This article explains both how to maximize the amount of money you get for your student loan as well as the best way to deal with any cash you receive that you might not need for your tuition or living expenses. It also explains the rules around when you are required to list your parents’ financial details on your loan application.
Most student loans (or school loans) do not have to be paid back until at least 6 months after a student graduates. Additionally, student loans typically accrue no interest until 6 months after graduation. in Ontario, the OSAP loan works in this way.
In years 1 through 3 of university or college, a student must input their parents’ financial information when filling out a loan application. For many students, this singly annoying fact is enough to deter them from applying. Once a student reaches their fourth year of study however, they are no longer required to give any information about their parents’ financial situation. This is where you have the most control over maximizing your student loan. Every student in their fourth year of a University or College program should absolutely apply for a student loan. Even if you do not require the money, you should take it and invest it in some form of guaranteed investment instrument (such as a high interest savings account, government savings bonds or GICs.) Once you reach your fourth year of study, you have about 14 months before you have to start paying the money back, so investing in riskier securities (such as stocks or options) is not recommended.
In order to get the most money possible for your student loan, you basically just have to make yourself look as poor as possible. There are 2 aspects to your financial status – how much money you’ve earned or plan to earn and how much money you have saved/invested. Obviously if you have $25,000 in your investment account, the government will feel no need to give you an interest free loan – you can clearly pay for school out of your own pocket. If you are in a situation where your current savings or investments make it look like you do not need financial assistance, find a way to change that! There are a few ways you could do this (make sure not to break the law!) First of all, you could just go and spend all your savings – probably not the best plan, but it would definitely increase the amount of loan money you would be eligible for. You could also temporarily loan/donate the money to someone else (be careful that you approach this in a legal way.) You could open a foreign account and temporarily transfer the money into it. You could move the money into a Registered Savings Plan (less emphasis is given to money in registered instruments when the government makes their loan calculations.) In order to maximize your loan amount you also have to make it appear that you are not making too much money. There are two aspects to this: the amount of money you earned in the period prior to the school term you are about to enter and the amount of money you are going to make during your study time. There isn’t ouch you can do about the amount of money you made last year, but you can definitely optimize the amount you plan to make. It’s pretty simple, do not plan to make any money during your study term until after you have completed you loan application and received your loan money.
These ware the most basic of methods for getting the most cash out of your student loan. Keep in mind that the money has to be paid back eventually, so don’t go too crazy. But let’s be serious, this is interest-free money – you should get as much as you possibly can.