01/02/2018How to Fund your Education at a Low Cost
Choosing a future career is the first major decision most Canadians face when they reach early adulthood. Like most students, if you are pursuing your studies you may require some financial assistance, even if you plan to work while in school. The increasing costs of education and the study demands of your program can make it difficult to balance your studies while working. While you may be able to obtain a scholarship or bursary, working during your degree or diploma is often the only way to fund your way to graduation. Your funding strategy should address your personal financial situation, possible family assistance, scholarship programs, and government assistance programs for education.
Work and/or Study
Planning ahead before applying to college or university can save you money, motivate you for your full-time program, and help you to avoid post-graduation debt. You may be working during the summers and/or taking a semester or two off to work to save for your education and/or working while trying to pursue full-time school.
Once in your post-secondary program, there are many initiatives that make working while studying possible. Many college and university programs have been designed to be taken on a full-time basis broken up into sections or part-time in order to accommodate you if you are working. Hybrid college/university programs offer the flexibility to pursue a deeper course of study between both institutions if you wish to extend your college education into a degree or pursue a post-university college program.
Recently, courts in many provinces in Canada have made it mandatory for students to be paid for their work during internship programs. Many courses of study offer internships and co-op programs with basic pay levels and course credits. A good internship with pay is crucial to entering many professional and practical career fields.
Employment programs on campus and through school supports can also help you with daily living costs and tuition fees. Additionally, taking up work outside of your career field can help you by giving you a fall-back occupation (even if in the short-term) in the event that your first career choice doesn’t work out.
Live at Home if Possible
Depending on the course being taken and time of completion, you may be able to live with your family during your studies to help you save costs. If you live within your means, you will have more freedom to explore your career options post-graduation.
If you cannot live at home, you may find it feasible to take courses abroad for credits in locations that offer a lower cost of living. Debt may be unavoidable, but it should be managed during a course of study to reduce your burden after graduation. Managing personal finances is an essential life lesson, and it may be as valuable to your future success as a diploma or degree.
Use Family and Personal Resources if Available
The rising cost of education is not a new issue in Canada, and so you may be looking for financial assistance where possible. Your parents may have funds set aside for you, such as in an in-trust account or a Registered Education Savings Plan (RESP) to attract tax-free growth, Canadian Education Savings Grants (CESGs), and, in some cases, additional CESGs and Canada Learning Bonds. When you withdraw the funds because you are studying in an eligible program, the Government of Canada taxes the withdrawal based on your income at the time, which often is at a very low rate. More information about RESPs is available online at canlearn.ca, through Canada Revenue Agency and through a financial institution offering RESPs.
More options are available if you already have savings. If you have a Tax Free Savings Account (TFSA), you can withdraw the funds as needed for your education. If you have a Registered Retirement Savings Plan (RRSP), you may be eligible to withdraw funds under the Lifelong Learning Plan (LLP) during your studies. You would need to repay the loan to your RRSP in increments of 1/10 per year for 10 years by the second year that you were no longer a full-time student for at least three months. If you fail to make an LLP repayment in the year it is due, the 1/10 amount for that year must be included in your taxable income, which does not typically attract tax if you are not earning income and is manageable if you are earning income.
Scholarships and Bursaries
There are various scholarship and bursary programs that consider your academic skills, personal experiences, and achievements when deciding on the winners of education grants and awards. Not applying for scholarships when there are a wide variety of programs guarantees that funds will not be awarded, so you should apply for as many as possible. Studentawards.com and ScholarshipsCanada.com are some of the major sources of scholarship guidance and application information in Canada. Scholarships Canada offers a database of programs ranging from government programs to programs supported by cultural associations. Scholarships from professional associations in Canada are particularly helpful, as they are often designed to help you get into a defined career path. Looking through the database can also give you some guidance on choosing a career in demand that has funding from third parties or other agencies.
Government Student Loans
The Canadian Government offers financial assistance through the Canada Student Loans program, which is accessed in Ontario through the Ontario Student Assistance Program (OSAP). Repayment of an OSAP loan is not required until six months after leaving an approved program, and it entails lower interest rates than that from a bank loan or credit card.
Private Sector Loans
If you are ineligible for an OSAP loan (e.g., due to a poor credit history), borrowing on a line of credit or using other credit tools that require payment of the interest may be your only option. Because your debt burden could accumulate quickly, it is advisable to first speak with a bank employee that deals with student loans.
You are eligible for the full-time or part-time education credit while you are enrolled in a qualifying program at a designated school and a non-refundable textbook tax credit of $65 for each month you are enrolled in a course that entitles you to a full-time education tax credit. If you pay interest on a government student loan, you are eligible for a 15 percent tax credit that applies to interest payments.
Turn to the Experts: Call your Hamilton (and cities across Ontario) Trustee in Bankruptcy
At Harris & Partners Inc., Trustees in Bankruptcy, we are all about helping you meet your financial goals. We are compassionate individuals who want to see you succeed in achieving your career. For more information about financing your education, contact us in Hamilton, Markham, Toronto, North York, or our offices in surrounding areas today. We have ten locations in Ontario to serve you.