Loans for International Students in Canada

Many international students planning to study in Canada will be looking for financial help to meet their educational costs. For a limited number of students, some financial help is available as a grant or scholarship which does not have to be repaid. These popular options may meet only a part of the total study costs, and most students will need a loan to cover some, or all, of the remaining costs. 

Co-signers

Most international students who wish to apply for a loan will also need a co-signer. This is a responsible person with a good credit record who, together with the student applicant, is prepared to guarantee that the loan will be repaid on time. A co-signer is necessary because loan providers feel most students will not have enough evidence to establish their own personal credit record.

Different loan providers have different rules about co-signers. Sometimes a co-signer can be a resident of your home country – perhaps a family member. For some loans, graduates may borrow most, or even all, of their education costs without the need to have a co-signer guarantee the loan. 

Loan Sources and Applications

When you begin to look for a loan provider, it will help if you organise your search very carefully.  It’s usually best to search for loan providers in the following order: 

1. Home country

You may well get the best advice of all from your home school or college. They will know you well and know all about your home education system. Arranging a loan in your home country, where everything is familiar, has many advantages. For example, you and your family will know how and where to get advice, your government’s education department will have handled such enquiries before, and there may well be companies and institutions in your country with strong Canadian links – or others very keen to establish such links. Also, the ‘co-signer’ type of arrangement may not apply to your country’s residents wishing to study abroad.

2. College and university schemes

The Canadian university or college you have chosen for your studies will understand that many international students will want to arrange a loan to fund their education costs. Staff in the international student office at these institutions will be very welcoming, and will have helped countless numbers of students through the same loan process. You will probably find they are the very best people to help with all the detailed information you need.

3. U.S. students

For U.S. students wishing to study in Canada, the process has been long-defined. Canada is a neighbouring country and the educational loan arrangements to meet the costs of Canadian studies are long-established. 

Loans and Scholarship Opportunities

Remember that scholarship awards can help meet some educational costs and do not require repayment. The Scholarships for non-Canadians site has lots of detailed information, and the organisations listed below may also be good sources of scholarship awards or other financial assistance. 

European Union initiatives:

Leonardo awards scheme
Socrates awards scheme 

European Commission scholarships for international students from developing countries:

Erasmus Programme for student exchange 
Comenius Programme student-teacher awards 

The African Educational Trust

International agencies:

IFUW (International Federation of University Women)
WHO 
UNESCO 

Voluntary organisations:

Charities, religious bodies and similar voluntary groups occasionally award scholarships, so be sure to check those you are familiar with.

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Student loans – campaign

Later this month (March), I will finally pay off the student loans I took out in the 1990s.  These were maintenance loans: I graduated before the introduction of what were called ‘topup’ fees (at first £1 000 per year), and amounted to just under £5 000 when I finished.  It has taken me nearly 14 years to repay that debt.

I enjoyed the protection of the Consumer Credit Act, a low interest rate set in statute, and a generous repayment threshold.  In 2009/10, my interest rate was -0.4% – that’s right, I received credit on my outstanding balance.  This is because interest was calculated at RPI minus 1 percentage point and RPI had been 0.6% in September 2008. 

In 2001, the repayment threshold was £20 696, by 2005 it was £22 764.  I was thus able to defer repayment.  Once the threshold was crossed, 60 equal monthly repayments were made to clear the outstanding balance.  Repayments were tied directly to the amount borrowed.

The advantages and protections of these pre-98 loans persisted even after the balances were sold to the company that became Thesis Servicing.

Since 1998, we have seen many changes in the loan scheme – all affecting new cohorts.  The most obvious is the introduction of income contingent repayment loans which means that the monthly repayments are relative to income, rather than initial amount borrowed.  The original debt taken can limit the total amount repaid, though it is more likely for most that the debt will be written off (after 25 years after graduation for those with recent loans, 30 years for those taking out the new loans in 2012/13).

What concerns me is not simply the complexity of income contingent repayment loans, but that many of the protections I enjoyed have been removed.

The new loans are not covered by the Consumer Credit Act and interest rates can be set at the discretion of the relevant Secretary of State using secondary instruments, as can the other details of the scheme, such as the repayment threshold (and percentage determining level of repayment).  Although the current government has stated its intention to set real rates of interest (ie above inflation) it has given itself powers to set rates much higher than that. 

