*HopefulMD Posted May 20, 2011 Report Share Posted May 20, 2011 Hello, I was wondering if you could explain to me how interest rates work for Alberta student loans? I know that interest doesn't kick in until after medical school (or is it residency?). And I did a quick search and found: https://www.edulinx.ca/ABDLWeb/En/EntranceLoanRepay.aspx#whatrate "The interest rate for your Alberta Student Loan is a floating rate of the prime rate . At any time, you may request interest be calculated at a fixed rate not to exceed the prime rate plus 2%." When I talked to Scotia about a LOC, they said the interest rate will remain at the prime rate, even during repayment. So if one were to choose the floating interest rate, then that will be the same rate as the LOC correct? It's just I was told in a different thread that most get a LOC and student loans. And when alberta student loans interest kicks in, they pay off those loans with the LOC, because the interest rate is higher for the student loans, once you finish school. Or am I missing something here? Thank you Link to comment Share on other sites More sharing options...
Jochi1543 Posted May 20, 2011 Report Share Posted May 20, 2011 The interest fluctuates with the prime but it's NOT prime - e.g. it might be prime + 3%, so depending on the prime, it could fluctuate between 5% and god knows how much more. I've heard it can get fairly high, and because of that some people have advised to pay off govt loans FIRST, before the LOC. I've definitely heard figures such as 6-7% interest. But yes, there is no interest while you are in school. So hypothetically, the best financial decision might be to max out govt loans while you are a student and then pay them right off with the LOC as soon as interest kicks in, as the interest on the LOC will be less. Link to comment Share on other sites More sharing options...
*HopefulMD Posted May 20, 2011 Author Report Share Posted May 20, 2011 Thank you for the fast reply! So "Floating rate of the prime" is not the same thing as the prime?? It is prime + a certain amount? Link to comment Share on other sites More sharing options...
mavrik13 Posted May 20, 2011 Report Share Posted May 20, 2011 Thank you for the fast reply! So "Floating rate of the prime" is not the same thing as the prime?? It is prime + a certain amount? They are the same thing - the prime interest rate is itself a floating rate. Right now, prime is about 3%. However, the prime interest rate changes over time, and therefore the interest rate you will pay on your Alberta student loan will change over time. According to what you wrote, the Alberta student loan interest rate is Prime +2%. When you graduate med school, this is the interest rate you pay. If you had graduated med school yesterday, your interest rate today would be Prime (3%) +2% = 5%. Since the prime interest rate is expected to increase (it is absurdly low right now), lets say that when you graduate, Prime is 5%. Your interest rate on your student loan would still be Prime +2%, but since prime is now 5%, your interest rate would be 7%. Link to comment Share on other sites More sharing options...
*HopefulMD Posted May 21, 2011 Author Report Share Posted May 21, 2011 Hey, Thank you! But doesn't that say EITHER a floating rate at prime, or a fixed rate of prime + 2% at the time you get the loan? So you get to choose? But if that's the case, that you can choose the prime, isn't that the same as LOC? Sorry I really must be reading this wrong! Haha thanks! Link to comment Share on other sites More sharing options...
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