Canada Education Loan: GIC & Process in detail
In the past couple of years, Canada is one of the most preferred countries for many Indian students who wish to pursue their higher education abroad. Because of their student-friendly policies, Canada is one of the top countries where hundreds of Indian students fly to, every year, to pursue their higher education dreams. The rules and norms applicable to students who borrow education loans to fund their studies are different for different countries. A Canada education loan procedure requires students to fulfill certain criteria before they proceed with their visa process. Today’s article highlights the education loan procedure which should be followed by students in order to fund their higher studies in Canada.
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 secured or unsecured loans in order to study in Canada. As you all know by now, education loans in India are of two types: Secured (one that requires the student to pledge collateral as security against the education loan) and Unsecured (one that does not require the student to pledge collateral). In India, NBFCs are the biggest lenders of unsecured education loans. For Canada education loan, public banks can fund up to 1.5 Cr. Contrarily, the maximum non-collateral education loan from NBFCs is in the range of Rs.15 to Rs. 25 Lakhs. A loan applicant’s academic and financial profiles are considered by NBFCs for this purpose.
In every article published here, we have always stressed on the benefits of borrowing collateral education loans from government banks. Do refer the same for further details.
Also, to get a piece of expert advice and assistance, speak with the WeMakeScholars financial officers by requesting a callback.
At what stage of the Canada study abroad process is an education loan required?
A successful Canada education loan process briefly comprises of two important stages:
- The application process to universities/colleges.
- Funding and Visa – Arranging GIC amount, payment of one year’s tuition fees, preparing visa documents.
A. 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. It is not difficult to figure out the admission procedure. The tricky part comes into picture when a student has received their admits and are planning their finances to fund the particular higher education course in Canada. This article will be focusing more on the Canada education loan process that students need to follow after they have received their admits from respective universities/colleges.
B. Funding & Visa:
This second stage requires students to arrange the funding source for their higher education in Canada and applying for their student visa.
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 an admission into their respective university/college.
The visa process for any country can be a stressful affair for students. They have to compulsorily adhere to the rules and regulations set for international students by the respective country’s embassy. In the Canada education loan 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 is to be deposited in a GIC account, is one of them. Before we dive into details about Canada GIC, let us take a look at the actions that students need to take before they apply for a student visa for Canada.
Now that you have a brief idea about the basic stages involved in the Canada education loan process, here are three tasks that any particular student needs to finish before they go ahead with their visa procedure:
- A medical test
- Depositing one year’s total expenses into a GIC account with embassy approved banks.
- Payment of tuition fees of the first term/semester.
Let’s take a closer look at each of these actions:
Medical Test: Students need to go through a medical test from an authorized medical center. This has to be done at least a week before they fill the student visa application for Canada.
GIC & Tuition Fee payment: When students apply for a student visa, they do so, under two separate categories – one is the SDS* program and the other is the student visa stream. (*The Student Partnership Program or SPP has been replaced by the Student Direct Stream or SDS from 01 February 2018) The GIC and tuition fee payment rules for students applying under these two categories are different.
Those applying under the SDS program: Students who apply for a student visa under this program are required to deposit the GIC amount and provide the receipt of payment of fees before going ahead with the visa process.
Those applying under the regular student visa program: Students who have applied under the regular student visa stream need not compulsorily deposit the GIC amount and produce a receipt of the payment of one year’s tuition fees.
Now, let’s move on to understand the most important component required for students to get their visa issues – GIC amount.
What is GIC and how is it important?
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 is deposited in advance in this account and students get to draw money from this account for their monthly expenses at regular intervals.
According to the Citizenship and Immigration Canada guidelines for students who have applied under the Study Direct Stream/Student Partnership Program, CAD $10,000 are required to cover their living expenses while they are in Canada for their course.
- The Canadian high commission advises students to arrange for the following documents as proof of funds to universities:
- The evidence of the purchase of a GIC account with any of the functional Canadian banks
- A receipt of payment of one year’s tuition fees.
- As an alternative, students may provide the receipt of payment of one year’s tuition fees and a copy of an education loan from an Indian bank/financial institution equivalent to CAD $10,000.
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 following banks: Nova Scotia Bank, ICICI Bank, Canada and SBI, Canada.
- Now here’s the tricky part. The purchase of GIC account and depositing the tuition fees have to be done before a student applies for a Canadian student visa.
- When loan applicants approach banks with this requirement, many bank officials, due to their ignorance about the changing policies of international embassies and educational institutes, happen to deny issuing the loan amount for the same. Hence, please make it a point to ask your assigned loan manager whether they will be transferring the said amount through wire transfers.
Students who had applied for Canada education loan through WeMakeScholars did not face this problem as our financial officers have been at the core of many important decisions taken by our partner banks regarding education loans. Any issue comes in, our team can speak with the bank manager and sort it for you.
The process of buying a GIC account from a Canadian bank is as follows:
- Loan applicant opens an account with any of the Canadian banks mentioned above with the help of their lending bank. The online application form to open a GIC account is available on the official website of the partner banks mentioned above.
