user123 Posted July 28, 2016 Report Share Posted July 28, 2016 Hi All, How does one most effectively finance Dental school expenses (tuition+living). From what I have read so far it seems that people are taking out LOCs. Although banks generally offer lower rates on LOCs vs traditional loans, I still feel that it may be very difficult to pay off the ever-increasing monhtly compounded interest. Are there other forms of financial aid that one can apply to (e.g. government loans/bursaries)? Any advice is appreciated Link to comment Share on other sites More sharing options...
Harvestpro Posted July 28, 2016 Report Share Posted July 28, 2016 Hi All, How does one most effectively finance Dental school expenses (tuition+living). From what I have read so far it seems that people are taking out LOCs. Although banks generally offer lower rates on LOCs vs traditional loans, I still feel that it may be very difficult to pay off the ever-increasing monhtly compounded interest. Are there other forms of financial aid that one can apply to (e.g. government loans/bursaries)? Any advice is appreciated The interest is added to your loan. So you don't really have to pay it while you are in school. There's also OSAP. Link to comment Share on other sites More sharing options...
user123 Posted July 28, 2016 Author Report Share Posted July 28, 2016 Well you just made my day! I thought you have to pay every month. Although this severely will impact my debt I'm okay with it haha. Link to comment Share on other sites More sharing options...
2020Dental Posted July 28, 2016 Report Share Posted July 28, 2016 Also, although LOC interest starts accumulating immediately once you use it, it commonly has lower interest rates than govt loans. Therefore it could be beneficial to use your govt loans first until you are done school and then pay off govt loans with your lower interest rate LOC. Although this is potentially variable between provinces and banks. Link to comment Share on other sites More sharing options...
ydogyy1 Posted July 28, 2016 Report Share Posted July 28, 2016 Also, although LOC interest starts accumulating immediately once you use it, it commonly has lower interest rates than govt loans. Therefore it could be beneficial to use your govt loans first until you are done school and then pay off govt loans with your lower interest rate LOC. Although this is potentially variable between provinces and banks. http://www.forbes.com/sites/davidmarotta/2015/07/26/how-quickly-should-i-pay-my-student-loans/#6af5abd81c1a This forbes article suggests: "If you have graduated with student loans you are probably anxious to leave those loans behind you and get on with your life. The best way to accomplish this is to pay the minimum and start saving and investing toward your future financial security." Thoughts? Link to comment Share on other sites More sharing options...
2020Dental Posted July 28, 2016 Report Share Posted July 28, 2016 Investing while repaying is certainly an option if people are interested in that sort of thing. I know very little of investments and have always been nervous of the risks involved (however minimal they may be). But what people do with their money is up to them, I only mentioned my first comment to plant a seed that govt loans may not be the best thing to try and pay back. Currently I have govt loans and a LOC. My LOC has an interest rate of "prime" but starts accumulating immediately. My govt loans don't accumulate until school is over but then has an interest rate of something like prime + 2 or 4 or something. Therefor using govt loans during school while there is no accumulation and then paying those off after school with your LOC with lower interest rate could save you interest accumulation. However you decide to pay off your LOC is up to you. Using one of the methods from the Forbes article would be viable whether you are paying the LOC or the govt loans. Link to comment Share on other sites More sharing options...
2020Dental Posted July 28, 2016 Report Share Posted July 28, 2016 Thanks Malkynn. There are a few angles to look at I suppose! Link to comment Share on other sites More sharing options...
DennisCPA Posted August 22, 2016 Report Share Posted August 22, 2016 Remember though that there is a tax benefit to the interest on your government student loan. So the effective rate could be less than prime depending on your tax bracket. That is correct, you will get a tax credit on the interest you pay on the government student loan. The interest relating to the LOC will not be tax deductible. Generally, after you graduate, you should repay loans which generate non-deductible interest as soon as possible, IE LOC. Link to comment Share on other sites More sharing options...
troothfairy Posted August 25, 2016 Report Share Posted August 25, 2016 That is correct, you will get a tax credit on the interest you pay on the government student loan. The interest relating to the LOC will not be tax deductible. Generally, after you graduate, you should repay loans which generate non-deductible interest as soon as possible, IE LOC. Student loans from the bank are 2.7% interest. Government loans are 5.2% interest. Even after the tax credit it still makes sense to pay off the higher interest government loan. Link to comment Share on other sites More sharing options...
rmorelan Posted August 25, 2016 Report Share Posted August 25, 2016 Student loans from the bank are 2.7% interest. Government loans are 5.2% interest. Even after the tax credit it still makes sense to pay off the higher interest government loan. quite true - the tax savings aren't really worth it - and the DON'T scale with income - they are used as a tax credit, not a deduction. That pay minimum and invest the difference chart above is making a lot of assumptions - including the insane ha notion of constant investment returns. That in the long term is not a bad idea at all but the implication that there is zero risk or volatility is a bit silly I think. Link to comment Share on other sites More sharing options...
