In recent years, Canada has become one of the most preferred education abroad destinations for many Indian students who aspire to pursue higher education overseas.
The main reason for this is that Canada not only offers world-class education but at much lower costs. But still what stops the majority of the students from applying is the lack of funds.
These days students can opt for an abroad education loan to fund their education in Canada but the rules and norms applicable to students who borrow education loans to fund their studies are different for different countries.
A Canadian education loan procedure requires students to fulfill certain criteria before they proceed with their visa process. Today’s article highlights those criteria which should be followed by students prior to their visa process.
Or better yet, watch the 18th episode of Loanflix, in which our expert speaker, Damini Mahajan tells you all about the procedure by herself.
What kinds of education loans do Canadian universities/colleges accept?
If you are funding your higher studies with the help of an education loan, you can opt for either a secured education loan (one that requires students to pledge collateral as security) or unsecured education loans (one that does not require any collateral security) in order to study in Canada.
In every article published here, we have always stressed the benefits of government banks' education loans as they can pretty much fund any course at lower interest rates. Get a piece of expert advice and assistance, speak with the financial officers at WeMakeScholars by requesting a callback.
When is an education loan necessary for a study abroad process in Canada?
A successful study abroad process briefly comprises of two important stages:
- The application process: The application process to any Canadian college/university is pretty simple. Students need to keep an eye on the tentative admission dates of the college/university they want to study in and apply accordingly.
- Funding & Visa: In the second stage, students are required to arrange the funding source for their higher education in Canada and apply for their student visas.
- Funding: The first and foremost important point that students need to keep in mind regarding the Canada education loan process is that none of the colleges/universities in Canada requires students to submit proof of liquid funds, prior to their admission. This process is initiated only after a student has secured admission into their respective university/college.
- Visa process: The visa process for any country can be a stressful affair for students. They have to adhere to the rules and regulations set for international students by the respective country's embassy.
For the Canada student visa process, there are certain criteria that students need to meet in order to get their student visa without any hurdles. Arranging for the living expenses which are to be deposited in a GIC account, is one of them.
What is GIC for international students? Is GIC compulsory for Canada?
A Guaranteed Investment Certificate or GIC is a Canadian investment program that offers fixed returns over a period of time. GIC accounts function like fixed deposit accounts in India. A student’s living expenses for one year are deposited in advance in this account and students get to draw money from this account for their monthly expenses at regular intervals.
In order to purchase a GIC account, students are required to deposit an initial amount of CAD 10,000. It is the estimated cost of living expenses of students for a year in Canada. On their arrival, students will be granted initial funding of CAD 2000 as set-up cost. Post this, students will be allowed to withdraw CAD 667 every month, to cater for their total expenses in Canada.
It is compulsory for students to purchase a GIC account prior to their Visa process (for SDS programs). A GIC account borrowed from any of the following banks is accepted as funding proof at the embassy of Canada.
- Scotiabank, Canada
- The State Bank of India, Canada
- The ICICI Bank, Canada
The exact process of the GIC creation process of these particular banks is discussed in detail in this article - How to open GIC for Canada in SBI, Scotiabank, and ICICI bank.
Do education loans for Canada cover the GIC amount?
All banks and NBFCs that provide an education loan for Canada in India cater for the expenses related to the purchase of a GIC account.
A GIC is nothing but your one-year living expenses that you are required to transfer to Canada before your Visa process which is also referred to as a pre-visa disbursement by the bank.
How to deposit the GIC amount?
The next important point in the Canada education loan process is depositing the GIC amount into a Canadian chartered bank. Self-funding students are required to deposit the amount via wire transfer in any of the aforementioned banks.
Students should begin their process of opening a GIC account at least a month before they apply for a Canada student visa. The general procedure followed by all the three banks is more or less, similar. Here is a basic outline of how students can get their proof of GIC amount for a Canada student visa:
- Register for a GIC account with any of the above banks which are located in Canada. This procedure can be done online.
- Upon successful creation of their GIC account login, respective banks send the investment account number and wire transfer details to students via their individual secure email services.
- Once they receive their GIC account number and wire transfer details from their respective lenders, Students may send the Canada GIC amount via wire transfer from their home country to the bank with which they had registered for a GIC account. This process may take about 10-12 days.
- All three banks charge a separate service fee for their GIC services. The final amount which is prescribed to students is including this fee. Out of the CAD 10,000, CAD 2000 is provided to students as the initial set-up fee. The remaining CAD 8000 is deposited into the investment account. Students will be able to receive a monthly sum of CAD 667, plus any applicable interest to support their expenses for the remaining period of their stay in Canada.
- Once the payment of the GIC amount has been successfully completed, banks send a letter confirming the receipt of the GIC amount payment via email to the concerned students. Candidates may submit this letter at the time of applying for their Canada student visa.
The Canadian embassy needs to ensure that any student going to Canada has sufficient funds for their living expenses. This is why they insist on the purchase of the GIC account.
Actions to be taken by students on arriving in Canada:
- When students arrive in Canada, they will be required to personally visit the respective banks in which they have opened their Canada GIC account, along with certain documents for a final verification procedure and to activate their GIC student account.
- Post the verification of relevant documents by the bank authorities, a personal deposit account will be created in the student’s name and the initial set-up fees of CAD 2000 will be deposited into this account. The balance amount of CAD 8,000 will be deposited into a non-redeemable GIC account. Once the students have completely utilized the initial setup cost, they will be able to withdraw their monthly allowance from this non-redeemable GIC account.
What is a non-redeemable GIC account?
A non-redeemable GIC account basically refers to an account in which students get to invest a certain sum for a particular length of time and get to enjoy the benefits of a fixed interest rate for that period of time. Once the term is over, students get to encash the remaining GIC amount along with the applicable interest for the same period.
Canada GIC amount refund process
It is possible for students to get their GIC account amount refunded from their respective banks in the following circumstances.
- Their study permit has been declined.
- Application of admission has been declined.
- If the student has withdrawn from enrolment into the respective university before/after arrival in Canada.
The Canada GIC refund policy implemented by all three banks is mostly similar. Candidates need to follow the below steps in order to get their GIC amount reimbursed.
- Students will be required to provide relevant documents supporting their reason for applying for the refund.
- The list of documents to be provided by candidates differs from lender to lender.
- Once all the documents have been verified successfully, banks will initiate the refund process. As soon as the refund process has been completed successfully, the respective banks send a confirmation email regarding the same.
- The entire Canada GIC refund process may take up to 4 weeks.
- Banks may levy extra charges for the same. Hence, students need to cater to the same while applying for their refund.
When to apply for an education loan for Canada?
As is the case with most abroad education loans, time is an important factor. Since the medical check, purchasing a GIC account, and depositing the tuition fees take up more than a month. It is recommended that you apply for an education loan as soon as you get an admission letter from your respective college/university.
You should consider at least 1 week for the GIC account-related procedures and an additional 6-8 weeks for the visa process while applying for the education loan. When it comes to disbursing education loans from government banks, this process may also take its own sweet time.
So, if the student is expected to start the course in the month of August, then it is recommended that he/she apply for an education loan in the month of May. This way, they can still have room for any kind of last-minute contingencies at any stage of the Canada education loan process.
While funding your higher education is an excellent option as opposed to self-financing, a lot of research is required before you dive right into the project. Hence, we recommend that you conduct thorough research of the lenders (banks/financial institutions), especially their terms and conditions before deciding on a lender.
You can also get in touch with our team at WeMakeScholars, who will give you unbiased opinions about the terms and conditions of the various education loan providers in the market. Our team will help you not only in getting the abroad education loan at the best deal possible but also in GIC creation for Canada.