A student loan can help cover tuition, books, housing and other costs related to post-secondary education in Canada. Students may have access to government financial aid, a bank student line of credit, or a combination of both.
These options work differently. Government aid follows student-assistance rules, while bank products are credit arrangements with their own eligibility requirements, interest rates and repayment terms.
How do government student loans work in Canada?
The Canada Student Financial Assistance Program provides grants and loans based on financial need. Grants do not have to be repaid, while loans do.
For the 2026–27 school year, the federal government is maintaining the maximum Canada Student Loan at $300 per week of study and the maximum Canada Student Grant for Full-Time Students at $4,200 per year.
The amount a student can receive depends on factors such as:
- province or territory;
- family income;
- tuition and other school costs;
- living expenses;
- number of dependants;
- disability status, when applicable.
Quebec, the Northwest Territories and Nunavut do not participate in the federal Canada Student Grants and Loans program. They operate their own student-aid systems.
Who can apply for government student aid?
Eligibility depends on the student’s circumstances, program and province or territory.
In general, applicants need to meet citizenship or immigration requirements, live in a participating province or territory and attend an eligible post-secondary institution. Students apply through the student-aid office for their province or territory.
The application determines what type and amount of assistance may be available. That can include grants, loans or both.
One important 2026 change affects the Canada Student Grant for Full-Time Students. Starting with the 2026–27 school year, most students in longer programs at private for-profit institutions are no longer eligible for this particular grant.
Other forms of student assistance, including Canada Student Loans and certain grants, may still be available depending on the student’s circumstances.
Do government student loans charge interest?
The federal portion of Canada Student Loans is interest-free. Provincial or territorial portions can have different rules, so students should check the terms that apply where they live.
This distinction matters when estimating the total cost of borrowing. A student may receive funding through both federal and provincial programs, and the conditions are not necessarily identical.
What is a bank student line of credit?
A student line of credit is a borrowing product offered by a bank. Instead of receiving a fixed student-aid amount, the borrower gets access to a credit limit and can generally use the funds as needed.
Interest applies to the amount borrowed, rather than the entire approved limit.
Banks may consider factors such as:
- school and program;
- estimated education costs;
- financial resources;
- credit history;
- ability to repay;
- whether a guarantor or co-signer is required.
Unlike government grants, money borrowed through a bank line of credit must be repaid with interest.
What do banks offer for students?
Banks structure their student credit products differently, so the terms depend on the institution and program.
RBC: Its Student Line of Credit offers different options based on the student’s program. RBC currently provides no principal payments during studies and for up to two years after graduation, although interest continues to accrue.
TD: Its student lines of credit cover undergraduate and professional programs. Students make interest-only payments while studying, with no principal payments due until 24 months after leaving school. Credit limits and rates vary by program.
CIBC: Its Education Line of Credit is available to students attending accredited Canadian universities, colleges and trade schools. Students pay interest only on amounts used while studying and for 12 months after graduation, or six months if they leave without graduating. The standard Education Line of Credit can provide up to $80,000 throughout the program, subject to eligibility and lending criteria.
These examples show why students should compare the actual terms of each product instead of looking only at the approved credit limit.
Government loan or bank line of credit: what changes?
The main differences involve how you qualify, how much you can borrow, when interest applies and what repayment support is available.
Government student aid is assessed through the student-aid system and may include non-repayable grants. A bank line of credit is approved by a financial institution and works as revolving credit.
Another important difference is repayment assistance. Eligible borrowers with government student loans may qualify for the Repayment Assistance Plan (RAP) if their income makes payments difficult. Bank student lines of credit do not qualify for RAP.
When does student loan repayment begin?
For Canada Student Loans, borrowers generally have a six-month non-repayment period after they finish their studies, leave school or drop below the required course load.
Bank products follow their own schedules.
For example, RBC gives eligible students a grace period of up to 24 months after graduation before principal repayment begins, while interest continues to apply to the outstanding balance. TD also states that principal payments are not due until 24 months after the student leaves school.
CIBC uses a different structure: its Education Line of Credit can remain a line of credit or be converted to a personal loan one year after graduation, or six months after leaving without graduating.
Can you use both government aid and a bank loan?
Yes. A student can potentially combine government assistance with private borrowing when eligible.
The important question is how much additional funding is actually necessary.
Before opening a bank line of credit, calculate the gap between your education costs and the money available from:
- government grants;
- government loans;
- scholarships and bursaries;
- savings;
- employment income;
- family support, if applicable.
Borrowing the maximum amount offered does not necessarily make sense if you need only a smaller amount to cover your remaining expenses.
What should you check before choosing a student loan?
Look beyond the amount you can borrow. The terms can have a major effect on the cost and timing of repayment.
Check:
- interest rate: whether it is fixed or variable and how it is calculated;
- when interest starts: some products charge interest as soon as you withdraw funds;
- repayment period: when principal payments begin and how long repayment can take;
- credit limit: how much you can actually access;
- co-signer requirements: whether another person must guarantee the borrowing;
- repayment assistance: whether government programs such as RAP apply;
- program eligibility: whether your school and course qualify;
- fees and other conditions: including any charges associated with the product.
Government student loan vs. bank option: quick summary
| Feature | Government student aid | Bank student line of credit |
|---|---|---|
| Provider | Government of Canada + provinces/territories | Banks and financial institutions |
| Funding | Based on student-aid assessment | Based on lender approval and credit limit |
| Grants | May be available | No |
| Federal loan interest | Federal portion is interest-free | Interest applies according to the product |
| Borrowing structure | Student loan amount | Reusable line of credit |
| Repayment assistance | RAP may be available | RAP does not apply |
| Co-signer | Rules differ from private credit | May be required |
| Repayment start | Generally six-month non-repayment period | Varies by lender and product |
How should you choose between the two options?
Start by determining how much you can receive through government student aid. The application may provide access to grants as well as loans, so this can reduce the amount you need to borrow privately.
If there is still a funding gap, compare bank lines of credit based on the amount you actually need, interest rate, repayment schedule and eligibility requirements.
A larger credit limit does not automatically make a product more suitable. What matters is whether the borrowing fits your education costs and your ability to repay it later.
FAQ
Can I pay off my Canada Student Loan early?
Yes. You can make additional payments toward your federal student loan, which can reduce the time needed to repay the balance. You can also adjust your payment amount through the National Student Loans Service Centre (NSLSC).
What happens if I cannot afford my student loan payments?
If you are having financial difficulty, you may qualify for the Repayment Assistance Plan (RAP). Depending on your income and circumstances, the program can reduce your payments or bring them to zero for a six-month period. You must reapply every six months to continue receiving assistance.
Can I use a student line of credit while I am still in school?
Yes. A student line of credit allows you to borrow funds up to your approved limit while studying. You generally pay interest on the amount you actually use, although repayment terms vary by financial institution.
Can a Canada Student Loan be forgiven?
Some borrowers may qualify for Canada Student Loan Forgiveness if they work in eligible occupations and communities and meet the program requirements. The benefit applies to the federal portion of the loan and does not apply to private loans.
Can I have both a government student loan and a bank line of credit?
Yes. Students may use both when they qualify. The important step is to calculate how much funding they actually need after grants, scholarships, savings and other available resources.