A professional student line of credit is designed for post-secondary students studying in an accredited professional education program.
Professional student lines of credit are typically the domain of top-tier banks and credit unions.
The reason is that students require affordable financing; high interest rates are unreasonable and impractical for them.
Smaller financial institutions and private lenders are wary of extending credit to students with little income and a limited credit history unless they can charge a high rate.
Conversely, traditional financial institutions can bear this risk and justify charging lower rates.
Here are the main financial institutions that offer professional student lines of credit:
- Bank of Montreal (BMO): Up to $150,000 for Graduate Programs and up to $350,000 for Medical or Dental Students.
- TD Bank: Up to $350,00 for Medical and Dental students, $150,000 for Law students, $125,000 for MBA program and $80,000 for graduate programs. For other programs and limits visit TD.
- Scotiabank: Up to $375,000
- Royal Bank of Canada: Up to $350,000 for Medical or Dental Students and up to $200,000 for Professional Studies.
- CIBC: Up to $350,000 for Medical or Dental Students, up to $140,000 for Chiropractic Medicine, $125,000 for Optometry, MBA and Pharmacy Programs and $100,000 for Law. Full list of programs at CIBC.com.
Examples of professional programs are law, accounting, dentistry, and medicine.
Students enrolled in an MBA program also qualify as do those pursuing their Master’s degree or Ph.D.
A line of credit provides these students with the means to finance the high costs of these educational programs, which can easily reach six figures.
They can borrow funds through their line of credit to cover the cost of tuition, textbooks, supplies, living expenses, and other schooling-related expenses.
Financial institutions offer professional student lines of credit to eligible individuals with a good credit history.
The interest rates that accompany these credit products are typically much lower than a regular line of credit, typically around the prime rate + 1%.
The rates vary by lender and professional education program that the student enrolls in.
To apply for a professional student line of credit, you need to choose a financial institution that fits your needs.
An advisor from a local branch will guide you through the process in person, online, or over the phone.
You’ll need to bring with you a few documents to complete your application, such as photo identification and pay stub.
How Much Can I Borrow?
Each financial institution sets different credit limits on professional student lines of credit.
Furthermore, the amount you can borrow depends on factors like the program you enroll in and whether you’re a full-time or part-time student.
It’s not uncommon for traditional lenders (like the Big Five Banks) to offer a spending limit between $80,000 and $125,000 for the duration of your program.
For programs with an exceedingly high price tag, such as medicine, dentistry, and law, it’s possible to access well over $300,000 throughout the entire program, including up to $100,000 in your first year alone.
What Do I Need to Apply?
Before you begin the application process, you’ll need to make sure you’ve gathered the proper documentation, which includes:
- Government-issued photo identification (driver’s license, passport, etc.)
- Recent pay stub or income tax return from the last two years (with a Notice of Assessment) for self-employment income
- Proof of enrollment in an eligible professional study program
To qualify for a professional student line of credit, you may need to demonstrate a positive credit history; if you lack one, you may need to rely on a co-signer to help get your application approved.
Professional Student Line of Credit vs. Regular Line of Credit
A professional student line of credit and regular line of credit both serve the same purpose: to enable an individual to borrow the funds they need at any time, up to the credit limit.
In addition, both line of credit types are variable-rate products, unsecured, and charge interest only on the funds borrowed.
The primary difference between the two accounts is that a student line of credit is meant strictly to pay for expenses incurred while studying at a post-secondary institute.
A regular line of credit, on the other hand, provides maximum flexibility – you can borrow funds to finance anything you wish.
Professional student lines of credit charge lower interest rates than those on a regular line of credit.
They also offer more flexible repayment terms, such as allowing you to pay interest only while you’re in school and for up to 12 to 24 months after graduation.
Regular lines of credit generally have stricter repayment terms.
Did You Know?
You have ample time to pay off the balance owing on a professional student line of credit – sometimes as much as 25 years.
Frequently Asked Questions
- What is the interest rate on a student line of credit?
Depending on the credit limit size, post-secondary program, and other factors, lenders usually charge the prime rate + a markup usually between 0.25% and 1.00%.
- Can international students get a line of credit?
Yes, international students may obtain a student line of credit for regular undergraduate programs and professional programs, such as law and medicine. A qualified Canadian co-signer is a standard prerequisite for international applications.
However, certain financial institutions require Canadian citizenship or permanent residency as part of their eligibility criteria (especially for professional educational programs), which disqualifies international students.