Financial Dictionary

Amortization:
The amount of time over which your loan is spread and you are repaying it in small amounts. For instance, you could have an amortization of 10 years, and be making payments of a few hundred dollars every month so that you repay your loan, with interest, within the 10 years.

Bursary:
Money you get for your education that you usually don't have to repay. Bursaries are usually given out based on the financial need of students, in other words, the difference between how much they and their families can pay versus how much they need to spend on their education and reasonable living costs. Sometimes, the student's academic or other achievements are also considered when giving out bursaries. They can be given out by different levels of government, companies, organizations or universities. Students have to apply for them.

Canada Student Loans (also known as Federal Student Loans):
Depending on how much you and your family can contribute toward your education, you can get a loan from the federal, as well as your provincial, governments for your studies that usually have better repayment conditions than a loan through a bank. In all but Quebec, the Northwest Territories and Nunavut, you go through your provincial Student Assistance Offices, which administer your provincial and federal student loans together. In Quebec, the Northwest Territories and Nunavut, you apply separately for federal and provincial loans.

Canada Study Grants:
Financial aid for students with disabilities, students with dependants, high-need part-time students and women in certain doctoral studies. Study grants do not need to be repaid.

Credit Rating:
A ranking, based on an analysis of your financial history by a credit bureau, that gives a potential lender an idea of how likely you are to default on your loan. So, for instance, if you don't pay your credit card bill or loan repayment on time, this will give you a bad credit rating and will make it difficult if not impossible for you to get money for things you'll need in the future, like buying a car or getting a mortgage.

Debit card:
A card that lets you pay for things by electronically taking money out of your bank account. Unlike a credit card, you don't owe any money after your purchase.

Default:
If you don't make several regular repayments on your loan on time, it's considered in default. If you default on a loan, it can also give you a bad credit rating and you may get a collection agency after you, or the lender can take legal action to get the money back from you.

Education costs:
For the purpose of the Canada Student Loans program, this is the amount you need to pay for tuition (instruction), fees required by the university, books, and supplies.

Federal student loans:
See Canada student loans.

Financial need:
The student's need for financial aid to go to university. Generally, it is based on the expected contributions from students and/or their family, which are subtracted from educational expenses, such as tuition and books, and reasonable living expenses.

Grace Period:
A period of time after you graduate or stop being a full-time student (usually six months, unless you really can't repay and apply for relief on repaying) during which you don't have to repay your loan. But you do start building up interest on what you owe, so if you can, it's a good idea to start paying it off anyway.

Grant:
A grant, like a bursary, is money given to you for your education that doesn't have to be repaid. It's usually based on your proving financial need but can be given out for other reasons, such as if you belong to a particular group (such as people with disabilities), or for research on a particular topic. They can be offered by governments, universities, companies or organizations. Students have to apply for them.

Interest:
The fee the lender charges you for borrowing money, usually as a yearly percentage of what you have left to pay off. For instance, if your loan is $30,000 and your interest rate is set at 10%, you would be paying $3,000 a year on top of the $30,000. But once you start paying off the loan, the amount of interest you pay is less. So, if you pay off $5,000 of your loan, you're only paying 10% of $25,000, which is $2,500 interest on top of what you have left to pay off. If you paid off your loan over five years, you'd be paying $8,065 in interest on top of the $30,000. If you took longer to pay off your loan, you would pay more interest. (This is a simple example only. There are many factors that affect how much you will repay, including whether you choose a fixed or changing interest rate, and are spelled out in your loan contract.)

Line of credit:
A type of loan, where you are given a maximum amount of money that you could use, but you don't have to use it all and can use only as much as you need. You pay interest on top of the amount you use so the less you use, the less interest you pay. Many banks have special lines of credit for students that allow you to withdraw money without having to repay the principal until up to a year after graduating, though you would have to pay interest (but usually at better rates than other types of non-governmental loans). You may need a parent or other person with a good credit rating to co-sign your application.

Living Costs:
For the purposes of the Canada Student Loans Program, this is one of the things the government uses to calculate how much of a loan to give you. It includes shelter, food, electricity, telephone, local transportation, field trips, thesis preparation, return transportation, child care and miscellaneous costs. It depends on your living situation (location and family size), and the province or territory where you will be studying.

Loan:
Money that is lent to you that must be repaid, usually with interest. There are provincial and federal student loans, which depend on a student's financial need and where students don't have to start repaying until after finishing or stopping their studies, and loans from banks or other financial institutions, where students make monthly payments even while studying.

Minimum student contribution:
The minimum amount students are expected to put toward their education, which depends on factors like the minimum wage where you live, and average weekly work hours, minus pension plan contributions, Employment Insurance contributions and living costs.

Parental contribution:
The amount that parents of single dependent students are expected to contribute towards the costs of your education, which depends on factors like family income and size.

Principal:
The amount of a loan, not including the interest.

Provincial Student Assistance Office:
Where you go to get government student loans. In all but Quebec, the Northwest Territories and Nunavut, you go through your provincial Student Assistance Office for both your provincial student loan and your Canada student loan. In Quebec, the Northwest Territories and Nunavut, you apply separately for federal and provincial loans. You apply to the province where you live, even if you're moving to another province to go to university.

Provincial Student Loans:
Depending on how much you and your family can contribute toward your education, you can get a loan from the federal, as well as your provincial, governments for your studies that usually have better repayment conditions than a loan through a bank. You apply to your provincial Student Assistance Office.

RESP:
A Registered Education Savings Plan, which is any type of savings or investment registered with the government as money that will be used for a student's education after high school. It's usually set up by parents or family members when the future student is still a child and there are rules about when students have to use it and how much they get every year of their studies. Students have to pay tax on the RESP, but usually at low rates because of their low income.

Scholarships:
Money that doesn't have to be paid back that's given to students based on their grades or volunteer work or athletic ability or other requirements. There are many different kinds, most of which need to be applied for, that are given out by universities, companies or organizations, provinces and territories and the federal government to help with education costs. Usually, scholarships are not based on financial need.

Student Bank Loans:
A loan from a bank or other financial institution that usually charges a lower interest rate than other types of loans and may have a grace period. You may need a parent or other person with a good credit rating to co-sign your application.

Term:
The number of years during which the interest rate of a loan stays the same. For example, though your loan might last 10 years, it might have a term of 2 years where the interest rate is 8 per cent. After two years, you would get another interest rate, and so on.

Tuition:
A fee you pay for an institution for instruction which is often dependent on the faculty you choose. Fees vary from institution, province and program. Tuition fees are only one aspect of your expenses - there may be additional fees for residence, meal plans, athletics, health and safety services. As well, please look at the term that the tuition covers - it may be for one year or it could before a shorter duration. Please review carefully.