Questions About Scotiabank Student Line of Credit

College is expensive, more so every year. Scotiabank has a product to help Canadian students address the costs of higher education at the undergraduate, graduate and professional student level.

Function

The Scotiabank offers a line of credit under its ScotiaLine brand. The credit line and its accompanying Visa card allow students to use up to $50,000 over a five-year period to pay for books, tuition, fees, incidentals and other expenses associated with a postsecondary education.

Features

The ScotiaLine student line of credit offers several features tailored to college students. The $50,000 lifetime limit means students can access up to $10,000 per year. Repayment of the principal amount is deferred until eight months after graduation. While in school, repayment of the interest amount is required. Since the product is a line of credit and not a traditional student loan, interest is only accrued on the funds used, not the entire amount accessible. Also, money you repay against the credit line can be accessed again like a standard credit account--unlike a loan, which would require reapplication.

Considerations

Scotiabank is a Canadian financial institution; however, it does apply interest using a prime-plus formula. As of September 2009, the rate was listed at prime plus 2.75 percent.

All undergraduate level students need a co-signer on the account to qualify (usually a parent or guardian). The co-signer has access to information regarding account usage and balance amounts. Account holders can use the Visa card like a traditional credit card account up to the annual limit. While the student is in school, payments can be made against the principal amount used. This will reduce interest payments and make final repayment of the principal easier after the grace period expires.

Eligibility for this account is restricted to Canadian citizens or permanent residents attending public, not-for-profit postsecondary institutions. (See reference 1) Some exceptions may be made for graduate students.

Potential

This product offers students an opportunity to build their credit rating with a high balance credit line. Managing this product is made easier because of its flexible repayment options and the extended grace period.

Warning

Building good credit is a key aspect of a productive financial life. If you are not able to make the regular monthly interest payments on this product, it is possible to do serious damage to your developing credit. Contact Scotiabank representatives to address any difficulties in making interest payments or repayment of principal and interest balances and protect your credit.