Guide On Student Loans For Canada – Eligibility & Features

Student Loans
for Canada

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Note: The education loan information on this page is provided only for the information of the website users, digibank by DBS doesn’t offer this product at the moment.

Student Loan for Canada

Here's how to get a loan to study in Canada

Canada is quickly becoming a favourite destination for Indian students to study abroad. In 2019, the country issued 4 lakh study permits – Indians got 1.39 lakh (34.5%) of these. So, why are more and more students choosing Canada?

The most significant advantage is graduates can apply for a post-study work permit for up to 3 years on completing their studies. Students can also apply for Permanent Residency (PR) while studying in Canada or after completing their course. Apart from this, Canada's vast Indian population tends to make students from India feel more at home.

Pro tip – In Canada, universities consider your academic record more important than extra-curricular activities or voluntary work. It would help immensely if you have good grades in school/college.

Courses for which Banks Provide Loans

Banks provide loans for undergraduate, master's and research programs. However, some banks stipulate that the courses must be from internationally recognised universities. Banks rarely provide loans for vocational, part-time or diploma courses.

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Scope of Expenses

To study in Canada, you might have to spend anywhere between INR 20 lakh to over INR 1 crore, depending on the university you're looking at, the program you will pursue, and your future living/ non-academic expenses.

If you're applying for a visa under the Student Direct Stream (SDS) program, which fast tracks visa processing for students from India, China, Vietnam, and the Philippines, you have to prove that you have the funds needed to spend at least a year studying in Canada. You can show a mandatory proof of funds by depositing CAD 10,000 towards the Guaranteed Investment Certificate (GIC). Many banks offer loans that include the GIC amount. You can get the loan disbursed in your savings account and then transfer the payment into an investment account or student account for the GIC.

Pro Tip – You can also show funds equivalent to CAD 10,000 in your loan account to get a student visa. However, it is better to opt for a GIC as it provides monthly returns that can be withdrawn and used to pay the interest on your loan amount.

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Types of loans

Both private and public banks, as well as NBFCs, provide education loans for studying in Canada. You can opt from two types –

Loan Type	Features
Secured loans	Need to provide collateral; can be movable or immovable assets
	Have lower interest rates
	Provided by public or private sector banks and NBFCs

Loan Type	Features
Unsecured loans	Do not need to provide any collateral
	Interest rates are higher
	Only up to INR 7.5 lakh by banks, NBFCs may approve higher loan amounts
	Sanctioning depends mainly on the reputation of the institute, credit score/financial stability of co-applicant, career prospects of the applicant

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Eligibility for Student Loans in Canada

Different banks have different eligibility criteria. For example, some banks might make it mandatory to have a co-signer, while others may have collateral guidelines. Familiarising yourself with a bank's eligibility criteria will help you determine how likely you are to get a loan from them.

Eligibility for Student Loans in Canada

However, there are some essential criteria you must fulfil to get a loan from any bank. These include –

Particulars	Requirement
Citizenship	The applicant must be an Indian citizen
Age	The applicant must be above 18 years of age (or parents will have to apply for the loan)
Admission	The applicant must have secured admission in a recognised university/college in Canada
Program	Preference is given to technical and professional courses
Academic Record	The applicant must have an excellent academic record

Pro tip – It's also good to know some of the common reasons why financial institutions decline loans.

A bank may reject your loan application under these circumstances –

The applicant or co-applicant's income may not be able to cover the interest payable during the study period.
The applicant or co-applicant has a low CIBIL score.
The applicant has applied to a non-STEM course (Or a course that has poor job prospects).
All required documents related to the collateral aren't submitted.

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How to Get a Student Loan in Canada

You should apply for a loan as soon as you get your admission letter from your university. This letter will give you an idea about how much funds you'll need to cover your studying and living expenses in Canada.

To apply for an education loan, consider these factors in your checklist:

Compare loan offers by different banks. You can check the following parameters to opt for the most affordable one:

Interest rate
Processing fee
Loan tenure
Moratorium period
Expenses covered under the loan
Prepayment terms

Submit all the necessary documents. These include:

Proof of admission
Completed loan application form
Relevant academic documents like certificates, mark sheets
Documents of qualifying exam (IELTS, GMAT, TOEFL, etc.)
Resident proof of applicant and guarantor
Income proof of guarantor
Passport size photographs

Keep the loan sanction letter (that your bank sent after approval) safe.

Go through the loan agreement carefully before signing it.

Keep a copy of the loan agreement and disbursal letter for your records.

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Steps to Apply for a Student Loan

Login to the website of your preffered lender or visit their branch to find out about the different types of loans offered
Understand the loan application process of your lender, as it mat vary among lenders.
Fill the loan application form featuring all the necessary details including the cost of studying in Canada, estimated tuition fees, etc.
Submit the necessary documents, including the offer of admission provided by the university you intend to attend.
Follow the instructions to complete your registration and complete the KYC process through your Aadhar number.
Wait to hear about the status of your loan from your lender.

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Do educational loans have income tax benefits?

Borrowers can get tax benefits on interest paid toward education loans Under Sec 80E of the Income Tax Act. You can get these tax benefits until full interest repayment or for a maximum period of 8 years, whichever comes first.

Is interest charged during the course?

During your course, banks charge simple interest. You can choose to pay this amount or allow it to accumulate till after you complete your education. This period is also called a moratorium; once the moratorium is over, the accumulated simple interest is credited to the principal amount. You will have to repay the loan in Equated Monthly Instalments (EMIs) after the moratorium ends.

Which are some of the top universities in Canada?

According to QS World University Rankings 2021, the University of Toronto, McGill University, University of British Colombia, Université de Montréal, and University of Alberta are the top 5 universities in Canada.Getting an educational loan on time can make a huge difference in your life. Make sure you pick a loan provider that simplifies the loan-sanctioning process so that you can get your loan quickly and without too many hassles. Education loans allow you to finance your higher education expenses, are easy to apply for and come with competitive interest rates and easy repayment terms.