gumgum Posted March 12, 2008 Report Share Posted March 12, 2008 Just wondering how other people paying back their loans when they start the residency. Is using LOC a good idea? Thanks. Link to comment Share on other sites More sharing options...
JewelLeigh Posted March 13, 2008 Report Share Posted March 13, 2008 I agree with Brooksbane for the most part. Though, to clarify - LOCs only charge interest on what you use. So you could take one out, and if you don't use any of it for a year, you don't pay a cent for that year. When it comes to paying back government student loans at the end of medical school (for some provinces) or residency (for others), it's a different story. If you don't have the money on hand, a LOC has a much lower interest rate than charged by the government (prime vs. prime +2 I think). From what I've heard, most people consolidate their debt into their LOC before they have to start paying interest on the government loans. It is certainly what I intend to do in a couple of months when I graduate... Link to comment Share on other sites More sharing options...
agregson Posted March 13, 2008 Report Share Posted March 13, 2008 I would agree that although you start paying interest on an LOC immediately there are benefits. The lower interest is one and the other is quick access to money in a lurch. I would recommend maxing out government student loans first. Alberta has a new program that keeps your Alberta loans interest-free during residency. Alberta also has a loan forgiveness program that helps if you have a lot of debt. The interest you pay on government loans is also tax-deductible. One problem that some people run into is that on a first year resident's salary it can be hard to pay all of your bills if you have a large student loan to start paying back. In that case it helps to consolidate and only make an interest payment (the down side is that it'll take awhile to get out of debt.) I'm in BC for residency and my first year resident take home pay is about $1400 every 2 weeks. With one bedroom apartments renting for $1100+/mo and hefty loan payments there isn't much left for fun if you are on a single income. Things to keep in mind. MD management can probably help guide you depending on your specific situation. Link to comment Share on other sites More sharing options...
Ollie Posted March 13, 2008 Report Share Posted March 13, 2008 One thing I've heard is that, in some cases, not paying your tuition is actually cheaper than taking out an LOC to do so, since the late tuition fee is less than prime. Is there any truth to this? I don't know about other schools but I know at UofT that the late tuition penalty is way more than prime (it's 1.5% monthly, so 18% annually which is more like a credit card). I have about $50,000 in student loans plus $50,000 on my LOC to start paying back soon. I think that I will probably consolidate. The benefit to not consolidating is that the interest on student loans is tax deductible, but most of us will have a lot of tuition credit to carry over so you probably won't need the additional deductions to lower your taxes. But I am going to be paying a visit to my MD Management consultant in the near future to actually sort out the numbers. Link to comment Share on other sites More sharing options...
gumgum Posted March 14, 2008 Author Report Share Posted March 14, 2008 Thank you for all the info. Link to comment Share on other sites More sharing options...
Satsuma Posted March 14, 2008 Report Share Posted March 14, 2008 Will schools actually let you keep enrolling if you don`t pay your tuition? I would be surprised, if that is a good route to take in terms of managing your finances. Ottawa (and probably most other schools) offer an interest relief bursary...so essentially the interest you pay on your LOC while you are a student is covered. Link to comment Share on other sites More sharing options...
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