What Is A Student GIC And How Does It Work?

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Published: Feb 21, 2024, 12:21pm

Aaron Broverman
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Effective January 1, 2024, Immigration, Refugees and Citizenship Canada (IRCC) more than doubled the financial cost required for international students to study abroad in Canada each year, resulting in mixed reactions from student representatives.

The previous amount of funds students were required to have individually before this change was $10,000 per year—not including the cost of tuition and travel. Now the IRCC has set the amount to $20,635 to “help prevent student vulnerability and exploitation” and so that “international students understand the true cost of living here.” as said by Minister of IRCC MarcMiller in a press release.

This means that If you or a family member is considering coming to Canada to study, specifically through the Student Direct Stream Program, the immigrating student will require a student GIC from an eligible financial institution in the amount of $20,635 to qualify. Still, what is a student GIC, how do you get one and why do international students need a GIC in particular?

What Is a Student GIC?

A student GIC is a guaranteed investment certificate offered specifically to international students seeking to study in Canada under the Student Direct Stream Program, which is Canada’s expedited study permit application process.

Student GICs have a set minimum investment amount of $20,635—set by IRCC—to match set guidelines regarding the minimum cost of living expenses for international students. A specific amount is redeemed each month, including the interest accrued over that month, in accordance with the lending institution’s program schedule, so students can cover their expenses.

Why Open a Student GIC?

Though international students who apply to study in Canada are not required to have a student GIC to obtain a study permit, they do miss out on utilizing our Student Direct Stream Program (SDS) if they don’t. The SDS is designed to get students their study permit much faster than normal with a processing time of 20 calendar days. Student GICs also come with additional perks, such as free chequing or savings accounts, which may not be available to international students not enrolled in the SDS.

How Does a Student GIC Work?

Each financial institution that carries student GICs will differ in its offering and product details, but here’s how student GICs work in general:

  1. An applicable student sends a wire transfer to the lending institution, in the amount of $20,635 or more, plus any applicable fees.
  2. The financial institution deposits the funds into an investment account.
  3. When the student arrives in Canada, they meet with a representative and the money is split into two different financial products: a lump sum of around $4,000 (plus interest) is put into a chequing account for immediate use and the remaining portion is put into a one-year student GIC.
  4. Once per month the financial institution will redeem a set amount (around $1,600) plus any applicable interest), which is then deposited into the student’s chequing account for their use. This will be done for 11 months until the GIC is fully redeemed.

Who Is Eligible for a Student GIC?

In order to be eligible for a student GIC, you must meet the following requirements*:

  • Be a legal resident of one of the following countries: Antigua and Barbuda, Brazil, China, Colombia, Costa Rica, India, Morocco, Pakistan, Peru , Philippines, Senegal, Saint Vincent and the Grenadines, Trinidad and Tobago or Vietnam
  • Be at least 14 or 18 years of age
  • Plan to come to Canada as an international student
  • Have an acceptance letter from a post-secondary designated learning institution
  • Be opening an account only for yourself, not on behalf of another person
  • Plan to arrive in Canada within 12 months of applying

*Note: These requirements may differ slightly for certain participating financial institutions.

What Do You Need to Apply for a Student GIC?

When completing the initial application for a student GIC, you will need a valid passport, your letter of admission from the school you will be studying at and a few general personal details (e.g. employment status and details, legal name, address and tax identification number).

Once you arrive in Canada, you’ll need to head to a branch of the bank you applied with, to make your first GIC redemption and complete the entire application process. To complete this step, you’ll need your passport, proof of enrollment and a study permit from the Government of Canada. If you are studying in Quebec, you will also need a Quebec Acceptance Certificate (QAC).

Pros and Cons of a Student GIC

Student GICs come with a variety of advantages and disadvantages to be aware of before applying.

Pros

  • Gives you access to the Student Direct Stream Program
  • Sets up a financial safety net for you while you are abroad
  • Gives you a guaranteed source of income
  • Provides a solid rate of return if interest rates are high

Cons

  • Investment amount required is financially unreachable for some international students
  • Only available to students in certain countries
  • Funds may not be accessible until the beginning of each month
  • Low rate of return if interest rates are low

Where Can You Get a Student GIC?

The Government of Canada has recognized specific financial institutions that may offer student GICs which meet the requirements of the SDS.

  • Bank of China (Canada)
  • Bank of Montreal (BMO)
  • Scotiabank
    • Bank of Xi’an Co. Ltd. – in partnership with Scotiabank China Everbright Bank Co. Ltd. – in partnership with Scotiabank
  • Canadian Imperial Bank of Commerce (CIBC)
  • Fédération des caisses Desjardins du Québec (Desjardins)
  • Habib Canadian Bank
  • ICICI Bank Canada
  • Industrial and Commercial Bank of China (Canada)
  • National Bank of Canada
  • Royal Bank of Canada (RBC)
  • SBI Canada Bank
  • Toronto-Dominion Bank
    (TD Bank)

Understand that locating an institution that issues eligible student GICs is the responsibility of the student, according to the government.

These financial institutions offer student GICs that have interest rates that follow the prime lending rate, which in turn are influenced by the Bank of Canada’s overnight interest rate. As a result, each bank’s interest rates may be similar, but it’s important to review each institution and the GICs they offer carefully. Plus, each institution may have different foreign exchange rates as well.

A number of banks of the list above offer free chequing or savings accounts with their student GICs while the account holder is a student, with some offering a $1,000 unsecured credit card as part of their package.

Also, if you are planning on studying in Quebec, take special care to confirm your chosen institution supports student GICs in the province, as some do not.

Bottom Line

Student GICs, while a requirement for the Student Direct Stream Program, are costly and a big financial decision, especially when you are coming to a new country. Make sure to weigh the pros of the SDS program against the costs of a student GIC compared to entering Canada as a student through the traditional study program. While student GICs are a great source of guaranteed income—especially with our current interest rates—they may not be ideal for every international student.

Frequently Asked Questions (FAQ)

What is a student GIC?

Like any other GIC, a student GIC is a guaranteed investment certificate issued by a bank, in exchange for funds held for a specified period of time. Student GICs are issued for one year and are partially redeemed once per month, including an initial lump sum redemption upon the student’s arrival into Canada. Student GICs are also a requirement to be eligible for Canada’s Student Direct Stream Program.

The idea behind student GICs is that international students studying in Canada will have a guaranteed source of funds while they study here, as a means of meeting their costs of living.

What bank is best for a student GIC?

Deciding which bank is the best for opening your student GIC will require analyzing multiple factors including GIC rates, account fees, foreign exchange fees, customer service, their GIC redemption schedule and a host of other factors. It’s best to review multiple banks across the country before making a decision, so you can be as informed as possible.

How much is a student GIC in Canada?

As of January 1, 2024, the minimum amount a student GIC can be issued for is $20,635—plus the bank’s program fee. Quebec has different requirements, which can be found on their applicable government website.

What is the GIC amount for students in 2024?

As of January 1, 2024, the student GIC amount required for students to study in Canada was increased to $20,635. This number was previously $10,000, and had not been adjusted since 2015. The Government of Canada indicated that this new income requirement will be adjusted on a yearly basis.

Note that Quebec has their own program for student GIC requirements, with $15,078 being the minimum amount for a student over the age of 18.

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