Unpacking Financial Aid
Overview
Financial aid and scholarships are often misunderstood. This section discusses how they differ and provides resources to learn more about the various sources of financial assistance available to students. The purpose of this chapter is not to provide you with financial advice. Instead, this chapter introduces some key concepts so that you can better navigate and understand conversations related to personal finances, and funding your post-secondary education. For more resources related to personal finance, see the chapter, Additional Open Access Resources, in this Guide.
Although some examples below are Ontario-specific, many resources included are applicable across Canada and the information may help you determine what to look for when navigating financial aid opportunities in your region. For specific information about financial aid resources for other provinces and territories, see the chapter, Financial Aid Across Canada.
Learning Objectives
- Define key terms related to financial aid (e.g., loans, interest, debt).
- Recognize the difference between financial aid and scholarships.
- Differentiate between the various types of scholarships that exist.
Keywords
#Budgeting #EligibilityCriteria #FinancialAidDocuments #SupplementaryDocumentation #TimeManagementResources
Defining Financial Aid
There are different ways to get help with paying for your studies. Financial aid can be loans, grants, bursaries, awards, or scholarships. This section will discuss how these forms of financial aid differ.
Although financial aid is broadly considered official financial help offered to a person, organization, or country, this Guide discusses the financial aid that is specific to students.
The following video describes the difference between loans and grants, and provides an overview of key concepts like interest rates and repayment periods. [Transcript]
The following resources elaborate on the content discussed in the video:
- The Financial Consumer Agency of Canada (FCAC) provides more information on loans and lines of credit, as well as on a credit report, and the factors that influence them.
- The Government of Canada has resources that further discuss loan repayment plans.
- The National Student Loans Service Centre (NSLSC) provides more information on the stages of a student loan.
Our Notion database includes a Loan Repayment Calculator that uses a complex interest rate formula to help calculate your estimated loan repayment amounts. The formula used in the Calculator accounts for accumulated interest over your repayment period . The purpose of this Calculator is to provide estimations so that you can begin planning for the cost of post-secondary. Do not substitute this Calculator for estimates provided by your bank or loan provider.
Quick Tip!
For most students, once you’re out of full-time enrolment for more than six months, your loans from the federal and provincial governments go into repayment, even if you haven’t graduated yet (NSLSC, 2024). The six-month period where you don’t need to start repaying your loan is often called a “grace period.” However, while your federal loan won’t start collecting interest during those six months, your provincial loan might (this varies across provinces; NSLSC, 2024).
Most undergraduate students in Canada have a four-month break during the summer, and graduate students are typically enrolled year-round. Loan repayment starts six months after you were last enrolled full-time. Although repayment generally begins after graduation, extended time off can affect your loan. Check your loan rules for specific details on repayment start dates and interest to make informed decisions about your repayment process.
Financial Eligibility
For both grants and loans, the amount of money you’re eligible to receive will depend on several factors, including:
- The province or territory you live in.
- Your family income.
- Your tuition fees and living expenses.
In Canada, student loan and grant eligibility are based on the province where the person last lived full-time for at least 12 consecutive months, not where they live as a student. For most dependent students, that would be their home province, although this might change if the student or their family moves provinces. For financial aid purposes, dependent students must report their parents’ or guardians’ income and assets when applying for financial aid, such as student loans or grants, to determine their eligibility.
Quick Tip!
Government loans in Canada could offer better interest rates and repayment terms than banks. The Financial Aid Office at your post-secondary institution will be able to assist you with this process and direct you to loan options best for students.
More information on student grants and loans in Canada is available online through the Government of Canada.
Supplementary Documentation for Financial Aid Services
To apply for loans and grants, you will likely have to provide supplementary documentation. This might include income statements and tax information from both you and your parents or guardians. You can request a copy of your income statement from the Canada Revenue Agency.
When employed, you will receive a T4 slip, a document summarizing all the money your employer paid you during the calendar year. More information on T4 slips is available online through the Government of Canada.
Your Notice of Assessment (NOA) includes information about your tax return. The Government of Canada provides more information on your NOA online. You can also request a copy of your NOA.
As part of your financial aid application, you might also be required to include an estimate of how much you expect to spend on your living expenses, such as food, clothes, insurance, and rent. For more information on calculating your expenses, see the Expense Calculations chapter in this Guide.
