5 ways to finance going back to school
Whether you're switching careers or looking for a higher-paying profession, you need money to make it happen. Here are five ways to secure financing.
Whatever your reason is for going back to school, it's a good one. Whether you're switching careers, seeking a more rewarding or stimulating job, looking to leave an industry where the job prospects aren't great, or simply longing to follow your dreams, you need to find a way to finance it. The good news is that there are several avenues available.
Whether through a financial assistance program or self-financing, there are several options to choose from, depending on your financial situation. Here are five.
01 Self-financing with the LLP
Simply put, the Lifelong Learning Plan (LLP) is a program that allows you to withdraw funds from your RRSP to finance going back to school, without having to pay tax. It's a loan that you take out from your retirement savings for educational or vocational training.
To access itAttention, this link will open a new tab., you must meet the following requirements:
- Have an RRSP.
- Live in Canada.
- Be enrolled in a qualifying educational program or have a letter of acceptance by March of the following year.
- Be a full-time student at a designatedAttention, this link will open a new tab. or certifiedAttention, this link will open a new tab. educational institution.
- Be enrolled in a program that requires a minimum of 10 hours per week on courses and work, for a minimum of 3 consecutive months.
In addition to CEGEPs and universities, numerous technical and vocational training schools are also designated, so that you have more flexibility in choosing where you want to study.
The LLP allows you to withdraw a maximum of $10,000 per year, up to $20,000 in total for a period of four years.
How and when to repay your LLP
As with the Home Buyers' Plan (HBP), you have to repay the amounts you withdraw from your RRSP. With the LLP, your repayment period starts two years after the end of your last withdrawal or five years after your first withdrawal, as the case may be.
Take Rebecka, who made LLP withdrawals from 2015 to 2018. Her studies continued until 2020, but she was only a qualifying student up to the 2018 taxation year. As such, Rebecka will have to start repaying her LLP in 2020, as it is the fifth year since she first withdrew funds from her RRSP.
Jonathan made an LLP withdrawal in 2017 for a program he enrolled in that same year. His studies spanned five months—during which time he was considered a full-time student—in 2018. He completed his studies in 2018 and is no longer considered a qualifying student for subsequent years. This means that Jonathan has to start repaying his LLP in 2020, two years after his last withdrawal.
You have up to 10 years to make repayments, at a rate of 10 percent of the amount borrowed per year, with some exceptions. To simplify things, the Canada Revenue Agency has a questionnaireAttention, this link will open a new tab. that can help you figure out when to start your repayments.
Go back to school sooner with the Fonds de solidarité FTQ
Update your skills or get a fresh start—with the LLP, going back to school costs less. This is especially true when you finance your studies with the Fonds de solidarité FTQ. Thanks to the additional 30 percent* in tax savings provided by the RRSP+, you can save money faster and easier, making your dreams a reality.
Note: You must have held shares with the Fonds for more than two years if you want to redeem them. Check out our FAQ section to find out all the conditions that apply when you withdraw funds from your RRSP+ with the Fonds under the LLP.
The LLP can be used to finance going back to school for you or your spouse, but not your children. If you move outside Canada, you must pay the remaining balance within 60 days.
02 Loans and bursaries, available at any age
The Loans and BursariesAttention, this link will open a new tab. Program can be very useful if you're thinking of switching careers and need to go back to school full-time. As far as the eligibility requirements go, age doesn't matter. What does matter is your income and other factors, such as your marital status, if you live with your parents, or if have a dependent child.
When it comes to loans and bursaries, the big question is always how much you will get. Keep in mind that the calculation made by Aide financière aux études (AFE) is based on your previous income and that of your family, if you still live with your parents.
To find out if you qualify and how much money you could receive, use the government's interactive assessment simulatorAttention, this link will open a new tab.. The simulator will calculate the total amount you could get and indicate whether you will receive it as a loan or a bursary.
You'll have to repay your loan at the end of your studies, either immediately afterwards or within six months.
03 Emploi-Québec, to help you update your skills
If you're not eligible for the Loans and Bursaries Program, you might be able to take advantage of Emploi-Québec's labour force training programAttention, this link will open a new tab.. This program is specifically for workers who are at risk of being unemployed for a prolonged period of time due to a lack of training.
Whether you want to brush up on your literacy, language, or professional skills, the assistance provided may be spread over a period of up to three years. Funds from the program may be used to cover training costs, childcare and transportation costs, and accommodation expenses if your training requires you to travel.
04 Ma place au soleil, a back-to-school program for young parents
Since 2000, Ma place au soleilAttention, this link will open a new tab. has enabled many young parents to finish high school and eventually earn a diploma from a vocational or technical training school.
The program is aimed at young parents under the age of 25 who have not completed high school. What makes this financial assistance program particularly appealing is that, in addition to covering training costs (registration and school materials), it can also provide reimbursement for childcare and transportation expenses.
Registration for this program is overseen by local employment centresAttention, this link will open a new tab..
05 Employment Insurance, a potential, but limited, solution
No one wants it to happen, but losing your job is a reality that you need to be prepared for. In general, workers can find a new job within a reasonable amount of time. But if you work in a seasonal, declining, or low-placement industry, the period of unemployment may be longer.
During this period, if you're receiving EI benefits, you might be able to use this time to go back to school. The Government of CanadaAttention, this link will open a new tab. explains how it works:
"As a general rule, to be entitled to Employment Insurance (EI) regular benefitsAttention, this link will open a new tab. or fishing benefitsAttention, this link will open a new tab., you must show that you are unemployed, able and willing to work and actively looking for suitable employmentAttention, this link will open a new tab.. If you decide on your own to take training, you must declare your trainingAttention, this link will open a new tab. and prove that you are still able and willing to work and are continuing to look for a job to continue receiving EI benefits. You must be ready to make arrangements to work if you receive a job offer, and to adjust or cancel your training plans if necessary."
The bottom line is that the priority is getting people back to work. You can to study while you're on EI, but it must not interfere with your availability or ability to work.
Regardless of the financing option you choose, it may be a good idea to talk to an accountant or financial advisor to help you plan your next steps and anticipate any repayments you may have to make.
Best of luck heading back to school!