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Hello everyone,

 

After reading the previous discussions about LOCs, I was wondering if anyone who has experienced meetings with both UBC Reps at Scotia and RBC could shed some light on the pros/cons of each. It is difficult for me to travel to Vancouver, so I was hoping to eliminate multiple trips.

 

Much appreciated in advance.

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I'm looking for LOC too. Just wondering, is there any reason why you'd get your LOC at a bank close your future school instead of just doing all the paper work from your home town well a head of time? I'm planning to get it done in my home town but not sure if I'm missing something important to not do otherwise.

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I'm looking for LOC too. Just wondering, is there any reason why you'd get your LOC at a bank close your future school instead of just doing all the paper work from your home town well a head of time? I'm planning to get it done in my home town but not sure if I'm missing something important to not do otherwise.

 

As long as the person you are dealing with understands medical student loans you can set it up locally. It did that originally - actually your new school's corresponding rep can just send the paperwork to your local branch as well.

 

In general the scotia vs RBC LOCs are very similar it seems to me. Only real difference is scotia gives the money out in 50K chunks vs RBC (although 50K with everything else is tons) and scotia ultimately gives you the most when you include residency amounts.

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I did a lot of research on this and yes, that seems to be the only difference. I am already with RBC so I will likely stick with them for my professional LOC.

 

Though Scotia will give you $25K more overall, remember that the vast majority of students in Canada won't use the full $250K from RBC and you can continue to use unused balance throughout residency.

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How much do residents make in Ontario, and why do they need more LOC money during residency?

 

http://www.carms.ca/eng/r1_program_salaries_e.shtml#ON

 

They start at $51,065/year. Plenty to live on, but if you are single and have, say $150,000 loan + OSAP (roll into one is better though), and live in a high-cost area like downtown Toronto, that is tight. Though this is enough to live on even in Toronto, I think many people after med school have significant lifestyle inflation where they start to live more like doctors, even before they are making a doctor salary. Hence, the LOC can still be useful.

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It is true that the plans do have a lot of similarities. Some of the smaller details of the products are what set them apart. Our product comes with the Scotia Gold Passport visa with the annual fee waived throughout school and residency. You will earn travel points on this card and can then redeem them for flights when you do your interview tour. Also a small detail with our loc is you don't need to make payments to the line as the interest accrues onto your balance. This is nice as you can focus on your studies and not worry about transfering money around each month to make a payment.

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http://www.carms.ca/eng/r1_program_salaries_e.shtml#ON

 

They start at $51,065/year. Plenty to live on, but if you are single and have, say $150,000 loan + OSAP (roll into one is better though), and live in a high-cost area like downtown Toronto, that is tight. Though this is enough to live on even in Toronto, I think many people after med school have significant lifestyle inflation where they start to live more like doctors, even before they are making a doctor salary. Hence, the LOC can still be useful.

 

exactly - they use the LOC to boost the lifestyle during residency and reduce it a bit during payback (got to have balance) - the jump in income is so large when you are doing people justify it as a smoothing out process. I don't think I will be but I see their argument. Personally I don't like debit :)

 

You also get a call stipend to that income I should mention - that can add up to a few extra thousands a year.

 

Banks also will give medical residents pretty excellent mortgages during residency - some in my class are buying downtown TO condos right now.

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Are both paid back after residency? Also, which one has the better interest rate or are they both prime?

 

yes on both counts - both at prime, both you have to make principal payments post residency. These are of course not government loans - interest starts as soon as you start using it.

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Compound interest is quite deadly if you only start paying after 6-10 years

 

Right now the rate are so low and people just coming in to this are new so they may be fooled into thinking this is the norm. It is all they have ever known.

 

It is NOT the norm - interest rates are as low as they have basically EVER been and they will not stay there forever. We have been very lucky in a sense and need to be careful. It isn't a panic situation but ignoring the impact of the rates eventual rise will be a big problem for a lot people (in or outside of medicine!). If the rates rise a few points we will all be paying double what we are now.

 

Use the LOC as a tool, don't starve yourself and live reasonably well but I wouldn't spend it without serious thought. I am about to go into residency and while I am in the minority I am sure I am about to start paying it down to a small amount and am hoping to even as an attending live like a somewhat upgraded senior resident for a couple years to set myself up for the long game.

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Right now the rate are so low and people just coming in to this are new so they may be fooled into thinking this is the norm. It is all they have ever known.

 

It is NOT the norm - interest rates are as low as they have basically EVER been and they will not stay there forever. We have been very lucky in a sense and need to be careful. It isn't a panic situation but ignoring the impact of the rates eventual rise will be a big problem for a lot people (in or outside of medicine!). If the rates rise a few points we will all be paying double what we are now.

 

Use the LOC as a tool, don't starve yourself and live reasonably well but I wouldn't spend it without serious thought. I am about to go into residency and while I am in the minority I am sure I am about to start paying it down to a small amount and am hoping to even as an attending live like a somewhat upgraded senior resident for a couple years to set myself up for the long game.

