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TLDR
- Three main funding sources for students in Canada: Government student loans (federal and provincial), student loans and student lines of credit from financial institutions.
- Government student loans offer built-in protections: Typically, you don't start repaying until six months after graduation, and payments adjust based on your actual income.
- Student lines of credit offer flexibility: Borrow only what you need, when you need it, with interest-only payments while studying.
- Smart debt management starts early: Make a budget, track your expenses and make interest-only payments during school when possible.
In 2025, Statistics Canada reported that the average annual tuition for undergraduate students in Canada exceeded $7,700. This annual cost can rise significantly when adding other educational and living expenses, pushing the actual cost closer to somewhere between $20,000 and $25,000. Fortunately, there are multiple ways to pay for your education, whether through savings, family financial support, government loans, grants, or a student line of credit at a financial institution.
This guide breaks down the key basics about borrowing for post-secondary studies, the differences between various loan types, and how to manage your expenses effectively.
What is a student loan?
A student loan is a financial tool designed to help students cover the costs of post-secondary education, including tuition, textbooks, equipment, and living expenses. Unlike grants or scholarships, student loans are borrowed funds that must be repaid with interest after completing your studies or leaving school.
In Canada, student loans generally come from three primary sources:
- Government Student Loans: Offered by federal and provincial/territorial programs (e.g., Canada Student Financial Assistance or OSAP in Ontario). These loans often feature interest-free periods while you’re in school and a grace period (typically six months) before repayment begins.
- Student Lines of Credit: Flexible loans from financial institutions, allowing you to borrow only what you need and pay interest solely on the amount used while you are in school These lines of credit typically offer a 24-month grace period before repayment begins.
- Personal Loans: Provided by financial institutions. These may require a co-signer (e.g., a parent) and typically accrue interest immediately upon borrowing. Personal loans allow you to borrow a one-time lump sum, repayable in fixed installments (including principal and interest) over a set period of time.
Who typically needs a loan?
A common misconception is that only a small percentage of students rely on loans. According to Statistics Canada, nearly half of Canada’s post-secondary students take out a loan. Rising educational expenses and living costs mean many students look for practical financing options to bridge the gap and reduce possible financial stress.
What are government student loans?
The federal government, together with provincial and territorial governments, offers student loans to reduce financial barriers to education. These loans help make post-secondary education more accessible, particularly for students from lower income families, students with children and those with disabilities, so that cost doesn’t stand in the way of pursuing a degree.
Understanding how government student loans work is highly recommended, particularly as they could offer interest-free financing during your studies. Furthermore, they provide flexible repayment grace periods, loan forgiveness programs and repayment assistance.
Federal government student loan programs in Canada
In Canada, federal student financial assistance is primarily delivered through the Canada Student Financial Assistance (CSFA) Program. This program offers two key forms of support to help you manage post-secondary education costs:
- Canada Student Loans: Borrowed funds that must be repaid with interest after completing studies.
- Canada Student Grants: Non-repayable financial aid based on financial need, academic achievement, or other criteria.
Canada student loans
Funding limits
The federal government partners with provinces and territories to deliver student loans. Your funding amount depends on your province of residence, family income, dependents, tuition and living expenses, and disability status, essentially your unique financial picture.
Interest-free status
Federal government student loans have been permanently interest-free since April 1, 2023 (though interest might still be owed on the provincial portion). No interest accumulates while you're in school, during the six-month grace period (after you graduate), or during repayment.
Repayment
You typically start repaying six months after finishing school. If you're struggling, the Repayment Assistance Plan (RAP) adjusts your monthly payment based on your income and family size, sometimes reducing it to zero. Students with permanent or persistent disabilities can access RAP for Borrowers with Disabilities, which offers additional support and more flexible terms.
Canada student grants
The Canada Student Financial Assistance Program offers grants to full and part-time post-secondary students in financial need. In all situations, the amount you receive is determined by the province or territory you live in. You are automatically assessed to receive a grant when you apply for student aid from your province or territory.
Eligibility for full-time students
The Canada Student Grant for Full-time Students is available to qualifying full-time students in financial need everywhere in Canada except the Northwest Territories, Nunavut or Quebec. Applicants in those regions have access to respective territorial and provincial aid programs.
