Question 1

What is the biggest cost difference between the two?

Accepted Answer

Interest during study. A government student loan charges nothing while you are in school: 0% federally, and provinces charge nothing before repayment starts. A student line of credit accrues interest from the first dollar you draw, and banks generally require you to pay at least the interest monthly while studying. Over a four year degree, that head start is usually the single largest difference in total cost.

Question 2

Does line of credit interest qualify for the student loan tax credit?

Accepted Answer

No. Line 31900 applies only to interest on government student loans (federal and provincial programs, and Quebec AFE loans). Interest on student lines of credit, personal loans, or any private borrowing never qualifies, even if the money paid for tuition. This also means consolidating a government loan into a bank product permanently forfeits the credit on future interest.

Question 3

What happens to each if I cannot find a job after graduating?

Accepted Answer

This is the sharpest non-financial difference. On the government loan, the Repayment Assistance Plan can reduce your federal-portion payment, to $0 if your gross monthly family income is below the threshold for your family size ($3,866 for a single person as of August 2026). A line of credit has no equivalent: the contractual payment is owed on schedule whether or not you are employed, and any relief is at the bank's discretion.

Question 4

When is a student line of credit the better choice?

Accepted Answer

When you need more than the government programs offer (the federal limit is $300 per week of study in 2026-27), when you do not qualify for government aid, or in professional programs where banks offer large limits at rates near or below prime and future income is high and dependable. Many students use both: max out the government loan first for the 0% federal money, RAP protection and the tax credit, then use the line of credit for the remainder.

Question 5

Should I pay off my line of credit or my government loan first?

Accepted Answer

Almost always the line of credit. It charges interest on every dollar from day one, while the federal portion of a government loan charges 0% and most provincial portions charge either nothing or prime-linked rates similar to a LOC. Rank your balances by interest rate and pay the highest first; the 0% federal portion goes last because it costs nothing to keep.

	Government student loan	Student line of credit
Interest accrued during studyGovernment loans charge nothing while you study. A line of credit accrues from the first draw, usually the single largest difference.	$0	$5,450
Interest during the 6 month grace period	$0	$1,090
Interest over repayment	$0	$11,333
Line 31900 tax credit (15% federal)Government student loans only. Line of credit interest never qualifies, so its column shows $0. A provincial credit adds a few points more.	-$0	$0
Required monthly payment if money is tight (RAP)Your $3,500 monthly income is below the $3,866 zero-payment threshold for your family size, so your federal-portion payment can drop to $0. The line of credit payment is owed regardless.	$0Estimate: threshold check and 10% cap only	$450
Total cost of borrowing (interest, net of credit)	$0	$17,873

	Government loan	Student line of credit
Grace period	6 months, first payment due the first day of month seven	None; interest is payable from the first draw
Repayment assistance	RAP can cut the federal-portion payment to $0; reapply every 6 months	None; hardship options are at the bank's discretion
Forgiveness programs	Forgiveness after 15 years (10 under RAP-D); professional forgiveness programs exist	Never forgiven
Tax credit on interest	Yes, line 31900, 15% federal plus provincial	No
Lender can demand scheduled payment regardless of employment	No; assistance exists for low income	Yes; the contract stands whether or not you have a job

Student Loan vs Line of Credit Calculator

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Cost comparison over a full 114 month repayment

Differences that are not about interest

When a line of credit genuinely is the better tool

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