The 2011 Education Act, which received Royal Assent last November, Education Act now allows governments to set up to market rates of interest on student loans using statutory instruments (rates must be “lower than those prevailing on the market, or no higher than those prevailing on the market, where the other terms on which such loans are provided are more favourable to borrowers than those prevailing on the market.”)

Having recognised this lack of statutory and legal protection, what do the terms and conditions of the student loan agreements say?

The clause that currently appears in the 2012/13 “STUDENT LOANS – A GUIDE TO TERMS AND CONDITIONS” allows future administrations great leeway to change terms and conditions. 

 “You must agree to repay your loan in line with the regulations that apply at the time the repayments are due and as they are amended. The regulations may be replaced by later regulations.” (p. 8)

It is clear that the loans are not merely income contingent, but future-policy contingent. 

With such long lifetimes, much higher debt and higher interest rates, this kind of contingency is unacceptable.

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education loans are a gamble too far for adult learners

Over the last 18 months, attention has focused on the widespread outrage over the government's tripling of tuition fees in higher education. But equally controversial proposals have been looming on the horizon for the further education sector. They've been largely under the radar, but they could derail learning opportunities for tens of thousands of adults across England.

The government announced in its 2010 spending review that it would scrap all the financial support it currently gives to students aged 24 and above studying A-level equivalent courses, and replace it with a system of loans based along HE lines for the academic year 2013-14 onwards.

Currently, the government provides students with grants for about 50% of the cost of these courses. Colleges charge the remaining sum in fees.

As a result of the reforms, colleges are likely to at least double their fees. Students will pay these fees in the first instance through loans. When students complete their courses and start to earn £21,000 or more, they will pay back the loans.

The coalition has no real evidence to suggest that the majority of people will feel either able or willing to take on such loans and plenty to suggest they will not, especially given the gloomy economic climate.

People who have had bad experiences of education often have to be supported and incentivised towards adult learning. The fashionable phrase in government circles for this sort of thinking is "nudge theory",but it is possible to nudge people away from things as well as towards them, especially when they are looking at having to take out loans of up to £4,000 a year.

Although it announced the FE loans policy in October 2010, only now has the Department for Business, Innovation and Skills (BIS) begun its market research, despite ministers wanting to have the changes signed off and ready to present to parliament before this summer for introduction in early 2013. Even their initial projections and modelling are based on a frank assumption that at least 20% of existing adult learners on such courses will fall by the wayside as a result of these changes.

So far, there has been little attempt to assess whether the Student Loans Company – which is supposed to take on the administration of this scheme – has the capacity to handle FE loans.

The government has underestimated the difference between the relative homogeneity of HE provision in terms of start dates, duration and course fees, and the multitude of options across FE.

The current plans also fail to ensure science and maths courses in FE are afforded the same protection as their HE counterparts. If we are looking to improve the science and maths skills base in higher education, surely protecting provision at FE colleges for those who may have missed out should also be of vital importance.

The coalition seems determined to introduce fees for access-to-HE courses, which are designed for those who missed out on university the first time. This looks set to hit women hardest as 70% of students enrolled in access courses in 2009-10 were female.

At a time when colleges already face a 25% funding cut in their resource grant from BIS, what is the likely impact on their viability if the number of adult learners starts to drop rapidly following the introduction of loans? At the very least we may see the number and range of courses available in FE colleges cut sharply, which in turn could lead to reductions in staffing levels.

What's more, all this follows on from the pressure the government has already piled on the FE sector with changes last year to funding for English for speakers of other languages (Esol) and the removal of the fee remission for students on inactive benefits. Isn't there something bizarre about expecting individual apprentices over 24, rather than their employers, to take on loan responsibilities when they are already taking a salary cut because of their training status?

FE colleges and other providers play a crucial role in supporting social mobility and aiding people's job and career prospects. The government should revise and revisit its "Big Bang" gamble on FE loans, which threatens to jeopardise learners and providers alike.

• Gordon Marsden is Labour's shadow minister for further education and skills

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