How much could you receive from Canada student grants?
As of the 2025-2026 school year:
- Full-time students: Up to $4,200 per year (or $525 per month of study), renewable each year while enrolled full-time.
- Full-time students with dependents: Up to $2,240 per year for each dependent, in addition to your full-time student grant.
- Part-time students: Up to $2,520 per year, capped at your assessed need.
- Part-time students with dependents: Up to $2,688 per year, capped at your assessed need.
- Students with disabilities: Up to $2,800 per year regardless of assessed need, helping you borrow less in student loans.
Accessing grants and scholarships could prove challenging. Here are some tips to consider:
- Start early: Application deadlines could be as early as six to eight months before the school year starts.
- Search extensively: Look into your school’s financial aid office, community organizations, and private foundations.
- Apply for multiple opportunities: Don’t limit yourself to just one or two grants or scholarships.
Provincial and territorial student loan programs in Canada
You may also be able to get financial support from your province or territory of residence.
| Province or territory of residence | Official sources for scholarships, grants, bursaries and tuition loans |
|---|---|
| Alberta | Alberta Learning Information Service |
| British Columbia | StudentAidBC |
| Manitoba | Manitoba Student Aid |
| New Brunswick | New Brunswick’s Student Financial Services |
| Newfoundland and Labrador | Newfoundland and Labrador Student Aid |
| Northwest Territories | NWT Student Financial Assistance |
| Nova Scotia | Nova Scotia Student Assistance |
| Nunavut | FANS program |
| Ontario | Ontario Student Assistance Program |
| Prince Edward Island | PEI Student Financial Services |
| Quebec | Aide Financiere aux études |
| Saskatchewan | Saskatchewan Student Aid |
| The Yukon Territory | Yukon Student Financial Assistance |
How do I apply for a government student loan in Canada?
To apply for a government student loan in Canada, you need to:
- Apply online through your province or territory's student financial assistance website at least two months before your program starts.
- Receive your Notice of Assessment indicating whether you qualify for grants and loans
- Complete your Master Student Financial Assistance Agreement (MSFAA) by logging into your National Student Loans Service Centre (NSLSC) account. You only need to sign this once, and it covers all future federal student loans.
- Confirm your enrollment with your school, which will notify the NSLSC that you're enrolled.
- Receive your funds either directly to your bank account or to your school to cover tuition and fees.
Government student loans have detailed eligibility criteria, where government agencies assess your financial situation, including household income and the number of dependents in your family. They also could consider your enrollment status, as you typically need to be enrolled in a designated program and maintain a particular course load (often 60% of a full course load) to remain eligible. For full eligibility rules and requirements, visit the NSLSC website.
What is a student line of credit?
A student line of credit is a flexible loan for university and college students that lets you borrow money when you need it for things like tuition or living expenses. You don’t need to use it all at once. You borrow as much or as little as you need, up to your approved limit, and you only pay the applicable interest on what you borrow. Minimum payments can be as low as interest only. You can pay off your entire balance or make extra payments any time without penalty.
Once you graduate, you typically have an interest only payment grace period of up to twenty-four months before you are required to start repaying the principal. Remember that it is always a good idea to always make additional payments if you can afford to do so to help you reduce interest costs.
Are there different types of student lines of credit?
RBC offers different types of student lines of credit with competitive interest rates and flexible repayment timelines depending on your study options:
- Royal Credit Line for Students – are designed for students pursuing undergraduate and graduate programs at colleges or universities.
- Royal Credit Line for Students in Professional Studies – are specific for professional graduate or specialized health sciences programs.
- Royal Credit Line for Medical and Dental Students – provides financial support for students in Medicine, and Dentistry.
- Royal Credit Line for Students Studying Abroad – provides funding for tuition, books, accommodation, and living expenses while studying at accredited universities or colleges outside Canada.
What is a personal loan for students?
Personal loans allow you to borrow a one-time lump sum from a financial institution, which you repay in fixed installments (including both principal and interest) over a set period. This predictable repayment schedule could make your budgeting easier.
