Which source of $$$ to use for medical school?

July 15, 2008 1:46 PM

Paying for medical school -- which money to use?

I'm starting medical school in Canada in September. I've got about $50k in US mutual funds and treasury bills, $15k in a Canadian RSP (which can be used to pay for education if repaid at a certain point), and the banks are offering a line of credit at prime + 1%.

The question is: how do I start paying for school and living expenses? Withdraw and use the investments, and then move to the line of credit when they're exhausted? Use the line of credit, and wait for the investments to grow in order to repay the LOC? Are the investments likely to grow in the next few years? Buy lottery tickets?

posted by anonymous to Work & Money (2 answers total)

I forget what the limit for the Lifelong Learning Plan is, but what you can do is move $X into your RRSP three months (or whatever the requirement was) before you need it. Then you'll get back X% on your RRSP next year. When the time limit passes, you withdraw the money under the LLP and use it for school. That way, you aren't "robbing" your RRSP and you're offsetting the cost of cashing out your existing mutual funds and what-not. (You might have taxable gains on those, so the 40% might be a wash. Not sure.) You could also use a LOC to top up your RRSP and withdraw that under LLP.
posted by acoutu at 2:05 PM on July 15, 2008

Regarding the LOC, you should be able to get that at prime, not prime + 1% (unless you have some extenuating financial circumstances). Make sure you talk to a medical specialist at the banks, usually located in the cities where the med schools are. Bank employees who are not in this position are often unaware of the LOC at prime for medical students. For example, RBC's information is here. National Bank/MD Management, BMO, and TD are others with similar offerings.
posted by flying kumquat at 12:48 PM on July 16, 2008