Types of Scholarships
In Canada, there are several types of scholarships (Griffiths, 2022). Merit-Based Scholarships are a large portion of the ones you’ll come across in your searches. This is because eligibility for a scholarship is usually based on some form of merit that you prove through your application to the funding organization. Usually, these scholarships require proof of your academic achievement, community involvement, and leadership experiences (Canadian Universities, 2019). Some Merit-Based Scholarships may also be considered a Needs-Based Scholarship.
In the accordion, below we cover six of the common types of scholarship. Many of the following fall under merit-based scholarships, so keep an eye on these as you apply!
Schools also have many “open” scholarships where anyone can apply, no matter your level of study or program. Several merit-based scholarships exist and are available to students from all faculties and programs, and some are available at any point in your student career. There’s funding every year for undergraduate, graduate, and post-graduate schooling, so building these skills can save you more money than you think!
Quick Tip!
If you’re still deciding which school to attend, consider signing up for either an in-person or virtual open house tour. You can also attend webinars from the various schools’ Student Award and Financial Aid offices, and contact the financial advisors at the schools. This can provide insight into the different financial aid you may receive from your schools of interest, helping you to make your decision.
Check Your Learning
Before you proceed, take a moment to review some of the content you’ve learned so far.
Glossary
Affiliate Scholarships
Scholarships eligible to anyone with a connection to a specific organization or company.
Bursary
A monetary award usually given out according to an individual’s financial need.
College- or University-Specific Scholarships
Scholarships offered by a college or university separate from entrance scholarships, and which require an additional application.
Credit report
A record of your outstanding debt and payment history.
Credit score
A number calculated based on a person’s credit report, which financial institutions use to make decisions about lending money.
Debt
The amount of money you owe (e.g., to a bank or an external organization).
Dependent student
Usually someone who graduated high school less than four years ago, is not married, is not a graduate student, and relies on financial support from their parents or guardians.
Entrance Scholarships
Scholarships automatically awarded to students upon admission, usually based on achieving a specific grade.
External Scholarships
Scholarships offered by external or independent organizations.
Faculty
A faculty is an over-arching title for many programs in a similar subject area. For example, the Biology and Film and Media programs at Queen’s University are both under the Faculty of Arts and Science. Some schools differ in their faculty and program layout. For example, the Biology program at McMaster University is under the Faculty of Science.
Financial aid
Funds from the government, private organizations, and/or an educational institution to help students pay for their education.
Grant
Money awarded to a person (or organization) by the government or a private organization for a special purpose. This can be to pay for post-secondary or to conduct research, and it does not need to be paid back.
High School Scholarships
Scholarships offered by a high school.
Income statement
A general version of your tax assessment that summarizes your income (assets) and deductions (liabilities).
Interest
Money that a bank or other financial organization chargers for taking a loan.
Interest rate
The cost of borrowing money, usually shown as a percentage, which tells you how much extra you have to pay back on a loan or how much you earn on savings.
Line of credit
A type of loan that lets you borrow money up to a pre-set limit.
Living expenses
Money that you will spend on your needs (e.g., housing, food, clothing, transportation, healthcare plans, etc.).
Loan
An amount of money that is borrowed and has to be paid back, usually with interest.
Merit-Based Scholarships
A type of scholarship in which the applicant shares their skills, experiences, and abilities relevant to the application to prove their merit.
Needs-Based Scholarships
A Needs-Based Scholarship is a financial aid award given to students based on their financial need. The primary criteria for eligibility are the student’s financial circumstances, which are often assessed through family income, assets, and other financial obligations. The purpose of a Needs-Based Scholarship is to provide educational opportunities to students who might otherwise be unable to afford the costs of post-secondary.
Notice of Assessment (NOA)
A document that provides information about your tax return.
Registrar
A person or group who maintains student records and course data.
Repayment period
The set period of time you have to pay your loan back.
Scholarships
A type of financial assistance to help pay for post-secondary education that you don’t have to pay back.
Supplementary Documentation
The documents required as part of an application (e.g., resume, transcript, PSE, income statement).
Tuition fees
The fees that you pay your educational institution for the schooling that you receive.
T4 slip
A summary of all the money you got paid by your employer during the calendar year.