On the other hand, because a personal loan has a set amortization, you could have higher monthly payments as you repay both the principal and the interest at the same time. It’s also important to note that with a personal loan you pay interest on the total amount borrowed, regardless of whether you have spent the funds or not.
How to apply for a student line of credit or personal loan with RBC?
To apply for an RBC student line of credit or personal loan, you'll need to provide:
- Enrollment confirmation from an eligible Canadian post-secondary institution (tuition invoice, proof of enrollment letter, acceptance letter with tuition deposit, or official enrollment printout).
- Educational cost estimate including tuition, supplies, fees, and living expenses.
- Financial resources such as RESPs, scholarships, bursaries, government funding, and summer employment income.
Applications are subject to credit approval. If you have limited credit history or are studying outside of Canada, a co-signer may be required.
For complete application requirements, speak to an RBC advisor or visit a local RBC branch.
Compare different kinds of student loans in Canada
Here's how government student loans, student lines of credit, and personal loans compare across key features:
| Feature | Government Student Loans | Student Lines of Credit | Personal Loans |
|---|---|---|---|
| Provider | The Government of Canada and the provincial and territorial governments | Financial institutions | Financial institutions |
| Interest rate | Permanently interest-free as of April 1, 2023 for federal portion; provincial rates vary by province or territory | Varies by lender and program of study | Varies by lender and program of study; fixed or variable rate |
| Eligibility |
|
Enrolled in eligible post-secondary program; may require co-signer | Enrolled in eligible post-secondary program; may require co-signer |
| Borrowing limit |
Maximum lifetime limit for student aid:
|
|
|
| Repayment terms | Begin 6 months after graduation; Repayment Assistance Plan available based on income | Interest-only payments while studying; full repayment begins 24 months after graduation | Terms range between 1 and 5 years; payments are made in equal installments over the selected term |
| When interests start adding up |
|
Immediately upon withdrawing funds, with interest-only payments typically required monthly while in school | Immediately upon receiving the loan |
| How you can use your funds | Education-related expenses only (tuition, books, supplies, living costs) | Education-related expenses with some flexibilities (tuition, rent, technology, transportation) | Any purpose (including non-education-related expenses) |
Strategies to manage your debt responsibly
No matter which financing option you choose—government loans, a student line of credit, or a personal loan—it’s essential to borrow wisely.
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Borrow only what you need
It may be tempting to borrow more than necessary to cover extras but remember that every dollar you borrow accrues interest and it will need to be paid back.
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Live within your means
Keep track of non-essential spending. Cooking at home, choosing cost-effective housing, and by using student discounts on transit, you can stretch your budget further. You can use our Student Budget Calculator to tally your costs.
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Seek out financial advice
Consulting a financial credit specialist can help you choose the best financial product for your needs. They can explain the pros and cons of each option and guide you to a decision that’s right for you.
To learn more about how RBC can support you, book an appointment or visit a local RBC branch. A knowledgeable credit specialist can help you understand all the available financing options, so you can make an informed decision.
How to pay off your student loan faster
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Start Making Small Payments Early
Even if you don’t need to start repaying the principal right away, consider making small payments while you’re still in school (if you can). This approach can lower your overall balance and reduce interest costs.
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Target interest-bearing portions first
If you're juggling multiple student debts, tackle the highest interest rates first. For example, focus extra payments on your line of credit or personal loan first, followed by provincial and federal loan portions. This means more of your money goes towards paying down debt rather than just covering interest charges.
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Pay during the grace period
Government student loans give you six months after graduation before payments begin, but making payments during this grace period reduces your principal with zero interest accumulating, resulting in lower monthly payments later.
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Switch to bi-weekly payments
Biweekly payments can help you pay down your student loans faster as you will make 26 half-payments per year, equivalent to 13 full monthly payments instead of 12.
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Pay more than the minimum
Whenever possible, pay more than the minimum requirement. For interest-free federal loans, extra payments directly shrink your balance. For lines of credit and personal loans, additional payments reduce your principal and cut down on accumulating interest.
Invest in your future with confidence
Higher education is a big commitment but understanding your financing options can help you confidently move forward. Whether you opt for government loans, a student line of credit, or a combination of both, the key is to stay informed, plan your budget, and borrow responsibly. With the right financial tools and a clear strategy, you can focus on your studies and future success.
