Making Tuition Free

 

If you make less than $30,600 a year as a independent person your tuition in British Columbia is free!

As a university graduate I know how difficult it can be to afford tuition and living costs on your own. I was lucky enough to get a casual position as a care aid while I was in school. When I finished my first year of the nursing BScN program I applied for licensing as a care aid. Where I live the first year of the BScN program is considered the equivalent education necessary for licensing as a care aid. I was able to work weekends as well as breaks such as summer and Christmas which happened to be when the unit was severely short staffed. This employment income paid for my living expenses. However, I was still not able to fully cover my tuition so I had to take student loans. Nursing is hard and requires a lot of free time to complete assignments, as a result I was not able to work enough to cover all my expenses.

When I had graduated the BScN program I realized my total tuition ended up being free.  When going to school the government (student aid bc) will give you money and lots of it provided you are low income (making less then $30,600 per year as of 2019).  As we know in the FIRE community $30,600 is a lot of money.  Generally you will get $1500 per semester in grants  automatically when you apply for student loans.

Student loans are great to pay for education as long as you don’t use the non grant portion. Instead take the non grant portion (loan portion) and either put it in a safety deposit, give it back to student loans or give it to a parent for safe keeping. When you are finished school take the money and pay off the student loan balance in one lump sum payment. Additionally, a little knowledge of taxes is useful. Your tuition is fully tax deductible at your marginal rate (or at your parents marginal rate). Combining the grants that low income students receive and the tax credit of tuition, the full cost of tuition becomes free.

So lets run through an example.

Lets say your tuition is $2200 for a 4 month semester (mine was very close to this number when I took the BScN program). When you apply for student loans you are automatically assessed for grants. If you make under $30,600 a year you will receive the maximum grant amount of $1500.  So now your tuition is only 700 a semester. Okay so how does this additional $700 a month get covered?

When you do your taxes you are able to carry forward your tuition amounts. These amounts can be carried forward or gifted to a parent or grandparent (up to $5,000). Lets say your tax bracket is 33% when you finish school. At a 33% tax bracket you would receive $726 back from you taxable employment income. So adding up amounts from the grants ($1500) plus tax rebate ($726) you would have $2,226 virtually covering all of the tuition.

If your parents are high income earners you could “gift” your parents a $5,000 tax credit. If your parents are willing they could gift you the money they save on taxes. So if they are in a 40% tax bracket they would save $2,000 and could gift this amount to you to help pay for tuition now instead of waiting until you are finished school to claim the tax credit at your marginal rate 

The key is to optimize what is available to you. I went to school with many people who were working 30 plus hours a week in tough jobs and did not want to take student loans. Many suffered and ended up failing out or getting low grades. By not taking student loans they were giving up $1,500 a semester in free money. Also because I was taking student loans a significant number of my loans was forgiven just for completing the degree. As well I received nursing specific grants as well. So don’t let the words student loans scare you. Just remember to only using the grant portion and save the loan portion to pay student aid back when you graduate.

 

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