Advice for Managing a Student Line of Credit  

With the cost of studying optometry in Canada¹ coming close to $100,000, you may be looking to borrow funds to foot some of the bill. While student loans can help, they’re unlikely to cover all your expenses. One option is to apply for a student line of credit.

Used wisely, a line of credit can help carry you through optometry school and support your future ambitions.

Here are some tips to help you manage a line of credit wisely:

Track expenses

“A student line of credit should be viewed as a complement to student loans,” says Ingrid Vanelle, Scotiabank Healthcare & Professional Specialist. “Student loans comes in lump sums that can be used to cover your tuition fees and living expenses, while a line of credit provides you with access to a fixed amount of funds that you can draw on as you need them.”

The downside of this flexibility, however, can be the temptation to overspend. “It’s therefore essential to create a budget to ensure you don’t max out your line of credit and run out of funds before you graduate,” reminds Vanelle.

Understand interest rates

“One of the benefits of applying for a Scotiabank student line of credit as an optometry student is that they will qualify for a preferred interest rate with the Scotia Professional^® Student Plan,” says Natalie Araujo, National Lead, Partnerships & Programs, Healthcare & Professional Banking at Scotiabank. “Meeting with a Healthcare & Professional Advisor who provides advice to optometry students to help ensure they are getting the best possible interest rate on their line of credit. They can also discuss benefits on other related financial services, such as premium credit cards with no annual fee.”

An advisor can also help you understand the potential impact of interest rates. For example, because the interest rate charged on a line of credit fluctuates with the prime lending rate (the base rate influenced by target rates set by the Bank of Canada²), during periods of rising interest rates there’s a corresponding increase in the cost of borrowing.

The good news is that interest only begins to accrue on a line of credit from the time you draw the funds. By avoiding drawing more money than necessary, you can keep interest charges to a minimum.

Track your credit score

Your credit score is based on information about how historically responsible you are at managing debt.³ Lenders use this score to determine whether to approve you for a loan and whether to grant you a preferred interest rate.

The credit reporting company, TransUnion, also notes that the length of your credit history is one of the factors used when calculating your credit score.⁴ The longer you’ve responsibly managed debt, the better. In the case of a credit line, that means never falling behind on your payments.  

“While you have up to two years after graduation before you have to start repaying our professional student line of credit, that only applies up to your credit limit,” says Sharu Jose, Scotiabank Healthcare & Professional Specialist. “It is prudent to not exceed that amount so as to avoid impacting your credit score and ending up in a position where you can’t afford to make a required payment.”

Managed wisely, a student line of credit can be a helpful source of funds to carry you through optometry school and set you on the path for a successful career in the future. But, as with all debt, the key is to never borrow more than you require and to create a sound financial plan that will enable you to pay it off responsibly.

For more information on financing optometry school and customized advice and support to help you plan your financial future, contact us today.

1. Canadian Association of Optometrists, Becoming a Doctor of Optometry.

2. Bank of Canada, Notes on Canadian interest rates.

3. Government of Canada, Credit report and score basics.

4. TransUnion, 5 Factors That Affect Your Credit Score.