Federal Budget 2019 – The Math Just Changed on your Student Loan Repayment Plan
Note: These changes are still subject to approval by government. Given that this is an election year, there is no guarantee that this will happen.
Many of our clients graduate Medical School or Residency with significant amounts of debt. For most, they converted their Canada Government Student Debt to a bank line of credit, normally RBC or CIBC. The main reason is because the bank line of credits are cheaper. However, this math may be changing in your favour.
The key reason for the change in preference to Canada Student Loan from a Bank Line of Credit is the rate that will now be offered by Canada will likely make its student loan debt CHEAPER than the bank. Most Doctors currently convert their loans unless they have a possibility for forgiveness – but now more Doctors may choose to keep the Government debt. The Canada debt will be cheaper (after student interest tax credit), will be a longer pay back period (10 year) and will have the possibility of forgiveness, grants or other repayment assistance programs not offered by Banks.
As for that bank line of credit, maybe use that to take advantage of buying a new home using the shared equity mortgages also announced in the Federal Budget 2019 (more to come on that soon).
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