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How Canada's Student loan plan Works.

Government payment Guarantees, Banks and Credit Unions are lenders, Eligibility and Qualifications.

Under Canada Student Loan Act, the Canadian government guarantees student loans to University students who meet certain conditions. These loans can be made by Commercial Banks and Credit Unions to students.

The Canadian Government guarantees the lenders against loss of principle and interest and if the borrower dies, the Government will pay the balance he or she has not completed in their loan.

The Government uses the lenders as collection agents to collect delinquent loans but also controls how much interest and fees can be charged to the borrower. These loans have lower interests than normal loans and run on a longer term.

Borrowers are eligible to borrow a set limit of maximum amount every year and up to a grand total of a certain amount for all years they are in college. These amounts vary every year and one has to check with their colleges to see what is the maximum amount they can borrow on a Government guaranteed student loan.

The Student borrower is not required to make any payments while they are in college and six months after graduation. During this period, the Government will pay the interest at no cost to the borrower.

After the student graduates, the loan is consolidated and the borrower will start paying interest on the total loan and also make monthly payments on the principal. This payment period is spread out to between five to ten years.

To be eligible for these student loans, one must be a full time student in college, must be a Canadian Citizen, or have lived in Canada for at least one year and intend to live in Canada on Completion of his/her studies.

There is no age restriction. One can be a minor (under 18 years) but need to have attained enough qualifications to be enrolled in college and should be in need of the money to pay for his/her college.