Last year I wrote about how my daughter got a Student Line of Credit, to help pay for her second degree, as a Chiropractor. Remember, I am the one that talks about being willing to change banks, but unfortunately, my daughter is changing banks due to the mistakes of the local branch of National Bank of Canada (which is the reason I changed banks a while ago as well).
The problems started when the line of credit was first set up, and has compounded since then:
- It took 3 visits to get the student line of credit set up (we thought) with the local branch. Once the application forms were set up, the first application for the account was declined, because the young lady at the local branch was unaware of how to do the application, it was declined because the application was asking for the entire value of the loan (for all 4 years of the school). There had to be a reapplication to get the loan set up (finally).
- The Student Line of Credit was actually set up as a standard unsecured line of credit. This caused the National Bank head office to call (more than once, and somewhat irate) to ask why weren’t the minimum payments being made to the account? It then would take an hour of explanation, and investigation for someone to figure out that the account had been set up incorrectly (by the local branch). The only way it could be fixed was by the local branch, and they failed (more than once) to remedy this issue. The account should be set up so that the interest payments do not need to be paid until my daughter graduated (but yes, they still compound).
- There was an inability to make payments from other banks to the National Bank for this loan. This meant all banking would have to go through the National Bank only (or use Interac transfers to do things). This is also a shortcoming with the CIBC Student Line of Credit.
- The on-line banking at National Bank, never really worked correctly for my daughter, she had to keep calling their on-line help folks to get access to the account (just to see what the balance was on the account). This happened every time she tried to access the account, and each time she would ask, “So with the information you have just given me, I can get access to my account”, and the help line person would say “Yes”. It worked that time, and then the next time, she had to call back in, because it would not let her in.
- The straw that broke the camel’s back was that the National Bank Head Office decided that the “ceiling” (maximum for the loan) for students in Chiropractic College (for their entire program) was dropped by 33%, and because of this, the line of credit would not have covered the cost of the entire program. The reason for this change (we theorize) was that the Chiropractic College in Trois-Rivieres was consulted to see how much their program cost, and the maximum for the line of credit was lowered to reflect that program’s total cost. This is an issue, as my daughter is going to the College in Toronto (which has higher fees and costs). This meant my daughter had to change to another bank or she would have run out of money, so she is now in the process of changing to CIBC for her Student Line of Credit (and Free Banking too). There were inquiries made to the local National Bank branch to figure out why the Loan Cap was lowered, no real answer was given, just that it was being put in place, and that even though my daughter had been enrolled last year, and the loan agreement included the higher cap, her cap was being lowered in accordance with the new rules.
Good Reasons to Change Banks
As you can see a great deal of frustration and confusion lead to my daughter changing her accounts over to CIBC. Naturally I was involved in the decision to change, as I am a guarantor on the student line of credit (or as Michael James would say, I have a Student Line of Credit). The change of the maximum loan limit was the main reason, but the other frustrations certainly made the decision to change, a simpler choice.
Remember, never be afraid to change banks, especially if you feel that you are not getting a very good deal. Also, this is why student debt is so darn high.