If you make less than $30,600 a year as an independent person your tuition in British Columbia is free! By using what is available to all of us legally we can apply FIRE principles to make post secondary tuition essentially free.
Here’s how to make tuition free:
Recently the BC government announced it will give every independent student, who makes less than $30,600 a year, $1500 a semester in non-repayable grants (literally free money). The catch is you have to take out student loans. The good news is you do not have to spend the loan portion. Just save the loan portion (stick it in a safety deposit box or with parents) and pay it back when you are done school.
Furthermore, the full tuition cost is a tax deductible expense (in other words a non-refundable tax credit). Your tuition is fully tax deductible at your marginal rate (or at your parents or grandparents marginal tax rate). Combining the grants that “low” income students receive and the tax credit from the tuition amounts, 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 to be applied to your marginal tax rate or gifted to a parent or grandparent (up to $5,000 per year). Lets say your tax bracket is 33% when you finish school and have entered the work force. At a 33% tax bracket you would receive a $726 tax refund. So adding up amounts from the grants ($1500) plus tax credit ($726) you would have $2,226, virtually covering all of the tuition. But it can get a bit better.
If your parents are high income earners you could “gift” your parents a $5,000 tax credit using this form. If your parents are willing they could gift you the money they save on their taxes from your tax credit. So if they are in a 40% tax bracket they would save $2,000 ($5,000 x 40%) and could gift this amount to you now to help pay for tuition, instead of waiting until you are finished school and working to claim the tax credit at your marginal rate.
But it gets even better. By having government student loans, you immediately qualify for private grants and scholarships (many grants are given to student aid recipients first before anybody else). As a personal example, I received nursing specific grants and scholarships simply because I was taking student loans. Additionally, because I was taking government student loans, much of my loan was forgiven just for completing the degree.
So don’t let the words “student loans” scare you. Just remember to only use the grant portion and save the loan portion to pay student aid back when you graduate. 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 (because they didn’t understand what was available to them). Many suffered and ended up failing out or getting low grades because they had to work so much. By not taking student loans they were giving up $1,500 a semester in free money as well as additional grants and scholarships. Don’t be like them!