 

Very true...I remember looking at mortgage rates of 6-7%, now they are around 3%! When (not if) this reverses, you need to make sure you can handle it financially.

 

However, the risky part of me sees that 3% 250K LOC and thinks "Hmmm...even conservative blue chip stocks yield 3-5% dividends...and many REITs give 6-11%...FREE MONEY" :P

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Very true...I remember looking at mortgage rates of 6-7%, now they are around 3%! When (not if) this reverses, you need to make sure you can handle it financially.

 

However, the risky part of me sees that 3% 250K LOC and thinks "Hmmm...even conservative blue chip stocks yield 3-5% dividends...and many REITs give 6-11%...FREE MONEY" :P

 

ha - yeah as an economist I can see that :) it is all about risk management of course.

 

The problem isn't the dividend - the problem is the variable stock value. Right now the stocks are flying high, which always makes me nervous for an eventual fall. My take we all are going have 30-40 years to invest and play with things - not exactly a rush situation.

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ha - yeah as an economist I can see that :) it is all about risk management of course.

 

The problem isn't the dividend - the problem is the variable stock value. Right now the stocks are flying high, which always makes me nervous for an eventual fall. My take we all are going have 30-40 years to invest and play with things - not exactly a rush situation.

 

Yes, but that same argument can be a good reason to be more risky now - tons of time to ride the highs and lows while reaping the dividends as well as the very long-term outlook of around 7% (historically) growth.

 

And I agree now is a terrible time to buy MOST stocks, as many are at record highs. But just waiting for a dip and tapping that LOC for some dividend stocks is quite tempting.

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Yes, but that same argument can be a good reason to be more risky now - tons of time to ride the highs and lows while reaping the dividends as well as the very long-term outlook of around 7% (historically) growth.

 

And I agree now is a terrible time to buy MOST stocks, as many are at record highs. But just waiting for a dip and tapping that LOC for some dividend stocks is quite tempting.

 

As long as reasonably worse case you don't leave yourself short on tuition and living expenses :)

 

and I pointed this out I guess before but you completely disqualify yourself from government loans by doing that as by def you have big assets - and the interest free status and grants/loan forgiveness that comes with it. You would have to absolutely make after taxation more than 10K a year to keep up with that. That added wrinkle has to be factored in - I saved with bursaries and government loans something in ballpark of 40-50K over the four years - and did it without any risk at all. A dollar saved is at least and usually more than a dollar earned (when you factor in taxation). Plus with post a lot of loan forgiveness schemes many will continue to save more during residency and beyond.

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As long as reasonably worse case you don't leave yourself short on tuition and living expenses :)

 

and I pointed this out I guess before but you completely disqualify yourself from government loans by doing that as by def you have big assets - and the interest free status and grants/loan forgiveness that comes with it. You would have to absolutely make after taxation more than 10K a year to keep up with that. That added wrinkle has to be factored in - I saved with bursaries and government loans something in ballpark of 40-50K over the four years - and did it without any risk at all. A dollar saved is at least and usually more than a dollar earned (when you factor in taxation). Plus with post a lot of loan forgiveness schemes many will continue to save more during residency and beyond.

 

That is very true. I will get no loan grants or bursaries from OSAP or otherwise since my wife works full-time, but otherwise, you are definitely correct and such a scheme would likely not be beneficial for most.

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As long as reasonably worse case you don't leave yourself short on tuition and living expenses :)

 

and I pointed this out I guess before but you completely disqualify yourself from government loans by doing that as by def you have big assets - and the interest free status and grants/loan forgiveness that comes with it. You would have to absolutely make after taxation more than 10K a year to keep up with that. That added wrinkle has to be factored in - I saved with bursaries and government loans something in ballpark of 40-50K over the four years - and did it without any risk at all. A dollar saved is at least and usually more than a dollar earned (when you factor in taxation). Plus with post a lot of loan forgiveness schemes many will continue to save more during residency and beyond.

 

This might seem like a stupid question, but for OSAP purposes if person A has (for example) $100k in Stocks and $180k in accumulated debt and person B has $0 in stocks but $80k in accumulated debt. Does OSAP give B more help than A?

 

i.e. assets bought on a loan are different from assets bought from your own money. Or no?

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This might seem like a stupid question, but for OSAP purposes if person A has (for example) $100k in Stocks and $180k in accumulated debt and person B has $0 in stocks but $80k in accumulated debt. Does OSAP give B more help than A?

 

i.e. assets bought on a loan are different from assets bought from your own money. Or no?

 

OSAP doesn't ask about your debt, only your assets. So the person with more assets gets less, despite being equal net.

 

Silly system if you ask me.

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OSAP doesn't ask about your debt, only your assets. So the person with more assets gets less, despite being equal net.

 

Silly system if you ask me.

 

I agree...at least with many entrance bursaries they ask about debt load as well. I also disagree with the primary residence issue (it's the same issue really, but backwards). If you own your home outright with no mortage, this should be an asset in my opinion. Only your net worth (including equity from a home) should be considered. Oh well...c'est la vie.

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