Show Me the Money - Financing Your Education

University is an exciting and enriching adventure. Aside from living on your own and making new friends, you're entering a world where you have to pay to get up early, listen to lectures, do homework and write exams. Welcome to the land of post-secondary education - it's not cheap (i.e. the spare change from dad's armchair isn't going to cut it this time).

Many parents can't cover the rising costs of post-secondary education. And even with a part-time job and summer employment, you could find yourself short on tuition money come September.

If you're looking for alternative sources of financing, the government and banks are a good place to start.

The Government-Sponsored Student Loan

Government-sponsored student loans are available to eligible students through the federal, provincial and territorial governments. If approved for a government student loan, you'll get a fixed amount of money for the semester or year specified in your application.

It's important to know that, while you may access your loan money through your bank, they are only an intermediary between you and the government. Banks are not involved in setting the terms of your loan agreement.

Government student loans offer the following major benefits:

It spares you all payments as long as you remain a qualifying student.
After graduation you are given a grace period until you have to start making payments on the total amount you've borrowed.

Check out CanLearn (see Related Links) to find information on government financial assistance, eligibility, application requirements and much more.

The Education Line of Credit (a.k.a. The Parent-Sponsored Loan)

Not everyone is eligible for a government-sponsored student loan. Even if you are approved, government student loans may meet only 60% of your financial needs at best. This means you could still find yourself living on a very tight budget, and may need an education line of credit.

An education line of credit is:

an alternative financing option available to students through most banks
often referred to as a "parent-sponsored" loan because, in most cases, a parent or guardian will have to co-sign your loan application

The amount of money you receive will vary from bank to bank, but the borrowing contracts are usually quite similar. You will be expected to make monthly interest-only payments while you remain a qualified student (refer to specific bank websites for criteria).

Once you've graduated, depending on your loan agreement, your grace period to repay your principal can last anywhere from six to 12 months.

A major benefit of the education line of credit is that you can make a lump sum payment at any time. This will let you:

free up money for future use (as long as you remain a qualifying student)
reduce your interest payments
pay off the principal (amount of money borrowed) sooner

Find out more

Now that you've got a better idea of how government and parent-sponsored student loans work, you probably have a few burning questions pertaining to your eligibility and how to secure the money you need.

Read our FAQs related to the CIBC Education Line of Credit by selecting the "More" link below, or make an appointment with a CIBC personal banker to discuss your options.

CIBC Education Line of Credit

This line of credit is designed to help students manage the cost of post-secondary education by providing access to up to $40,000.

Complete list of products for students

The information in this article is general only; it is not intended as specific investment, financial, accounting, legal or tax advice for any individual.