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Student Line of Credit vs OSAP

A photo of beaubeau beaubeau
Does anyone know about one or both enough to weigh the pros and cons? As well, can you apply for both (assuming you can, but is that a great idea?).

Are there any other financial aid programs?

Bursaries might not help me too much, apparently my parents make too much money :|

Oh, and GICs and other interest based savings, has anyone tried that? I was looking at the ones with AIG, I think it would be a good idea to save a couple of hundreds a year and put that money away until grad and use that to also pay for the debt I'll have.

Any ideas, opinions, experiences--please let me know! :)
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A photo of kaytotz kaytotz
I think a Student Line of Credit is the only option for you if your parents make a lot a money.

I was also thinking about a Line of Credit until I found out you must pay interest EVERY month while your in school. OSAP doesn't require or even calculate interest until 6 months after you graduate [Source].
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A photo of beaubeau beaubeau

@kaytotz wrote
I think a Student Line of Credit is the only option for you if your parents make a lot a money.

I was also thinking about a Line of Credit until I found out you must pay interest EVERY month while your in school. OSAP doesn't require or even calculate interest until 6 months after you graduate [Source].



Yeah, I was looking at the info on LOCs and they really seem like the only viable option, I'm afraid of not getting enough with OSAP. As well, when you're done school, the interest rates for OSAP skyrocket, so in the long run, having a line of credit wouldn't be so bad, since the interest rate is fixed.

I'm just afraid of the whole trap with OSAP, there's plenty of people I know that haven't had great experiences with its system! D:

Apparently it's designed to be paid off in ten years at a reasonable rate?
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A photo of kaytotz kaytotz

@beaubeau wrote

@kaytotz wrote
I think a Student Line of Credit is the only option for you if your parents make a lot a money.

I was also thinking about a Line of Credit until I found out you must pay interest EVERY month while your in school. OSAP doesn't require or even calculate interest until 6 months after you graduate [Source].



Yeah, I was looking at the info on LOCs and they really seem like the only viable option, I'm afraid of not getting enough with OSAP. As well, when you're done school, the interest rates for OSAP skyrocket, so in the long run, having a line of credit wouldn't be so bad, since the interest rate is fixed.

I'm just afraid of the whole trap with OSAP, there's plenty of people I know that haven't had great experiences with its system! D:

Apparently it's designed to be paid off in ten years at a reasonable rate?



Yeah, your interest rate point is probably accurate. I wish the bank websites would actually post the interest rate instead of just putting "very low!"

I guess I'm just looking at it from the perspective that I'll be borrowing about 10 to 11 thousand from OSAP, but only have to repay about 7 grand which is not possible with a LOC.

Hmm, I think I might do some intensive research on loan/ interest repayment and post my findings later.

I always found it so scary when high school teachers would talk about still paying off their loans until I found out what they make...:tongue:
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A photo of mynameismattgotmlgo mynameismattgotmlgo
Yeah, LOCs require that you pay at least the interest on your balance on a monthly basis while you're in school. "On your balance" being key. If you're given a $40,000 LOC, you are not charged interest until you start withdrawing money from the LOC. If you never use any of that, then you will be charged nothing (at least not in the form of interest; I'd imagine there'd be some administrative fees). If you use $1,000 one month, then you will be charged interest on just that $1,000; if you repay none of that, and then use $2,000 the next month, then you will be charged interest on $3,000. Interest rates are pretty fair - usually less than OSAP interest rates. I haven't heard of any fixed rate LOCs though. All the ones I've seen are prime + x% (i.e. variable rate).

Because you're constantly paying interest, an LOC should not be your first choice for financing. For example: let's say you have a $10,000/year LOC, and you use the $10,000 right away to pay for tuition. Every month from then on until you pay back that $10,000, you are going to be charged interest. Presumably, as you're a student, you probably won't be able to pay back that 10k until you're done school and are out making money. If you get a prime (currently 3.0%) + 1.5% LOC, you're going to be paying 4.5% annually in interest on your balance (10k). That's $450/year. Quite a bit, especially once you start drawing more from your LOC when you're granted access to another 10k the next year and as prime rate continues to rise. You could easily pay $5,000 in interest while in school for four years by using your LOC this way. If you used $10,000 in OSAP loan in this same way, then you'd save yourself that $5,000.

OSAP is a little tough to deal with sometimes - that's the government for ya. It still is your best bet though. You should seriously consider a LOC if OSAP isn't enough, but you should consider a LOC regardless. Nothing wrong with having money available for a rainy day, so long as you're financial-minded enough to not treat it like free $$$.
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