Note: The education loan information on this page is provided only for the information of the website users, digibank by DBS doesn’t offer this product at the moment.
Here's how to get a loan to study in Canada
Canada is quickly becoming a favourite destination for Indian students to study abroad. In 2019, the country issued 4 lakh study permits – Indians got 1.39 lakh (34.5%) of these. So, why are more and more students choosing Canada?
The most significant advantage is graduates can apply for a post-study work permit for up to 3 years on completing their studies. Students can also apply for Permanent Residency (PR) while studying in Canada or after completing their course. Apart from this, Canada's vast Indian population tends to make students from India feel more at home.
Pro tip – In Canada, universities consider your academic record more important than extra-curricular activities or voluntary work. It would help immensely if you have good grades in school/college.
Banks provide loans for undergraduate, master's and research programs. However, some banks stipulate that the courses must be from internationally recognised universities. Banks rarely provide loans for vocational, part-time or diploma courses.
To study in Canada, you might have to spend anywhere between INR 20 lakh to over INR 1 crore, depending on the university you're looking at, the program you will pursue, and your future living/ non-academic expenses.
If you're applying for a visa under the Student Direct Stream (SDS) program, which fast tracks visa processing for students from India, China, Vietnam, and the Philippines, you have to prove that you have the funds needed to spend at least a year studying in Canada. You can show a mandatory proof of funds by depositing CAD 10,000 towards the Guaranteed Investment Certificate (GIC). Many banks offer loans that include the GIC amount. You can get the loan disbursed in your savings account and then transfer the payment into an investment account or student account for the GIC.
Pro Tip – You can also show funds equivalent to CAD 10,000 in your loan account to get a student visa. However, it is better to opt for a GIC as it provides monthly returns that can be withdrawn and used to pay the interest on your loan amount.
To send money abroad seamlessly and securely, open a digibank by DBS savings account in minutes!
Both private and public banks, as well as NBFCs, provide education loans for studying in Canada. You can opt from two types –
Loan Type |
Features |
Secured loans |
Need to provide collateral; can be movable or immovable assets |
Have lower interest rates |
|
Provided by public or private sector banks and NBFCs |
Loan Type |
Features |
Unsecured loans |
Do not need to provide any collateral |
Interest rates are higher |
|
Only up to INR 7.5 lakh by banks, NBFCs may approve higher loan amounts |
|
Sanctioning depends mainly on the reputation of the institute, credit score/financial stability of co-applicant, career prospects of the applicant |
Different banks have different eligibility criteria. For example, some banks might make it mandatory to have a co-signer, while others may have collateral guidelines. Familiarising yourself with a bank's eligibility criteria will help you determine how likely you are to get a loan from them.
Different banks have different eligibility criteria. For example, some banks might make it mandatory to have a co-signer, while others may have collateral guidelines. Familiarising yourself with a bank's eligibility criteria will help you determine how likely you are to get a loan from them.
However, there are some essential criteria you must fulfil to get a loan from any bank. These include –
Particulars |
Requirement |
Citizenship |
The applicant must be an Indian citizen |
Age |
The applicant must be above 18 years of age (or parents will have to apply for the loan) |
Admission |
The applicant must have secured admission in a recognised university/college in Canada |
Program |
Preference is given to technical and professional courses |
Academic Record |
The applicant must have an excellent academic record |
Pro tip – It's also good to know some of the common reasons why financial institutions decline loans.
A bank may reject your loan application under these circumstances –
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You should apply for a loan as soon as you get your admission letter from your university. This letter will give you an idea about how much funds you'll need to cover your studying and living expenses in Canada.
To apply for an education loan, consider these factors in your checklist:
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Borrowers can get tax benefits on interest paid toward education loans Under Sec 80E of the Income Tax Act. You can get these tax benefits until full interest repayment or for a maximum period of 8 years, whichever comes first.
During your course, banks charge simple interest. You can choose to pay this amount or allow it to accumulate till after you complete your education. This period is also called a moratorium; once the moratorium is over, the accumulated simple interest is credited to the principal amount. You will have to repay the loan in Equated Monthly Instalments (EMIs) after the moratorium ends.
According to QS World University Rankings 2021, the University of Toronto, McGill University, University of British Colombia, Université de Montréal, and University of Alberta are the top 5 universities in Canada.
Getting an educational loan on time can make a huge difference in your life. Make sure you pick a loan provider that simplifies the loan-sanctioning process so that you can get your loan quickly and without too many hassles. Education loans allow you to finance your higher education expenses, are easy to apply for and come with competitive interest rates and easy repayment terms.