Glossary of typical financial terms
Amortization Period - The amortization period is the length of time it takes a borrower to pay back the full amount of a loan principal plus the associated cost of borrowing (interest). An amortization period is typically set out in months or years.
Credit Rating - A score used by lenders to determine creditworthiness. It is based on previous borrowing history.
Interest Rate - Cost of borrowing money. Interest is charged as a percentage of the amount borrowed, calculated and charged on a monthly basis. Prime Interest Rate - Interest rate used by banks to determine the cost of borrowing. The rate of interest on lines of credit with the law school’s preferred lenders (Scotiabank and TD Bank) is prime.
Line of Credit - A loan arrangement which allows student to borrow up to a fixed amount of money. The students borrow money as the need arises. Lines of credit generally have lower interest rates than other forms of debt such as credit cards. Students are charged interest only on the outstanding borrowings.
National Student Loans Service Centre (NSLSC) - Administers student loans, log in for balance and repayment information.
Ontario Student Assistance Program (OSAP) - Ontario government’s financial aid program which consists of grants and interest free loans while studying,
Other Provincial Assistance Programs - Each province administers its own financial aid program as well as the federal aid program. Students apply through the province/territory of residence.
Creating a Budget
Make a budget and break down realistic spending categories (i.e., Tuition, Rent, Food, Medical, Transportation, etc.)
Develop a detailed spending plan allocating expenses and resources, keeping in mind the fact that the timing of expenses and bursaries may not coincide
Track how much you are spending each month on each category of expenses, check out the tracking apps below:
Planning Resources for Law School
Students are expected to access all income sources available to them to fund their law school education, i.e., personal assets and summer savings, parental and spousal contributions, government student loans, grants and external scholarships. The Financial Aid calculator (https://www.law.utoronto.ca/financial-aid-calculator) can provide an estimate of financial aid available to JD students.
Make sure to apply for government financial aid
Make sure to apply for Professional Student Line of Credit. Students are not obligated to borrow money from the line of credit if they have other options, however, opening a line of credit is free and useful to have in place in case of unforeseen situations. The law school negotiated an interest rate of prime for these lines of credit. Students who are not applying for financial assistance from the Faculty or government loans, WILL still have access to these special lines of credit from our preferred lenders.
Students may claim tax credit based on the amount of tuition that they pay. For most students 20% tax credit would be a reasonable estimate, but depends on income bracket and province of residence. Tax credits for tuition can be claimed in the same year in which tuition was paid. The unused amount of the tax credits can be carried forward to future years or transferred to a third party. Students may not need to use the entire tax credit in a particular year if they don’t owe taxes and instead transfer up to $5,000 in tax credits to a partner, parent, or grandparent to help reduce their taxes.
Canada Revenue has a tax guide for students. In addition to tuition credits, there are also tax credits for moving expenses, and professional licensing fees.
The University of Toronto Students’ Union has a free tax clinic: Tax Clinics - UTSU - University of Toronto Student Union
Loan Repayment
Line of Credit - Faculty’s preferred lenders (Scotiabank and TD) will only charge interest during articling and up to 24 months after.
Government Loans - Government loans will require students to start making payments 6 months after the end of the study period. Interest will start accruing immediately after graduation. For example, if you graduate in April, your first payment will be due in November.
Government student loans have a monthly repayment obligation that will be indicated in the Consolidated Student Loan and Repayment form sent by the National Student Loans Services Centre (NSLSC) around mid-end of October.
Some students choose to consolidate their debt by paying off a government student loan that often has a higher interest rate with a lower interest rate line of credit.
Although paying off government loans makes sense for some students, it does not make sense for others, particularly students who are earning lower incomes after school. Consolidating government debt will prevent students from applying to the Repayment Assistance program (RAP) as that requires an outstanding government loan. The government RAP can only be used for government loans and not private loans. It is based on student’s monthly income. Please consult Repayment Assistance Estimator to see if you qualify to receive government loan repayment assistance.
The Faculty of Law provides assistance to students whose income may not be sufficient to meet their debt obligations after graduation. The Post-Graduation Debt Repayment Assistance Program (PDRAP) ensures that the Faculty of Law's graduates can make career choices based on their interests rather than debt-induced financial pressure
Debt Repayment - Consult your lenders, financial planners, or resources below to help set up a structured payment program to control your debt. If your financial situation permits it, consider making more than the minimum payment as you will pay off your debt sooner and end up paying less interest. Setting up automatic withdrawals with your bank will facilitate debt repayment.:
https://www.thebalance.com/free-debt-reduction-spreadsheets-1294284
https://www.creditkarma.com/calculators/debtrepayment
