RBC Line of Credit

A couple of weeks ago, I sent in an application for a student line of credit with the program that Queen's MBA has with Royal bank. (There's a brief description on this page.) The huge advantage of the program is that it's specifically for Queen's MBA students, providing very competitive interest rates, and Queen's pays for all the interest during the time that you're at school.

It took the Kingston branch less than a week to process and approve my application. Today I spoke with the banker in charge of it, and he walked me through some of the logistics. Basically, since I will not be in Kingston before school starts, he will send whatever documents I need to sign to a branch close to where I live. At the same time, he will open a student chequing account for me and mail me a bank card. After I get the card, I can take it to my local branch, who will have received the loan docs, to sign the documents and activate my card, and whatnot.

Towards the end of this month, the banker will pay the first instalment of my tuition for me, directly into my student account at Queen's. This is because I told him that I'd like to use the money to pay this tuition. If I'd rather have the cash instead, I guess either he would just deposit the amount into my new chequing account, or I could use the account to take out money as I need (like any other line of credit).

Technically, you need to pay the bank the interest that's accumulated, on a monthly basis. The first such payment is due at the beginning of June. At this time the bank will charge whatever interest there is, from your new chequing account. Around the same time, Queen's would've gotten a bill from the bank for the students' interests for the month, and the school will also pay the bank at the beginning of the month. After the bank receives payment from the school, it will credit the amount back to the students' chequing accounts.

Therefore, effectively, the students don't pay the interest during the school year, but are just required to have some amount of money available in the account so that it can be debitted first when reimbursement from Queen's comes a few days later. It's a seamless process. RBC also has a very competitive rate - prime + 0% - for the first two years that you're in this loan program. Prime is 2.5% at this time.