Education is an expensive investment that not everybody can easily afford. The struggling job market, coupled with the pandemic, makes meeting ends harder than ever. Here are some tips for students looking for ways to balance their ever-increasing expenses and tuition prices!
Use Your Income Tax Refund Money
There are some tax credits available for tuition costs, and you can find out more from CRA (Canada Revenue Agency) about tuition, education and textbook amounts. Along with other ways to reduce how much income tax you pay and increase the size of your refund (for example, with RRSP contributions) – you may receive a refund that is big enough to help offset some of the costs of your education.
Take Advantage of Benefits Through Your Work
Your benefits package that often comes with your job might include help with tuition and/or education costs. Study your extended benefits package or talk to the human resources (HR) department at your workplace to see if you qualify for benefits. Whilst some employers will stipulate that courses must be related to your work, others won’t.
Apply for Canadian Student Grants
If you are a low or middle-income student who has been out of high school for a minimum of ten years, there are certain federal grants available to help you return to school. You should research the expanded eligibility for the Canada Student Grant program, which is designed to help students returning to both full or part time studies (with or without dependents). Additionally, there are grants for students with permanent disabilities – both for tuition and to help pay for education-related costs.
Understanding the Two Types of Student Loans
Student loans, regardless of the source, with few exceptions must be repaid. To start off – there are two kinds of student loans. Government (provincial and federal) and private (funding from elsewhere, e.g. your financial institution). If you qualify for government student loans, they do not need to be paid whilst you’re in school. In terms of repayment, they can be repaid within ten years or more and the interest is tax deductible.
Student loans or lines of credit via your bank or credit union usually require interest-only payments whilst you’re in school. In order to qualify, you may need a co-signer or collateral.
Use Your Savings to Pay for School
If you have savings in a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP), you might want to consider using some of the money to help pay for your education. The Lifelong Learning Plan (LLP) allows you to withdraw money from your RRSP to help finance full-time training or education for yourself or your spouse.
When withdrawing money from your long-term savings, contemplate all of your options. Tax consequences, and any requirements for conditions of repayment should be deeply and carefully understood. The amount you take out can impact future goals, for example, when you retire and with how much savings. Depending on your situation, the wise decision would be to seek guidance from your tax professional.