While Canadian medical schools are generally less expensive than those in the U.S., the total cost of pursuing a medical degree can far exceed $100,000 when you include non-education-related expenses. For many individuals, the cost of medical school can act as a financial burden. If you can’t secure enough funding through student loans, scholarships, and bursaries, a medical student line of credit can act as a potential solution to fill in the financial gaps.
Let’s dive into what a medical student line of credit is and how it can help ease the financial burden of medical school.
Key Points
- A medical student line of credit provides high borrowing limits with interest-only payments during school and residency.
- Big banks offer similar programs with various first-year access limits, interest rates, and flexibility features.
- Eligibility typically requires full-time enrollment and supporting documents.
- Alternatives include government loans, scholarships, grants, or private loans.
What Is A Medical Student Line Of Credit?
A medical student line of credit lets you repeatedly borrow money up to a specific limit. It works somewhat like a credit card. You can borrow, repay, and then borrow again up to your maximum credit limit.
You can use a line of credit to help fund the cost of medical school, including tuition, living expenses, books, and more.
Learn more: Guide: Line Of Credit
How Does A Medical Student Line Of Credit Work?
Medical student lines of credit are developed specifically for medical students. They come with very high limits, running from $350,000 to $400,000 for the length of your program.
Students are offered a preferred variable interest rate and are only responsible for making interest payments while in school. Principal payments generally start 24 months after leaving school or a residency program.
With a student line of credit, you apply once and then have access to your funds throughout your program. There are limits on how much you can access during the first year. For example, with BMO, you can access up to $95,000 in your first year, and with TD Bank, you can access up to $100,000.
| Note: A medical student line of credit differs from a student loan in several ways: – It’s offered by banks, and typically has higher borrowing limits. – Interest is only charged on what you use, but it starts accruing immediately, which is starkly different to government student loans, which generally defer interest while you’re in school. – Medical lines of credit are not eligible for the Canada Student Loan forgiveness program. |
What Are The Eligibility Requirements For A Medical Student Line Of Credit?
Before applying for a medical student line of credit, be sure you understand the eligibility criteria first.
Who Can Apply?
To apply for a medical student line of credit in Canada, you must meet the following basic requirements:
- Be a Canadian citizen or permanent resident.
- Be enrolled as a full-time medical student at a recognized Canadian institution.
Required Documents
The exact documents you need can vary between lenders, but commonly required documents include:
- Proof of enrollment in school
- Government-issued ID
- An estimate of your education costs
- Proof of annual income
Can You Get A Medical Line Of Credit With Bad Credit?
Most banks require a minimum credit score, but if yours is low, you may still qualify with a cosigner. A cosigner is someone who is willing to take financial responsibility for your payments if you default on your line of credit.
If you can’t include a cosigner, you can look into a regular line of credit from a private lender. Some private lenders have more flexible qualification criteria, making it easier to get a line of credit with a bad score. However, lenders will typically charge a higher interest rate to account for the added risk.
Learn more: Can You Get A Line Of Credit If You Have Bad Credit In Canada?
Comparing Major Canadian Banks’ Medical Student Lines of Credit
Here’s an overview of medical student lines of credit offered by some of the big banks in Canada.
BMO Medical Student Line of Credit
BMO offers a student line of credit for medical students who are pursuing an MD degree and dental students.
- Credit Limit: Borrow up to $350,000; access up to $95,000 in the first year.
- Interest Rate: Variable interest rate based on prime rate minus 0.25%.
- Features:
- Pay interest on what you borrow.
- No annual or monthly fees.
- Interest-only payment while in school and for two years after graduation.
- Eligibility:
- Enrolled in an accredited medical or dental program.
- Canadian citizen or permanent resident.
RBC Medical Student Line of Credit
RBC also offers a line of credit available to medical and dental students.
- Credit limit: Borrow up to $350,000; Access up to $100,000 in the first year.
- Interest rate: RBC prime rate minus 0.25% with RBC Healthcare Advantage.
- Features:
- No cosigner required for most applicants.
- No need to reapply after completing residency.
- Eligibility:
- Students need to confirm they are enrolled in an eligible Canadian medical or dental program.
- Residents require a letter of employment or enrollment from the residency, hospital, or the Canadian Medical Resident Program.
Scotiabank Medical Student Line of Credit
Scotia offers a professional line of credit for medical students and residents.
- Credit limit. Borrow up to $400,000.