- They deposit CAD $10,000-$10,200 ($200 is the processing fee here) via wire transfer towards the purchase of a GIC account.
- On successful completion of the purchase, the student receives an online receipt, the print out of which has to be attached along with their visa application form.
The break up of the amount deposited by students in their GIC account is as follows:
- Out of the CAD $10,000, CAD $2000 is allotted to students as the set-up cost.
- From the remaining amount, students can withdraw CAD $667 every month for the next 12 months to spend towards other living expenses.
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.
On another note, there have been rumours that the amount to be submitted in the GIC account has been increased to CAD $20,000. There is no truth to this statement and students are advised to go through the official website of their lending banks or the Canadian high commission for such information.
Is GIC included in a Canada education loan? If not then how can it be included?
Now that you have read about how Canada GIC accounts work, it must be clear that the GIC amount is nothing but students’ living expenses for a year. This is automatically included in the education loan. So while calculating the total expenses, students need to multiply this GIC amount by the total duration of their course and accordingly apply for a loan. Pretty simple, right? Now that we have taken a look at the financial requirements to be fulfilled by students, let’s move on to understand the next major procedure in the Canada education loan process.
What are the Embassy’s Criteria for student visas?
Getting a Canadian visa without any hurdles is the next important step in the Canada education loan process.
The first step towards getting a student visa requires students to fulfill the criteria set by the Canadian embassy for loan applicants. As mentioned in the previous paragraphs, one of those requirements is to deposit the Canada GIC amount and to provide a receipt of payment of the first semester’s tuition fees.
Every student who wishes to study in Canada needs to deposit CAD 10,000 into their respective GIC accounts. When you convert this amount into INR, it comes close to INR 5 Lakhs. Similarly, on average, a student’s first-semester tuition fees amount to INR 5 Lakhs as well. So, in all, a student needs to arrange for at least INR 10 Lakhs before they even apply for a student visa. This point needs to be considered while applying for an education loan.
For those who are funding their higher education with the help of an education loan, a ‘pre-visa disbursement’ serves this purpose.
Pre-visa disbursement: As the name suggests, this is the loan amount disbursed by the lending banks to students before their visa is approved. This amount is required by students in order to purchase a GIC account and to pay at least one semester’s tuition fees to the university, which is a mandate set by the Canadian high commission.
Now those who are borrowing an education loan from NBFCs can get this disbursement without any hurdles. However, government banks generally hesitate in issuing this amount prior to the students’ visa approval without any guarantee.
Hence, it is important to ask your banking official whether they transfer the loan amount to the embassy approved Canadian bank accounts through a wire transfer, before applying for a loan. Those who have previously applied to nationalized banks through WeMakeScholars did not face this problem. Hence it is best advised that you approach these banks through our financial officers for education loans. This way, you can get your pre-visa disbursement without any problems. Speak with the WeMakeScholars financial officer now!
The Canada education loan timeline:
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 takes up more than a month’s time, it is recommended that you apply for an education loan as early as possible.
- Once you get an admission letter from your respective college/university, immediately apply for an education loan.
- It is recommended that you consider at least 1 weeks’ time for the GIC account related procedures and an additional 6-8 weeks for the visa process and then apply for the education loan. When it comes to the disbursement of education loans from lending banks, this process may also take its own sweet time.
- The loan processing takes about 18-20 days time if the student’s profile is considered to be a normal one by the lending bank. However, if the bank finds out any anomaly in the student’s profile, that can be a reason for an extended education loan process.
- Consider the following scenario for example. When a student’s co-applicant resides in a state other than the one where the student has applied for an education loan, then it becomes a multi-city case. In such scenarios, the student is required to coordinate with the co-applicant in order to get their loans disbursed in shorter periods. This can slightly delay the loan process further.
- So, in all, after considering all possible reasons and possibilities, we would recommend students to apply for an education loan at least a month and a half in advance. 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.
So that’s pretty much how Canada education loans work. 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 would recommend that you do a thorough study of the lending banks/financial companies before you decide on a particular lender. The most important point is to carefully go through their terms and conditions before deciding. At WeMakeScholars, our financial officers will be able to give you unbiased opinions about the terms and conditions of the various education loan providers in the market. Since the team has been a part of many decisions taken by most of the major banks who lend education loans, you can have a hassle free education loan process when you apply through us.
Do Stay tuned for our next article, which will tell you all about securing education loans for higher education in Australia. The Australian embassy has the most demanding financial criteria when it comes to student visas. So do keep a lookout for the upcoming article on the Australia education loan procedure.
Note: WeMakeScholars is an organization funded and supported by the Government of India that focuses on International Education finance. We are associated with 10+ public/Pvt banks/ NBFCs in India and help you get the best abroad education loan matching your profile. As this initiative is under the Digital India campaign, it’s at free of cost. The organization has vast experience dealing with students going to various abroad education destinations like the US, Canada, UK, Australia, Germany, Sweden, Italy, China, France among others