Recently, I received a call from my friend Joey, who lives in the Gaspésie region of Quebec, informing me of his decision to return to university to pursue a master’s degree. Joey has been working in Gaspésie for about seven years as a technician. During our conversation, he explained that he will need to put his job on hold, as the program he has selected is offered exclusively on a full-time basis. As a result, it is not possible for him to pursue his studies while continuing to work.
Without hesitation, I strongly encouraged him to continue his education, as—whether one likes it or not—higher education consistently increases an individual’s market value. After my conversation with Joey, my financial instincts immediately came to the fore. I found myself asking the following question: given that he is leaving his job, how can he finance his studies, which, it should be recalled, amount to several thousand dollars?
It is this question that I seek to address in this article by examining the potential financing options available for such a project.
Disclaimer
While I try to ensure the accuracy of the information contained on this blog, I do not guarantee it. I’m not a licensed financial adviser nor a lawyer, so take this blog only as an educational resource and my personal thoughts and opinions. No liability is assumed for losses or disappointments due to the information provided. It is important that you always exercise your own judgement when making decisions that can impact your wallet, and your life!
I. Students Loans and Grants
Canada’s student loans and grants program is designed to support students with modest incomes. Financial assistance is provided jointly by the federal and provincial governments. For information on the federal component, please consult the following link: https://www.canada.ca/en/services/benefits/education/student-aid/grants-loans.html
For details regarding the provincial component, individuals should contact their respective provincial authorities.
The amounts Joey might receive under this program, should he choose to apply, would be determined based on his prior income. Given that Joey earned a relatively high salary with his former employer, it is highly likely that relying on student loans and grants would not be a particularly effective option. In fact, the assistance available to him would likely be so limited that it might not even cover the cost of textbooks.
II. Working Part-Time Despite Everything?
During our conversation, Joey mentioned that his employer did not offer him the option of working part-time. However, given his extensive professional experience, an alternative would be for him to offer his services as a consultant, either online or in person, while pursuing his studies. This approach would allow him to seek contracts independently and benefit from greater flexibility in managing his work schedule.
On a more personal note, I am not a strong proponent of debt or credit. That said, if Joey is comfortable with this approach, another option would be to secure a standard line of credit before leaving his position. Banks are generally unwilling to lend to individuals without income or a solid financial profile. In practice, credit is best obtained when one does not immediately need it.
III. The Lifelong Learning Plan
The Lifelong Learning Plan (LLP) may, in fact, be the option that deserves priority consideration. The LLP is a program embedded within the Registered Retirement Savings Plan (RRSP) framework. It is designed to support skills development by allowing taxpayers to temporarily withdraw funds from their RRSPs to finance full-time education or training, without triggering immediate taxation on the withdrawal.
A. Eligibility Criteria
To be eligible for the LLP, an individual must meet the following conditions:
- Hold an RRSP;
- Be a resident of Canada;
- Be enrolled as a full-time student in an eligible educational or training program;
- Be registered in a course that lasts at least three consecutive months and requires a minimum commitment of 10 hours per week to coursework or related activities;
- Attend a recognized educational institution.
B. The LLP and Taxation
The LLP allows individuals to withdraw up to $10,000 per year, to a maximum cumulative amount of $20,000, from their RRSPs on a tax-free basis. All withdrawals must be made within five (5) years of the initial LLP withdrawal. Contributions must have been made to the RRSP at least 90 days prior to withdrawal to be eligible. No supporting documentation is required for the expenses, and individuals may therefore use the withdrawn funds at their discretion, provided they meet the eligibility requirements of the program.
Conclusion
In conclusion, returning to school is a significant investment that requires careful financial planning. By thoughtfully assessing available options—such as limited public assistance, flexible work arrangements, access to credit, and tools like the Lifelong Learning Plan—individuals can structure a financing strategy that supports their educational goals while maintaining long-term financial stability.