Makaveli Posted August 26, 2016 Report Share Posted August 26, 2016 Not sure how much your tuition is costing but my federal + provincial student loans have covered not only my tuition, but also my living expenses also. and those are interest free! gotta exhaust government loans before even thinking about using that LOC. Link to comment Share on other sites More sharing options...
uoft2020 Posted August 26, 2016 Report Share Posted August 26, 2016 On 8/26/2016 at 2:25 PM, Makaveli said: Not sure how much your tuition is costing but my federal + provincial student loans have covered not only my tuition, but also my living expenses also. and those are interest free! gotta exhaust government loans before even thinking about using that LOC. . Link to comment Share on other sites More sharing options...
KDent15 Posted August 27, 2016 Report Share Posted August 27, 2016 Not everyone is that lucky unfortunately... My federal and provincial loans total $18,000 which doesn't even cover half of my tuition and fees. LOC is a must for some people Link to comment Share on other sites More sharing options...
_dreamville Posted August 28, 2016 Report Share Posted August 28, 2016 Could you pay off your government student loans with a line of credit after you're done school? Doesn't that make the most amount of sense financially? Or can you not do that? Link to comment Share on other sites More sharing options...
markar438 Posted August 28, 2016 Report Share Posted August 28, 2016 you can use LOC to pay off your OSAP, it does make a whole lot of sense as you the interest on your LOC is primarily 2.7% (Prime) while OSAP is somewhere around 5% (or slightly even higher). Few of my buddies (2-3 year DDS) bought expensive cars though...not a good move unless bank of mom and dad is there and abundant, I am getting off point, the bulk of the matter is, if you DON'T spend the money on extravagant items and have money left after 4th year, note: this also depends on where you attend dental school, it makes sense to pay off your Government loans from your LOC ALSO: exhaust OSAP or other governmental bursaries funds DURING school as you will NOT pay any interest on them while your in school but you pay interest on you LOC as quick as you take out funds Link to comment Share on other sites More sharing options...
rmorelan Posted August 28, 2016 Report Share Posted August 28, 2016 you can use LOC to pay off your OSAP, it does make a whole lot of sense as you the interest on your LOC is primarily 2.7% (Prime) while OSAP is somewhere around 5% (or slightly even higher). Few of my buddies (2-3 year DDS) bought expensive cars though...not a good move unless bank of mom and dad is there and abundant, I am getting off point, the bulk of the matter is, if you DON'T spend the money on extravagant items and have money left after 4th year, note: this also depends on where you attend dental school, it makes sense to pay off your Government loans from your LOC ALSO: exhaust OSAP or other governmental bursaries funds DURING school as you will NOT pay any interest on them while your in school but you pay interest on you LOC as quick as you take out funds I think that is correct on all points Most meds/dents do use the LOC to pay off the government loans if possible when interest starts being charged as the interest charged is vastly more on the gov loan vs the LOC. Link to comment Share on other sites More sharing options...
StriveP Posted September 3, 2016 Report Share Posted September 3, 2016 I used my provincial student loan (40k/year) and some scholarships. But I heard recently if you have kids or disabilities you are eligible for a higher amount. Link to comment Share on other sites More sharing options...
cookiemonster99 Posted September 4, 2016 Report Share Posted September 4, 2016 Remember though that there is a tax benefit to the interest on your government student loan. So the effective rate could be less than prime depending on your tax bracket. Can you elaborate on this a bit more? also if you do pay off your gov student loans with your LOC how does it work in terms of your tax bracket? (sorry if i'm asking stupid questions, I'm clueless when it comes to finances.....) Link to comment Share on other sites More sharing options...
rmorelan Posted September 4, 2016 Report Share Posted September 4, 2016 Can you elaborate on this a bit more? also if you do pay off your gov student loans with your LOC how does it work in terms of your tax bracket? (sorry if i'm asking stupid questions, I'm clueless when it comes to finances.....) shamelessly stealing a quote on this, ha! : The tuition amount is a nonrefundable tax credit used to reduce the amount of tax payable. All eligible tuition fees are added together, then multiplied by the lowest federal tax rate percentage for the current tax year to determine the amount of the credit (John Pacheco) So your tax rate is not relevant to this at all - doesn't matter how much you make or how much income tax your pay. Tax credits don't scale with income tax rate - tax deductions do though (things like your RRSP deductions). Link to comment Share on other sites More sharing options...
cookiemonster99 Posted September 4, 2016 Report Share Posted September 4, 2016 thanks guys! Link to comment Share on other sites More sharing options...
rmorelan Posted September 4, 2016 Report Share Posted September 4, 2016 thanks guys! No problem - malkynn is right - doesn't take that long to be an expert in finance (at least in the important stuff). It is skill you just have to pick up Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.