Canada Student Loans
The Canada Students Loans Program (CSLP) was initiated by the Canadian government in 1964, under the Canada Students Loan Act, to encourage Canadian students with financial limitations to take-up higher studies, by limiting the financial burdens of higher education on them, through loans and grants.
Under this program, which is a part of the Canadian Governments Human Capital Agenda, any Canadian citizen or a permanent resident of the country (under the Immigration and Refugee Protection Act), who are qualified to enroll or already enrolled for a full-time or a part-time study or course at a post-secondary school level in specified educational institutions, with an intention of completing the study or course, are eligible to apply for study loans under this program, through their province of residence.
Full-time students can avail loans under the CSLP, which are interest-free during the period of study. However, part-time students are required to pay the interest (which is usually lower than other loans) during the period of study. They should start paying the principal along with the interest after their study or course ends, just like in the case of full-time students. In some cases the government supplements the loans with grants, if the students suffer from permanent disabilities or if they belong to low-income families.
Canadian students can avail a loan of up to $210 per week for a full-time program or 60% of the money required for the full-time program in a loan year (calculated from August 1 to July 31), whichever is lesser. Loans provided by the province of residence can help the students to cover the balance cost of the full-time programs. Part-time students can avail a loan of up to $4000 in a loan year.
Ever since its inception, CSLP has extended financial resources from a host of sources to eligible students, to encourage them to pursue post-secondary education. Till the year 1995, financial institutions issued student loans to post-secondary students, who were approved to receive financial assistance under CSLP. The entire process involving loan payment, collection of interest and repayment of principal was administered by the financial institutions. The Canadian government guaranteed all the loans issued under the CSLP and reimbursed the financial intuitions with the entire amount, which went in to default.
In the year 1995, many changes were made to the Canada Student Loans Program, based on the needs of all the parties involved in the loan process. The government and the financial institutions agreed to share the risks involved in the loan process, with the financial institutions agreeing to cover the potential risk of loan default, in return to a fixed amount paid by the government. The risk-sharing agreement between the government and the financial institutions came to an end in July 31, 2000 and the government started issuing the loans directly through National Student Loans Service Centre (NSLSC). The NSLSC has two divisions to manage the loans issued to students attending public and private institutions, separately.
Students are eligible to receive loans under Canada Student Loans Program, only if they enroll for post- secondary education at designated educational institutions, as specified in the Canada Student Loans Act. The list of the designated educational institutions is usually drawn by the Canada Student Loans program and the Human Resources and Skills Development department and the list is updated at frequent intervals. A four-digit educational institution code is assigned to every institution and the code indicates the geographical location of the institution, its type and its unique identity number.
In an attempt to simplify the entire loan process, the Canadian Government has been working with different provinces to develop integrated federal and provincial student loans, which would benefit the students. Currently the provinces of Ontario, Saskatchewan, Newfoundland, Labrador and New Brunswick are offering integrated loans, under an integration agreement with the Canadian government. This initiative has simplified the loan process for the borrowers, apart from streamlining the process.
Under the integrated student loans, student borrowers require only one application, one cost assessment and one loan certificate and a single loan repayment form and could enjoy common repayment assistance. Unlike in other cases, where a borrower needs to apply for a loan under the CSLP and also under provincial programs to meet the entire financial needs for post-secondary education, integrated student loans are hassle-free, since the students are required to make only single payment at a time, in the repayment process and need not hold more one student debt. At the same time they can benefit from single loan consolidation process and pay only single interest towards their loans.
The Canada Student Loans Program ensures that all Canadian citizens acquire necessary skills to compete in the complex job market of the 21st century, irrespective of their financial abilities. This program enhances the opportunity of Canadian citizens to enjoy the benefits of higher education. This program has assisted over 3.8 million Canadian students and has issued over $16 billion in loans, since its inception in 1964. CSLP signifies the Canadian governments commitment in the betterment of its people.
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