Line of Credit

Overview

Canadian banks have student lines of credit for Canadians studying internationally. Most students will be required to have a co-signer, so be prepared to ask a family member to act as a guarantor.

CIBC – No caps—based on your financial situation
RBC – up to $275,000
BMO – $200,000
TD – $275,000
National Bank of Canada – $200,000

About Student Line of Credit

It is important to keep an eye on the exchange rates as you can save thousands of dollars by watching. Even a fluctuation of 1% – 2% can mean significant savings when you consider the total cost of your degree.

Loan – With a bank loan, you will be paying interest on the full amount that is borrowed. For example, if you are given a loan of $50,000, you will pay interest on $50,000. Your payment amounts will also include the principal (called P&I). This may be a better option for you if you have a big chunk of savings and have the capacity to make payments while you are in school.

Line of Credit (LoC) – With a line of credit, you will only pay interest on the money you borrow. For example, if you have a $50,000 line of credit and you use $20,000, you will pay interest on the $20,000 until your LoC converts to a loan (at the end of your studies).

Student Loan – A student loan is only funded by the government (provincial and/or federal). You will need to apply through your province (OSAP, BC Student Aid, etc.). With this money, you will not need to repay until you have completed school.

Canadian Banks

Canadian Bank Financing Options

I have an offer. Now what?

First, some background information to ensure we’re on the same page.

Canadian banks have student lines of credit and loans for Canadians studying internationally. In most cases, students will be approved for a certain amount and will use it through their degree. Most students will get a Professional Student Line of Credit, which is a line of credit (interest only) during your study that converts to a loan (principal and interest) once you graduate.

Do Your Options Make “Cents”?

We advise all students to shop around to see what options are available to them before settling on a bank. Specifically, you’ll want to investigate how much money you are eligible for and what the interest rates are.

When going to the bank, here are some questions to consider:

  • What credit options are available (loan or line of credit)?
  • What are the repayment terms? Is there a grace period after graduation?
  • When do I need to start paying interest? What about the principal?
  • Are there any constraints on withdrawals? Do I have access to all money right away?
  • My degree is 4 years. Do I need to do anything throughout my studies?
  • Do I need to have a cosigner?
  • What are the interest rates? How low will the bank go? How long do these interest rates last?
  • Whom do I speak with if I have any issues?

Nearly all students will be required to have a Canadian resident as a cosigner(s), so be prepared to ask a family member to act as a guarantor. Beginning in 2018 and for CIBC specifically, cosigners need to have an existing relationship with the bank.

All amounts listed from Canadian banks will be in Canadian dollars, and you will be paying your costs in Australia in Australian dollars, so when you work out estimated expenses and budgets, remember to factor in the (constantly fluctuating) exchange rate!  What is the dollar at now?

If most of a student’s funding is going to be through the bank, we advise students to get money from a government student loan first, then a line of credit. With student loans, there may be grants and it will not need to be repaid until after the studies are complete.

What to Bring to the Bank?

Once you have your bank appointment, they will advise on what documents you should bring to your meeting. Usually, they tend to ask for

  • identification (passport, driver’s licence);
  • your Offer letter and/or Confirmation of Enrolment;
  • proof of employment – T4, statement (if applicable);
  • a list of your financial resources (RESP, TFSA, government funding, etc.);
  • a cosigner – they will also need to bring identification, proof of employment (paystubs and T4).

Know your rights: https://www.canada.ca/en/financial-consumer-agency/services/loans/student-lines-credit.html

Before going to the bank, look on their website to see if there is anything further they recommend you bring.

 

Banking Options

“Cheque” your Options!

Below are some of the main banks that offer student financing options. OzTREKK does not recommend one financial institution over another. We recommend that you research and compare banks—especially loan amounts, interest rates, and repayment terms. A critical point of differentiation will be the competitiveness of the bank’s interest rate for your student line of credit. Some banks set their student interest rates at 0.5% above the bank’s prime rate, while others set it at 1.0% above prime. Over the course of your degree, even a point (or percentage difference) can result in a few thousand dollars’ difference.

Other banks may increase the variance rate above prime because you are a Canadian studying internationally. Pay close attention to the various interest rates, whether that rate applies each year you have the financing, and make sure you ask how low the bank will go!

#OZTREKKTip: Start your conversations with the banks early to make sure studying in Australia is a feasible option for you. You won’t be able to complete the application until you have an offer, but you can start comparing your options and discussing with your cosigner.

Student Loan vs Bank Loan vs Student Line of Credit

Loan – With a bank loan, you will be paying interest on the full amount that is borrowed. For example, if you are given a loan of $50,000, you will pay interest on $50,000. Your payment amounts will also include the principal (called P&I). This may be a better option for you if you have a big chunk of savings and have the capacity to make payments while you are in school.

Line of Credit (LoC) – With a line of credit, you will only pay interest on the money you borrow. For example, if you have a $50,000 line of credit and you use $20,000, you will pay interest on the $20,000 until your LoC converts to a loan (at the end of your studies).

Student Loan – A student loan is only funded by the government (provincial and/or federal). You will need to apply through your province (OSAP, BC Student Aid, etc.). With this money, you will not need to repay until you have completed school.

If most of a student’s funding is going to be through the bank, we advise students to get money from a government student loan first, then a line of credit. With student loans, there may be grants and it will not need to be repaid until after the studies are complete.

What to Bring to the Bank?

Once you have your bank appointment, they will advise on what documents you should bring to your meeting. Usually, they tend to ask for

  • identification (passport, driver’s licence);
  • your Offer letter and/or Confirmation of Enrolment;
  • proof of employment – T4, statement (if applicable);
  • a list of your financial resources (RESP, TFSA, government funding, etc.);
  • a cosigner – they will also need to bring identification, proof of employment (paystubs and T4).

Know your rights.

Before going to the bank, look on their website to see if there is anything further they recommend you bring.

FAQs

How do students usually fund their studies?
It is important to determine if you are financially equipped to study in Australia. You will need to have funding from a bank loan/line of credit, personal savings, a provincial student loan and typically support from your family. Yearly tuition can be anywhere from $30,000 AUD to $100,000 AUD depending on the program and the cost of living anywhere from $25,000 to $35,000 AUD depending on where you are living and your lifestyle.

Also, it is never too early to reach out to the bank to see if Australia is a viable option for you. Once you start applying through OzTREKK, it is beneficial to speak with a representative at the bank (or a few banks) to see if you would qualify for a line of credit should you receive an offer. Speak with your friends and family members to make sure you have someone willing to be a co-signor when the time comes.

Will I need a cosigner?
Yes. If you are applying for a student line of credit you will need a cosigner. Your cosigner will need to be a Canadian resident who is staying in Canada. For ATB specifically, they will need to be an Alberta resident. For CIBC specifically, they will need to already have a diverse portfolio with CIBC.

What is the cosigner for?
The banks want to make sure if you choose not to return to Canada, that your debts are still being paid. Banks are trying to reduce the risk as much as they can. The bank will assess your cosigner’s income capacity and their assets and resources to make sure they can take over payments if needed. Should you skip out on paying your credit line, your cosigner will be responsible for that debt. Make sure your cosigner understands this before signing.