Transcripts
Video 1.1 transcript: [Narrator] “Think about what it would mean if you were to loan something, like your headphones, to a friend. At some point, you would expect to get your headphones back. Financial loans are similar, in that you will borrow a set amount of money from a bank or another financial institution. By taking a loan, you will incur debt. You will need to pay this money back, usually with interest, over a set period of time. An interest rate is the price you pay to borrow money, usually calculated as a percentage of the amount of money you have borrowed. The set period over which you need to repay your loan is known as your repayment period. Different types of loans will have different interest rates and repayment periods. You might be able to choose the amount of your monthly repayment. For example, you might choose to pay $50 per month or $2,000 per month. These options will depend on your bank and influence your repayment period. You should also be aware that taking out and repaying loans will affect your credit score. Your credit score is a number that is calculated based on your credit report, which provides an overview of your credit history and how well you manage your money. Banks and financial institutions will use this score to help decide whether to loan you money. There are many different types of loans, including personal loans, student loans, and mortgage loans. The type of loan you take will depend on what you are going to use it for. For example, a mortgage is a type of loan typically used to buy a house or piece of land. You might also consider a line of credit to pay for school, which is a type of loan that lets you borrow money up to a pre-set limit and can be used for many different purposes. For certain loans, you might be required to meet a certain income threshold during the calendar year to qualify. Both you and your parents might also be required to meet a certain income ratio to apply for a student line of credit. Grants refers to money that you do not need to pay back. A scholarship is a specific type of grant. A grant can come from many different sources, such as from the government, a company, or a community organization. It’s totally normal and understandable to feel overwhelmed by all this information. The best source of advice will be the Financial Aid Office at your post-secondary institution. A financial aid advisor will be able to help you get an idea about what options are available to you and plan the best course of action.” [Return to Video 1.1]
References
Canadian Universities. (2019). Canadian scholarships, awards, prizes and bursaries. Canada’s Higher Education and Career Guide. https://www.canadian-universities.net/Scholarships/
Griffiths, A. (2022, May 30). 5 types of scholarships for Canadian students. GrantMe. https://grantme.ca/5-types-of-scholarships-for-canadian-students/
National Student Loans Service Centre. (2024, March 8). Stages of a student loan. Government of Canada. https://www.csnpe-nslsc.canada.ca/en/stages-of-a-loan
How to Cite this Chapter Using APA Style
*Nusselder, F., *Burrows, H. M. R., Giovannangeli, A. J., Armstrong, A. M., & Xu, Y. (2024). Unpacking financial aid. In Pay for post-secondary: A student’s guide for securing financial aid. Queen’s University, eCampus Ontario. Licensed under CC BY-NC-SA 4.0. https://ecampusontario.pressbooks.pub/payforpostsecondary/part/unpacking-financial-aid/
*denotes equal contributions as first authors
Money that a bank or other financial organization chargers for taking a loan.
The amount of money you owe (e.g., to a bank or an external organization).
Funds from the government, private organizations, and/or an educational institution to help students pay for their schooling.
An amount of money that is borrowed and has to be paid back, usually with interest.
Money awarded to a person (or organization) by the government or a private organization for a special purpose. This can be to pay for post-secondary or to conduct research, and it does not need to be paid back.
A monetary award usually given out according to an individual's financial need.
A type of financial assistance to help pay for post-secondary education that you don't have to pay back.
The cost of borrowing money, usually shown as a percentage, which tells you how much extra you have to pay back on a loan or how much you earn on savings.
The set period of time you have to pay your loan back.
The fees that you pay your educational institution for the schooling that you receive.
Money that you will spend on your needs (e.g., housing, food, clothing, transportation, healthcare plans, etc.).
Usually someone who graduated high school less than four years ago, is not married, is not a graduate student, and relies on financial support from their parents or guardians.
The documents required as part of an application (e.g., resume, transcript, PSE, income statement).
A general version of your tax assessment that summarizes your income (assets) and deductions (liabilities).
A summary of all the money you got paid by your employer during the calendar year.
A document that provides information about your tax return.
A type of scholarship in which the applicant shares their skills, experiences, and abilities relevant to the application to prove their merit.
A Needs-Based Scholarship is a financial aid award given to students based on their financial need. The primary criteria for eligibility are the student’s financial circumstances, which are often assessed through family income, assets, and other financial obligations.
The purpose of a Needs-Based Scholarship is to provide educational opportunities to students who might otherwise be unable to afford the costs of post-secondary.
A faculty is an over-arching title for many programs in a similar subject area. For example, the Biology and Film and Media programs at Queen's University are both under the Faculty of Arts and Science. Some schools differ in their faculty and program layout. For example, the Biology program at McMaster University is under the Faculty of Science.
