant portion of their aid as grants.

Other Provincial Programs

Every province and territory has its own program:

• Alberta: Alberta Student Aid
• Saskatchewan: Saskatchewan Student Aid
• Manitoba: Manitoba Student Aid
• Quebec: Aide financiere aux etudes (AFE)
• Nova Scotia: Nova Scotia Student Assistance
• New Brunswick: StudentAid New Brunswick

Visit the Government of Canada student aid page for links to each province's program.

Grants vs. Loans: What Is the Difference?

When you receive your student financial aid assessment, your funding package will typically include a mix of grants and loans. Understanding the difference is critical for making smart financial decisions.

Grants

Grants are the best type of financial aid because they are free money. You do not need to repay grants under any circumstances. The amount of grant funding you receive is based primarily on your financial need and your family income. Lower-income students receive more grant funding.

Loans

Loans are money you borrow from the government to help pay for your education. You must repay this money after you finish school, plus any interest that accrues. The key advantage of government student loans over private loans is that they have lower interest rates, more flexible repayment terms, and built-in assistance programs if you struggle to repay.

Interest Rates on Student Loans

Understanding interest rates is important because interest increases the total amount you repay over time.

Federal Student Loans

As of April 1, 2023, federal student loans in Canada are interest-free. This is a significant benefit. The federal government eliminated interest on Canada Student Loans, which means the amount you repay is exactly the amount you borrowed (for the federal portion of your loan). This policy applies to all borrowers currently in repayment and all new borrowers.

Provincial Student Loans

Provincial student loan interest rates vary by province. Some provinces have also eliminated or reduced interest on their student loans:

• British Columbia: BC eliminated interest on provincial student loans, making BC Student Loans interest-free.
• Ontario: Ontario charges a floating interest rate on OSAP provincial loans (prime rate as set by the provincial government).
• Other provinces: Check with your provincial student aid office for current interest rates.

When Does Interest Start?

Interest on your student loans does not accrue while you are enrolled in school full-time. After you leave school (either by graduating or stopping your studies), there is a six-month grace period during which you are not required to make payments. However, on provincial loans that charge interest, interest may begin to accrue during this grace period even though you are not making payments. On federal loans, no interest accrues at any point because they are interest-free.

Repaying Your Student Loans

After your six-month grace period ends, you must begin making monthly payments on your student loans. Here is what you need to know about repayment.

Standard Repayment

Your loan is typically set up with a standard repayment period of 9.5 years (114 months). Your monthly payment amount depends on the total amount you borrowed and the interest rate on any provincial loans. You can make extra payments or pay off your loans early without penalty.

The National Student Loans Service Centre (NSLSC)

Your federal student loan is managed by the National Student Loans Service Centre (NSLSC). After you leave school, you will receive information from the NSLSC about setting up your repayment. You can manage your account, make payments, and check your balance online through the NSLSC website.

Provincial Loan Repayment

Your provincial student loan may be managed by the NSLSC (for some provinces) or by a separate provincial office. Check with your provincial student aid program to understand how your provincial loan repayment is handled.

The Repayment Assistance Plan (RAP)

One of the most important safety nets for student loan borrowers in Canada is the Repayment Assistance Plan, commonly known as RAP. If you are having difficulty making your loan payments because of low income, RAP can help.

How RAP Works

RAP adjusts your monthly loan payments based on your income and family size. If your income is below a certain threshold, your required payment may be reduced to zero. The government covers the interest that you cannot afford to pay. After 15 years of RAP eligibility (or 10 years if you had a permanent disability), any remaining loan balance may be forgiven entirely.

How to Apply for RAP

You apply for RAP through the NSLSC. You must reapply every six months and provide updated income information. To qualify, you must be experiencing financial difficulty and have exhausted other options. There is no stigma in using RAP. It is specifically designed to help borrowers who need support during difficult financial periods.

Tips for Managing Student Debt as a Newcomer

Taking on student loans is a significant financial decision. Here are practical tips to manage your debt wisely.

Create a Budget

Before you start school, create a detailed budget that accounts for tuition, fees, textbooks, rent, food, transportation, and personal expenses. Compare this to your available funding (grants, scholarships, savings, and income from part-time work) to determine how much you actually need to borrow. For help with budgeting and financial planning, visit our guide to Canadian banking for newcomers.

Minimize Borrowing

Only borrow what you need. If your financial aid package offers more loan money than you need, decline the excess. Consider working part-time during the school year (10 to 15 hours per week is common for students) and full-time during summers to reduce the amount you need to borrow.

Apply for Scholarships and Bursaries

Continue applying for scholarships and bursaries every year you are in school, not just in your first year. Many awards are available to students at all stages of their education. See our guide to scholarships and grants for newcomers for more resources.

Understand Your Loan Terms

Know exactly how much you are borrowing each year, what the interest rates are, and what your estimated monthly payment will be after graduation. The NSLSC and your provincial student aid office can provide estimates and tools to help you understand your loan.

Start Repaying Early If Possible

If you can afford to make payments on your loans while you are still in school or during the grace period, you will reduce the total amount you owe. Even small payments of $50 or $100 per month can make a difference over time, especially on provincial loans that charge interest.

Student Financial Aid and Your Taxes

There are important tax benefits related to student financial aid in Canada.

Tuition Tax Credit

You can claim a federal tuition tax credit for the tuition fees you pay. This credit reduces the amount of tax you owe. If you do not owe enough tax to use the full credit, you can carry it forward to future years or transfer a portion to a parent, grandparent, or spouse. File your tax return with the Canada Revenue Agency (CRA) every year to claim this credit.

Student Loan Interest Tax Credit

The interest you pay on government student loans (both federal and provincial) qualifies for a tax credit. This reduces your tax burden and effectively lowers the cost of borrowing. Private loans do not qualify for this credit.

Grants Are Not Taxable

Government student grants are generally not taxable. You do not need to report them as income on your tax return. Scholarships and bursaries are also generally tax-free for full-time students.

Common Questions from Newcomer Students

Can I get student loans if I just arrived in Canada?

You may need to meet a residency requirement (typically 12 months in your province) before you qualify. Check with your provincial student aid office for specific rules.

What if I do not have a Canadian credit history?

Government student loans do not require a credit check. Your eligibility is based on financial need, not your credit score. This is a significant advantage over private loans.

Can I work while receiving student financial aid?

Yes. You can work while receiving student financial aid. However, your employment income is considered when calculating your financial need. If you earn a significant amount, your aid may be reduced. Part-time work during the school year and full-time work during summers is common and expected.

What happens if I drop out or change programs?

If you leave school before completing your program, you are still responsible for repaying any loans you received. Your grace period begins when you leave school. If you change programs, you may need to submit a new student aid application for the new program.

Take Control of Your Education Finances

Student financial aid in Canada is designed to make post-secondary education accessible to everyone, including newcomers. By understanding how grants, loans, and repayment work, you can make informed decisions that support your education goals without creating unmanageable debt. Apply for all the free money available to you (grants, scholarships, bursaries), borrow only what you need, and take advantage of programs like RAP if you need help after graduation.

WelcomeAide is committed to helping newcomers access the resources they need to succeed in Canada. Our AI Newcomer Navigator can answer your questions about student financial aid, help you understand application processes, and connect you with resources in your language. Visit our blog for more newcomer guides, learn about our mission, or explore our programs for settlement support.