When student loans and scholarships are denied

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 In General

When student loans and scholarships are denied, navigating the student aid system for loans and scholarships can be a stressful process for young adults. College and university are expensive, no doubt, and finding the funds to pay for even part of the tuition is a strain for most Canadian families.

How student loans work

Student loans—at the federal and provincial level—are based on your assessed financial need.

Both agencies will use your personal income, household income and savings and scholarships as part of the assessment. You’ll also need to do some number crunching to calculate your pre-study income and all the costs you’ll wrack up during the school year. The formula looks like this:

Allowable costs

(Tuition, books and living expenses)

Resources

(Student contribution, parental contribution and scholarships)

=

Assessed need
(The amount the federal and provincial programs will provide, either as repayable loans or non-repayable grants)

Typically, 60 per cent of the assessed need is covered through the federal government’s Canada Student Loan Program, and the remaining 40 per cent is picked up provincially, but this varies from province to province.

When it’s not enough

Student aid programs use provincial averages for rent and living allowances and a benchmark for what you should earn through wages in a summer, rather than your actual expenses.

Additionally, there will always be some exempted amount that you will need to cover through your own means by part-time work, prior savings, loans, scholarships or grants. If the amount you need to contribute personally seems out of reach, Cashco Financial Flex Loans can help bridge a gap or work well as a line of credit throughout the school year. Ideally, you’ll be able to work enough through the summer months to pay it back.

And since you need to reapply for loans every year, there can be reasons why the amount you receive changes or your request is denied, including:

  • Changes to your household income (e.g., parents, spouse or common-law partner)
  • Changes to your personal income (e.g., you end up working more during the summer or the school year than put forward on your initial assessment)
  • You’ve reached either your annual or lifetime loan limit

Reasons you don’t qualify at all

Depending on the province you live in, there are a number of factors that may leave you empty-handed altogether, including:

  • Your credit rating, if you are a first-time applicant age 22 or older
  • Previous student loans in default
  • Declaring bankruptcy while repaying student loans

Sometimes, ineligibility is not personal; it’s about the program itself. To be eligible to apply for student aid, both the post-secondary program and school must be designated (i.e., it meets provincial and federal criteria).

Some examples of ineligibility could include:

  • Program length is too short (e.g., less than 12 weeks)
  • Programs offered by private career colleges
  • Adult basic education, high school equivalency courses, college prep or upgrading courses
  • Literacy or language instruction (e.g., English as a Second Language)
  • Personal interest or continuing education courses or programs that don’t lead to a credential

Learn more, start early

The best advice for anyone with their eye on post-secondary studies is to start the process early, so you’re not left short of funds when it’s time to pay the bills. You’ll need to reapply for funding before every school year, so the amount you receive can vary from year to year, based on your situation.

The second most important thing to remember is that everything you borrow through student aid will need to be paid back eventually, and you’ll be expected to start making payments within six months of graduation.

To learn more about the Canada Student Loan program, along with provincial and territorial information, visit the Government of Canada website.

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