How to Prepare for a Loan

If you're like most students, your savings probably won't cover all of your education costs. To determine your loan needs and get tips on applying for a student line of credit and government student loan, read on!

The basics

You need to know your financial needs before you head to the bank or submit your government student loan application.

To calculate your financial needs, start by compiling your estimated savings and anticipated expenses.

Estimated savings: Break open your piggy bank, pull out that money from under the mattress and estimate your summer and part-time job earnings. Don't forget to factor in scholarships, bursaries and contributions from your family.
Anticipated expenses: Calculate your estimated expenses for tuition, room and board (food, utilities, rent), books and supplies, travel, and entertainment. It's also a good idea to factor in an emergency fund. If you're uncertain, estimate on the high side - better safe than sorry.

Do the math

Below is an example of what your spreadsheet might look like:

Savings	Amount	Spending	Amount
Anticipated job savings	$4,000	Tuition/yr	$5,000
Scholarship	$2,500	Books/yr	$500
Parents	$1,000	Food (meal plan)/yr	$2,400
RESP	$1,100	Residence/yr	$2,600
		Transportation/yr	$800
		Personal necessities	$200
		Entertainment/yr	$500
Total Savings	$8, 600	Total Expenses	$12,000

Subtract Total Expenses from Total Savings.

$ 8,600

-$ 12,000

= -$ 3,400

If you break even or come out on the plus side, know that you are lucky and go do your homework.

If you get a negative number, that's the amount of money you'll need to borrow.

What is the difference between a government student loan and a student line of credit?

Unlike a government student loan, which you can get from the federal or provincial government, a student line of credit is available from financial institutions. With a student line of credit, you are required to pay interest on the amount you borrow while in school.

With a government student loan, your interest payments are deferred until some time after you graduate (so long as you remain a qualifying student.)

Getting a government loan

Eligibility requirements and more information on government student loans can be found online at www.canlearn.ca, the CanLearn Interactive website (see Related Links on the right side of the page).

Getting a student line of credit

If approved for a student line of credit, undergraduate students can receive from around $5,000 to $15,000 a year (depending on the field of study).

Most banks will ask you for the following:

Proof of Canadian residency (such as Social Insurance Number, birth certificate, passport or landed immigrant certificate)
Proof of student status (such as university/college acceptance letter, tuition receipt, or proof of enrolment)
Proof of ability to make monthly interest payments on the amount you spend throughout the year (part-time job pay stub showing earnings to date, letter of employment)

Depending on your financial circumstances, you might need a guarantor with a specified minimum income, usually a parent or guardian, who is legally responsible for paying your loan if you do not make your payments.

For details about how to secure a student line of credit, check out the CIBC Products for Students section below or set up an appointment at your branch.

You can also get briefed on your borrowing options by checking out other Student Life articles on financing your education.

CIBC Education Line of Credit

This line of credit is designed to help students manage the cost of post-secondary education by providing access to up to $40,000. More

Complete list of products for students

The information in this article is general only; it is not intended as specific investment, financial, accounting, legal or tax advice for any individual.