How Can a Student Line of Credit Help You?

A student line of credit is a great option to help you pay for school and give you easy access to cash in an emergency. Learn more about its benefits and how it can help you save money.

Meet Emily. She’s been accepted to university, and come September will be moving away from home to start her new life as an undergrad.

She’s excited to go, but she’s just not sure about the money side of things. How much is school really going to cost – and is she going to have enough to pay for it?

With the help of an online student budget calculator, Emily builds out her first-year budget. She estimates she will need:

  • $5,600 for tuition
  • $1,700 for books
  • $4,400 for rent
  • $1,920 for food
  • $480 for transportation
  • $1,040 for health and personal items
  • $1,040 for entertainment and shopping.

That adds up to total expenses for the year of $16,180! Now, Emily looks at the money she has available for school.

  • RESP - $5,000
  • Summer job - $4,000
  • Scholarship - $1,000

That adds up to $10,000 – leaving her with just over $6,000 short. So how is she going to cover it? Emily’s dilemma is not uncommon, and for many students, a student line of credit can help make up the difference between what they need and what they have. So what exactly is a student line of credit?

Think of it like a standard loan, in that you get approved for a certain borrowing limit but with some added flexibility and benefits. Here’s how a student line of credit can benefit Emily’ situation:

Typically a student line of credit has a lower interest rate than a standard loan with the added benefit of allowing Emily to pay only the interest while she’s in school, and for one year after graduation.

It gives her the flexibility to use just what she needs, when she needs it. And unlike a conventional loan, she is only charged interest on the amount she is currently using. As she pays back what she borrows, Emily can use her student line of credit again and again without having to reapply

She can easily access her money through the branch, ATM, online banking or mobile banking.

Finally, because interest isn’t charged until she uses her line of credit, Emily can just hang onto it—at no cost—until she needs it. A student line of credit is a flexible and very easy way for students like Emily to borrow money for school. Remember, while you only have to pay the interest owing each month, it’s a good idea to pay more whenever you can to help reduce your interest charges. If you think it could work for you too, give us a call or visit a branch to find out more.

The information provided in this video is for information purposes only and is not intended to be and does not constitute financial advice or any other advice. It is general in nature and not specific to you. Personal lending products are offered by Royal Bank of Canada and are subject to its standard lending criteria. Some conditions apply.