Student loan or student line of credit?
Understanding the key differences between two common ways
to help pay for post-secondary education
Heading off to post-secondary can feel both exciting and overwhelming. There are so many questions on your mind and one of the biggest is, "How am I going to pay for my education?"
There are different ways to access financial support. Two of the most common options are student loans and student lines of credit. While you might be familiar with government student loans, lines of credit are often shrouded in misconceptions.
Let's break down how they differ, compare their features and help you make a more informed decision about financing future education.
What is a student line of credit?
A student line of credit is a flexible borrowing option offered by financial institutions.
Unlike a traditional loan, you don’t receive all the funds at once. Instead, you’re approved for a credit limit and can borrow only what you need, when you need it.
In some ways, it works like a credit card. For example, if you have a line of credit with a $7,000 limit but only use $2,000, you only pay interest on that $2,000. You can borrow what you need, repay it when you are able and borrow those funds again down the road.
This flexibility is useful if expenses vary throughout the school year. Some students use a line of credit to cover tuition and textbooks, while others use it to help with unexpected expenses that aren’t covered by student aid.
Vision’s Student Select Line of Credit provides access to revolving credit throughout studies. Students make interest-only payments while they’re in school and for six months after graduation. After that, the balance converts to a regular repayment schedule.
The maximum amortization period depends on how much you owe: balances up to $10,000 are amortized over 5 years, while larger limits can scale up to 10 or 15 years to keep monthly payments manageable.
To apply, students need proof of enrolment at a recognized college, university or technical school with a minimum 60% full-time course load, a Vision account and a qualified co-borrower.
What is a student loan?
Student loans are government-backed funds intended to cover the costs of post-secondary education and make it more accessible.
In Alberta, students apply through Alberta Student Aid using a single application. They may receive funding from both the Government of Canada and the Government of Alberta.
Unlike a line of credit, students don’t choose how much to borrow. Funding amounts are determined based on factors such as financial need, family income, course load and the cost of attending school.
Students enrolled in full-time studies aren’t required to make payments while they’re in school. Once studies are complete, the federal portion of a student loan has a six-month grace period and remains interest-free.
Alberta student loans have a 12-month interest-free grace after studies end. Once repayment starts, interest is charged on the Alberta portion of the loan.
Student loans can be a good option for students who qualify for government assistance and want access to funding with fewer repayment obligations while they’re studying.
To apply, students must create a verified Alberta.ca Account and submit an Alberta Student Aid application. Eligibility is based on factors such as residency, enrollment in an approved program and financial need.
Student line of credit vs. Student loan
| Feature | Student line of credit | Student loan |
|---|---|---|
| Application process | Through a financial institution | Through Alberta Student Aid |
| The interest rate | Interest is charged on the amount borrowed | 0% interest on the Canada portion; interest charged at the prime rate on the Alberta portion |
| Payments while studying | Monthly interest-only payments on used funds | No payments required |
| Flexibility | Borrow as needed up to approved limit | Fixed funding amounts |
| What you need to apply | Proof of enrollment (60% full-time load), a Vision account and a qualified co-borrower | Verified Alberta.ca account, proof of eligibility and a single online application |
Let’s build a plan together.
Although these options work differently, student loans and student lines of credit can both help students manage the cost of post-secondary education.
Some students rely on a single option, while others use a combination of both. No matter which route they choose, the important thing is to understand how each mechanism works before borrowing.
Vision’s loan officers can help students and their families navigate these choices and build a financing plan that fits their specific goals.