- Interest rate. Scotiabank prime rate, minus 0.25%.
- Features.
- Option to convert a professional line of credit to a personal revolving line of credit, or a business line of credit, when you finish school or your residency.
- No monthly or annual fees.
- Eligibility.
- Enrolled in an eligible program.
- Canadian citizen or permanent resident.
TD Medical Student Line of Credit
The TD Medical Student Line of Credit is available to medical, dental, and veterinary students.
- Credit Limit:Medical students can borrow up to $400,000; access up to $100,000 in the first year.
- Interest Rate: TD prime rate, minus 0.25%.
- Features. No cosigner needed for Canadian students applying to a Canadian school.
- Eligibility.
- Proof of enrollment.
- Proof of income.
- Current address.
- Monthly rent and payment obligations.
- Proof of identification.
CIBC Medical Student Line of Credit
CIBC’s professional line of credit is available to many professional students, including medical, dentistry, optometry, and pharmacy.
- Credit Limit: Medical students can borrow up to $350,000.
- Interest Rate: Variable interest rate; CIBC prime rate, minus 0.25%.
- Features: One year after graduation or residency, convert your line of credit to a personal line of credit, personal loan, or professional line of credit.
- Eligibility:
- Enrolled in an eligible program.
- Canadian citizen or permanent resident.
Where Else Can You Get A Line Of Credit For Medical School?
If you’re looking for a different option or additional financial assistance, you can opt for private lines of credit.
Learn more: Best Lines Of Credit In Canada
Can International Students Get A Medical Line Of Credit In Canada?
If you’re a newcomer to Canada and interested in studying in the medical field, your funding options are more limited. Both private and government student loans are reserved for Canadian citizens and permanent residents.
To help fund your medical education as an international student, you can look into scholarships, grants, and bursaries. Another option is Windmill Microlending. This is a national charity that provides loans to skilled immigrants and refugees who have come to Canada.
Learn more: Guide For International Students In Canada
Tips And Tricks You Should Know When Getting A Medical Student Line Of Credit
Going to medical school comes at a high cost. A medical student line of credit can help you finance your education and achieve your professional pursuits. Use these tips to get the most of your medical student line of credit.
- Make A Budget: Getting a $300,000 or $400,000 line of credit might seem like too much money to spend. But without a budget, it can disappear quickly. Creating a budget can help you stay on track and reduce the amount of student debt you’re left with when you graduate.
- Compare Your Options: Shop around to find the medical student line of credit that’s right for you. Different banks may offer different credit limits and benefits, so compare multiple options.
- Take Advantage Of Interest-Only Payments: After you graduate and move into your residency, most banks will give you 24 months of interest-only payments on your line of credit. You can use this time to make and save money, without taking on more debt.
- Have A Repayment Plan: Before you take out a medical student line of credit, think about how you will repay the money. One strategy is to treat your student debt like a mortgage or rent payment. Have a set amount of money that you pay each month towards your debt.
- Look Into Student Loan Forgiveness: To help reduce your overall student debt, the government of Canada offers student loan forgiveness to some medical professionals. Over a five-year period, family doctors and residents can receive up to $60,000 in loan forgiveness for federal student loans.
Alternatives To A Medical Student Line Of Credit
A medical student line of credit is one way to fund medical school, but there are other options, including:
- Government Medical Student Loans: Look into federal and provincial student loans to help fund your education. There’s no interest on federal student loans, which can help you reduce your overall debt. For example, Ontario offers the Resident Loan Interest Relief Program (RLIRP). With this program, you don’t have to pay principal or interest on government student loans during medical residency if you’re an Ontario resident and you agree to practice in Ontario for five years after residency.
- Scholarships & Grants: The government of Canada offers grants for full-time students based on financial need. You’re automatically assessed when you apply for provincial or territorial student aid. Scholarships and grants are ideal because you don’t have to pay them back.
- Private Personal Loans: Private loans are offered by banks, credit unions, and other financial institutions. They tend to come with higher interest rates than government loans, and don’t offer benefits like loan forgiveness. You can look at private loans to help fill in the financial gaps if you don’t have enough funding from government loans, scholarships, and grants.
Final Thoughts
A medical student line of credit is a flexible financing tool that you can use to help fund your medical education. Before you take on a line of credit, compare all of your funding options to try and minimize your overall debt. If you decide a medical student line of credit is necessary, make sure you have a repayment plan in place to eliminate your debt as quickly as possible.
