Student Loan Guide

There are a number of ways to finance post secondary education. It’s a substantial amount and care is required to think thru the process. Taking into account flexibility and interest payment, the cost of commercial student loans (a.k.a. student-line-of-credit) is considerably higher than other options. It should only be considered upon exhausting all other lower cost alternatives. Take into account your expected future incomes after graduation.

Here is one the 5-step process.

1) Exhaust All Other Available Options

Make sure you have exhausted all other options, including Scholarships, government Student Aid and most importantly Registered Education Saving Plan (RESP) before considering walking into a commercial bank. Government programs and other valuable resources can be found here:

2) Bring along the following Documents to your Bank

  • 1 piece of government picture ID, so Driver License or Passport.
  • 1 other government ID such as SIN, Birth Certificate, and Health Care Card are also acceptable.
  • Acceptance of Admittion from accredited post secondary institution.
  • And income confirmation if you have a regular full or part time job
  • 2 months of pay stubs or 2 years of Notice of Assessment would be great, some banks want 2 years of T1 (tax form)
  • Most likely you’ll need a co-signor. Ask co-signor to bring 2 IDs and income confirmations to meet with bankers together. That will save time for both sides and less running around.

3) 5-Business-Day Processing

Plan ahead. Once all items are ready for the student line of credit application. Banks should take no more than 5 business days to approve or decline your application. Some banks instantly approve or decline applications, others take their time. Feel free to remind your banker after 5 business days. Keep in mind that you still need to pay all tuition fees, in full, even if the banks are taking their time. When approved, bankers will then arrange a second meeting to sign documents. Yes, ask your co-signor to go with you when his presence is required. There will be a second follow-up meeting to explain the terms of student line of credit such as interest rate, minimun monthly interest payment, when to make principle payment, and when to collapse the line of credit as in paying it all back. Both the borrower and co-signor are legally liable and this student line of credit. How the loans are being handled would affect both parties’ credit histories.

4) Access to the Loan

After signing (say you agree to take the student line of credit), bankers will need to activate or funding the loan. This required confirmation of enrolment from the accredited institution. Either a tuition payment receipt (if you paid tutition with your own money already) and/ or a course schedule from post secondary institution should work. Banks will ask for more docs if needed. According to deadline of tuition payment or first day of class, banks will activate the student line of credit for you.

5) Think Twice

Once the student line of credit is activated and a withdraw is made, there is no going back. My recommendation is to think twice before signing off for the loan. Remember that student loans are borrowings against your future incomes. Your expected future incomes are closely tied to the degree you’re about to obtain. If you have other ways to fund your education, it’s always worth considering. Due to its high cost, commercial loans must be your last resort.


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