Five ways to pay for post-secondary education
You have options when it comes to paying for school. Here are five different ways students like you can finance your post-secondary education.
By ATB Financial 29 April 2022 5 min read
Whether you’re in the middle of a post-secondary program or excited to start your first semester, you have options when it comes to paying your bills and setting yourself up for success—in student life and beyond.
Here are five different ways to fund your post-secondary education.
1. Student loans
Generally easy to apply and qualify for, government student loans are disbursed based on program costs, your expected cost of living while in school and your (or, if you’re a dependent, your parents’) income. In Alberta, you apply for both national and provincial student loans through a single application with the National Student Loan Service Centre, but repay and manage national and provincial loans through separate online portals.
Student loans are a bit different from bank loans. For example, the interest rate on government student loans is often higher than on a bank loan or student line of credit (LOC). However, student loans don’t start accruing interest until six months after you finish studying, and their repayment options (including payment deferral) are more flexible than the repayment options on a loan or LOC you might get from a bank.
So what’s the best way to take advantage of a student loan? Many students who get a government student loan receive more than they need to pay their tuition. Our recommendation: make sure you’re not taking on more debt than you need to. Even though it feels like free money now, it probably won’t seem that way in four or six years when you have to start repaying it.
Want to access some of the money you don’t need now, later? You could put it into a tax-free savings account (TFSA). You’ll still be able to withdraw it in an emergency, but you won’t be as tempted to spend it. If you're confident you won't need the full amount of the loan, you could repay a portion of the loan while you're still in school, or invest the extra money to redeem before you finish your program.
2. Student line of credit (LOC)
Another borrowing option is getting a student line of credit from a bank. Student LOCs, like ATB’s Students First Line of Credit, usually offer slightly lower interest rates than government student loans. That’s a huge bonus, but LOCs also start accruing interest as soon as you withdraw from them (though you only pay interest on the amount you’ve withdrawn, not necessarily on the full amount you’ve qualified for). Plus, you’ll need to make monthly interest payments.
For this reason, when you apply for a line of credit, you have to prove that you have enough income to make interest payments, or you can co-sign with someone else who has sufficient income, like a parent or guardian.
How much you’re eligible for when you apply for a student LOC depends on the type of program you’re in. Repayment terms are also based on your program, but as a general rule you’re only required to start making payments on the principal amount after you’ve graduated.
Bontu Galataa, a post-secondary strategy leader at ATB, recommends using a student LOC “to bridge any gaps left after you’ve applied for government student loans.” Because you only pay interest on the amount you withdraw and can make payments on your principal as early as you want, an LOC is a financial cushion without the cost of interest on a regular loan.
It’s always a good idea to manage your debt at the cheapest cost you can get. That’s why products that have a lower interest rate like a student LOC allow you to move debt around to reduce interest costs. What could this look like in real life? Here’s an example: if you have high interest debt (like credit card debt), transferring it to an LOC may be more a manageable and affordable way to maintain it until you're able to start paying it off.
3. Bursaries, scholarships and grants
Bursaries, scholarships and grants are a great way to pay for your education. Like student loans, they’re a funding option only available to students—but unlike student loans, they don’t need to be repaid.
When you apply for a government student loan, you’re automatically considered for a low-income bursary. If you qualify for it, you’ll get the bursary amount plus the loan.
Be on the lookout for any scholarships or grants available through your school. While lots of external scholarship applications include long applications and essays, many internal scholarships are given based on grades or accomplishments recognized by your instructors. In some universities, just maintaining a high GPA can mean a tuition reduction of hundreds or thousands of dollars.
For more scholarship opportunities, check out our guide to scholarships in Alberta.
4. Registered Education Savings Plan (RESP)
If your parents have put aside money for your post-secondary education in an RESP, they’ll be able to withdraw funds on your behalf as soon as they can provide proof that you’ve registered full- or part-time in an approved institution.
5. Working while in school
First, we know that working part-time while in school isn’t always possible or healthy for everyone. But if you’re able to hold down a job while also maintaining your academic standing (and your sanity) even a small income can go a long way in reducing your debt when you graduate.
You may still need to borrow as a back-up or make up the difference between what you’re able to earn and what you need to spend, but the less debt you have while you’re in school, the more financially set-up you’ll be when you walk across that stage.
P.S. (saving while in school)
Another way to lessen the financial load of post-secondary is to re-examine your cost of living. Have you considered living with roommates? Studying remotely? Creating a budget? Changing your schedule or taking fewer courses at a time to allow you to work a couple of days a week?
Regardless of how much you’re borrowing or what your living expenses are, get into the habit of saving part of whatever you earn.
Building up a small emergency fund, rather than racking up credit card debt when you have unexpected expenses, is a great way to reduce anxiety and give you a sense of control over your finances.
Whether you go for student loans, a student line of credit, scholarships and grants, have RESP funds saved for you or get a part-time job, you have plenty of options to make paying for school work for you.
Want more good advice to support your post-secondary journey? Check out our resources curated for Alberta students.
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