Student loans in Canada FAQs
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Does having a student loan affect my credit score?
Yes, student loans can affect your credit score, but whether the impact is positive or negative depends on how you manage them. Making regular, on-time payments builds a strong payment history and can improve your credit score over time. Student loans also add diversity to your credit mix and help lengthen your credit history, both of which credit bureaus view favorably.
However, late or missed payments get reported to credit bureaus and can lower your credit score. If you default on your loan (stop paying for an extended period), it can seriously damage your credit for several years. The loan itself doesn't hurt your credit, it's how you handle payments that matters. Think of your student loan as an opportunity to build good credit by staying current on your payments.
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Can I combine a government loan with a student line of credit?
Yes, you can use both a government student loan and a student line of credit at the same time. Many students use them together to cover the full cost of their education, with government loans covering tuition and basic expenses while a line of credit fills any remaining gaps for things like rent, textbooks, or living costs.
Keep in mind that each funding source has different rules. Government loans are based on financial need and don't require a credit check, while lines of credit depend on your credit history and often require a co-signer if you're just starting out. Banks may also consider your existing student loan debt when deciding how much credit to offer you. A smart strategy is to maximize government loans first and tap into your line of credit for additional needs.
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How long does it take for a student loan approval?
The approval timeline varies depending on the type of funding. Government student loans typically take a few weeks to several months to process, depending on your province or territory and when you apply.
Student lines of credit from financial institutions are usually faster. You can often get an initial approval decision within one to two weeks once you've submitted all required documents, though you won't be able to access funds until your school confirms your enrollment.
Several factors affect how quickly you're approved for student line of credit: having all your documentation ready, whether you need a co-signer and how quickly they can complete their part, and when you apply relative to your program start date. To avoid delays, apply at least a few months before you need the funds and gather all required documents before starting your application.
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Do you need a co-signer for a student line of credit?
Banks might require a co-signer (usually a parent or guardian) if you don't yet have an established credit history or sufficient income. Your co-signer becomes legally responsible for the debt if you can't make payments, which is why banks use their income and credit score to back up your application.
However, there are exceptions. Banks may waive the co-signer requirement for certain professional programs based on their lending criteria, which consider factors like program length, typical borrowing amounts, and employment outcomes. Some graduate programs (Master's or PhD) may also be evaluated on a case-by-case basis; if you have a solid credit history and some income, you might qualify on your own regardless of your field of study.
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Can you claim student loan payments on your taxes?
Yes, you may be eligible to claim an amount of interest you pay on your government student loans each year. This applies specifically to loans issued under the federal and provincial programs. The tax credit is worth 14% of the interest you paid (as of 2026), which means if you paid $1,000 in interest, you'd get a $140 credit to reduce your taxes. You'll receive an annual interest statement from the National Student Loans Service Centre showing how much you paid.
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Can international students get a loan or line of credit in Canada?
Government student loans are not available to international students; they're earmarked for Canadian citizens, permanent residents, or protected persons. However, you can apply for student lines of credit or personal loans from banks, though you'll almost always need a co-signer who is a Canadian citizen or permanent resident with good credit and stable income.
To apply with a co-signer, you'll need proof of enrollment, your valid study permit, a cost estimate, and your co-signer's income documentation. If you don't have a co-signer, start building Canadian credit history by opening a bank account and using a student credit card; this will help with future applications.
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What happens if you can’t pay back your student loan or student line of credit?
For government student loans, if you miss payments for nine months, your loan goes into default and is transferred to the Canada Revenue Agency for collections. However, you can apply for the Repayment Assistance Plan before reaching default.
For student lines of credit, banks typically involve collection agencies for missed payments. If you’re having trouble making payments, contact your bank immediately to discuss revised payment terms. The key: act early. Both government and financial institutions prefer working with you to find a solution rather than pursuing collections.
References
- Statistics Canada: Student Loan statistics (www.statcan.gc.ca)
- National Student Loans Service Centre (www.csnpe-nslsc.canada.ca)
- Government of Canada, Canada Student Grants Program (www.canada.ca)
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