Chapter 11: Taking Control of Your Finances
- Understand the importance of researching and applying for financial aid every year even if you don’t think you qualify for assistance.
- Identify key differences among scholarships and grants, student loans, and work study programs.
- Avoid excessive student loans and setting yourself up for future financial difficulties.
You may already be receiving financial aid or understand what types of financial aid are available. Even if you are not receiving financial aid, however, you should understand the basics because your financial situation may change and you may need help paying for university. You owe it to yourself to learn about potential types of aid you might receive. The University of Saskatchewan has a Student Finance and Awards unit, that can give you information about awards, scholarships, and student loan programs. Certain kinds of financial aid, however, such as private scholarships, may not be administered by the university, so you may need to do some research. There are three main categories of financial aid:
- Scholarships and grants (money or tuition waivers that do not need to be repaid)
- Student loans (money that does need to be repaid, usually starting after graduation)
- Co-operative education programs (money that is earned for tuition or other expenses)
These three types of aid are described in the following sections. Remember that this section only introduces these types of financial aid—be sure to get more information from your university’s financial aid office and the online sources listed here.
Applying for Financial Aid
The Canadian Federal Government works with most territorial and provincial governments to deliver provincial and federal student loan programs. Visit the National Student Loan Service Centre (NSLSC) for more information and for application instructions, or visit the Student Finance and Awards unit at the University of Saskatchewan for more help in this regard. Outside loans and scholarships are generally applied for separately. Follow these general rules to ensure you receive any aid for which you are qualified:
- Apply to your university for financial aid every year, even if you do not qualify in your first year or term. Your situation may change, and you want to remain eligible depending the awards or loans that may become available.
- Talk to the financial office immediately if you (or your family) have any change in your circumstances.
- Complete applications accurately, fully, and honestly. Financial records are required to verify your data. Pay attention to the deadlines for all applications.
- Research possible outside financial aid based on other criteria. Many private scholarships or grants are available, for example, for the dependents of employees of certain companies, students pursuing a degree in a certain field, or students of a certain ethnic status or from a certain religious or geographical background, and the like.
- Do not pay for financial aid resource information. Some online companies try to profit from the anxieties of students about financial aid by promising to find financial aid for you for a fee. Legitimate sources of financial aid information are free.
Scholarships and Grants
Scholarships and grants are “free” money—you do not have to pay them back, unlike student loans. A scholarship is generally based on merit rather than demonstrated financial need—based on past grades, test scores, achievements, or experiences, including personal qualifications such as athletic ability, skills in the arts, community or volunteer experiences, and so on. Don’t make the mistake of thinking scholarships go only to students with high grades. Many scholarships, for example, honor those with past leadership or community experience or the promise of future activities. Even the grades and test scores needed for academic scholarships are relative: a grade that does not qualify for a scholarship at one university may earn a scholarship at another. Never assume that you’re not qualified for any kind of scholarship or grant.
A grant also does not need to be paid back. Most grants are based on demonstrated financial need. A grant may be offered by the university, a federal or provincial program, or a private organization or civic group. Often times, grants are provided with student loans to those with demonstrable financial needs.
The most common student loan program in Canada is administered by the federal government. Because many universities do not have sufficient funds to offer full grants to students with financial need, financial aid packages often include a combination of grant and loan money. Ideally, one would like to graduate without having loan balances to repay later on. However, many full-time university students will need student loans to pay for university.
Unfortunately this is a necessary reality for many students. For most, graduating from university owing some money is preferable to not going to university at all. With smart choices about the type of loan and a structured repayment program for your working years after graduation, there’s no reason to fear a loan. Just remember that the money eventually has to be repaid—it’s not “free” money even though it may feel that way while you’re in school.
Student loans provided through the government do not begin accruing interest until after graduation. If you borrowed $20,000 over four years and interest accrued during this time, you could owe as much as $25,000 upon graduation, so this can be a substantial saving over the course of your degree.
How Much Should You Borrow?
Many financial analysts urge university students not to borrow more than about $6,000 per year or about $24,000 for four years. Even if you qualify for more, that doesn’t mean you should take it, and in fact, you may want to borrow much less. Think about this seriously before jumping to any conclusions about your future earning potential and how much you may have to struggle then to pay off your student loans. During an economic downturn, for example, many students have difficulty finding a job that pays well enough to cover their loan payments without hardship.
First learn the repayment rate for a loan amount. Then research the starting salary you can realistically expect after graduation. Assume the starting salary will be at the low end of the salary range for any given career. Finally, make sure that your loan payments do not total more than 10 percent of your starting salary. If the payment amount is more than 10 percent, you are setting yourself up for future financial problems. Try to find ways to cut back on expenses instead. Many experts advise attending a less expensive university, if necessary, rather than risking your future well-being.
Co-operative Education Programs
Co-operative education programs are the third type of financial aid. They are administered by universities and are becoming increasingly common in the areas of business, economics and engineering. They allow students to earn money while gaining valuable work experience prior to graduation. Because they are run by university staff, students receive recognition of program completion on their transcripts and they have access to additional support and preparatory services prior to, during and after their co-op placements.
Start with your Student Finance and Awards unit to gather information about financial aid. Do additional research to make sure you’re considering all available options. Even though this takes some effort, it will prove worthwhile if you find other sources of funds for your university years. Start with the online resources listed here.
Federal government information about student loans. See https://csnpe-nslsc.cibletudes-canlearn.ca/eng/Default.aspx
Federal government scholarship information. http://www.esdc.gc.ca/en/student_financial_aid/scholarships.page
ScholarshipsCanada.com. See this private information Web site on scholarships available for Canadian students. http://www.scholarshipscanada.com/
Salary Wizard. To estimate future earning potential, use this tool available at http://www.salary.com/category/salary/.
- Many forms of financial aid are available for university students. Apply every year and notify the university financial aid office if you have a significant change in circumstances.
- Consider all forms of financial aid—not just the aid managed by your university. Look into private scholarships and grants.
- Carefully consider how much to borrow in student loans.
What is the best kind of university financial aid to seek?
For each of the following statements, circle T for true or F for false:
T F You don’t need to complete the FAFSA if you are applying only for a federal student loan. T F If you apply to your university’s financial aid office, they will tell you about all possible scholarships for which you may be qualified. T F After graduation, you have to begin repaying the money you received in a grant. T F A work study program job often has advantages over a job you find on your own.
- As a general rule, your future payments on a student loan should not be more than _____ percent of what you expect to make with your starting salary.