Note On Abbreviations
The following abbreviations are used throughout this FAQ:
- BMO – Bank of Montreal
- MFin – Master of Finance
- MFRM – Master of Financial Risk Management
- MMA – Master of Management Analytics
- OSAP – Ontario Student Assistance Program
- PSLP – Professional Student Loan Program
- RBC – Royal Bank of Canada
- RISP – Rotman Interest Subsidy Program
- Social Insurance Number – SIN
Which banks are partnered with the Rotman School for the Professional Student Loan Plan (PSLP)?
The Rotman School is partnered with the Bank of Montreal (BMO) and the Royal Bank of Canada (RBC) to offer the Professional Student Loan Plans (PSLP), aimed at helping students meet the educational costs of their program and is specifically tailored to provide competitive interest rates and loan limits.
However, there are specific branches dedicated to the Rotman School and this loan program.
Is it true that the Rotman School pays the interest for PSLP loans while I am in the program?
Interest is paid on students’ PSLP loan for students in the following programs:
- Morning MBA
- Evening MBA
- Master of Finance
- Master of Financial Risk Management
- Master of Management Analytics
- are approved for a loan from the specified branches of the Bank of Montreal (BMO) and Royal Bank of Canada (RBC);
- have submitted your Declaration of Need to the Rotman School; and
- have a loan principle which does not exceed their maximum basic amount.
The Rotman School will pay BMO or RBC directly for the interest incurred on that loan for these above students, up to the maximum basic amount for the duration of studies (beginning no sooner than 1 September of first year, and usually up to 30 June of the graduating year).
Note that any insurance premiums that are billed monthly, along with any other charges to a student’s loan account, are not covered by the Rotman School in the interest-subsidy.
Students who are not interest-subsidized by the Rotman School are responsible for monthly payments (interest and insurance) during their studies.
What does the PSLP cover? What is the “maximum basic amount”?
This phrase applies to students whose loans are interest-subsidized by the Rotman School. The “maximum basic amount” refers to the highest amount of loans for which the Rotman School will provide an interest subsidy, and covers tuition fees (sum of the annual academic fee, University mandatory incidental, and Rotman specific ancillary fees) and administrative fees assessed by BMO (for students accessing the BMO loan using a Standby Letter of Credit). The loan principal may or may not be equal to the maximum basic amount as this is dependent upon the loan limit approved by the banks. The Rotman School will pay the interest on loan principals up to this maximum basic amount only. Any amounts borrowed in excess of the maximum basic amount or any other products other than the education loan are not eligible for an interest subsidy.
If a student has a loan with BMO/RBC through the PSLP, do they need to complete the Rotman Interest Subsidy Program (RISP) application?
No, the student does not need to complete the Rotman Interest Subsidy Program (RISP) application. RISP provides an interest subsidy for loans from banks (domestic or international) other than the specified BMO or RBC branches.
RISP is available for students in the following programs:
- Morning MBA
- Evening MBA
- Master of Finance
- Master of Financial Risk Management
- Master of Management Analytics
What is the interest rate?
Interest rate will be Prime while students are in their program, and also for during the bank’s defined “Grace Period” following graduation. After that time, the rate may change as per the loan agreement.
When must the loan be repaid?
Graduates may make interest-only payments during the “Grace Period”; beyond this time period, combined principal and interest payments will be required.
The dates of repayment will be reviewed with students when they meet with their bank representative to sign paperwork. If students decide to leave the program before completing degree requirements, the bank will be notified to make arrangements regarding repayment of the loan, and it will advise regarding due dates, minimum payments, and terms. If a student leaves the program without graduating, they may be responsible for both interest and principal payments immediately.
Is there any penalty for paying off the loan as soon as a student graduates?
Students may pay off their loan in whole or in part at any time without penalty.
How does the loan affect taxes?
Any interest paid by the Rotman School on students’ behalf is considered a bursary/grant and falls under “other income” for tax purposes. The University is required to report scholarship, fellowship, or bursary/grant amounts issued to students for reporting purposes. This amount will be reflected on a T4A form that will be sent to students each year in February. However, bursaries/grants are not taxable on the tax return when accompanied by a corresponding T2202 Tuition & Enrolment Certificate. This means that scholarships, fellowships, or bursaries/grants must be received by students with respect to enrollment in a program that entitles them to claim the education amount.
Once students graduate and assume payment of the loan principal and interest, the interest payments on the PSLP loan do not fall under the Canada Student Loans Act or the Canada Student Financial Assistance Act, and therefore are not tax deductible.
If an employer pays for tuition, are students still eligible to receive the loan?
Students may still apply for a PSLP loan if their tuition will be paid by a third party. Some employers require students to pay their program fees and receive reimbursement later, so the PSLP loan can pay for tuition first. If the employer will pay program fees directly to the University, follow the procedure listed in Register Without Payment and inform the Registrar’s Office, as it will affect the disbursement of the PSLP and your access to funds.
How does receiving a Rotman scholarship or award affect the loan?
Receiving awards/scholarships or other bursaries will not affect the amount of funds available through the PSLP loan in any way. Students are still eligible to apply for the maximum basic amount to cover tuition fees. The Rotman School does not penalize students who receive additional financing, and will still provide an interest subsidy for loans up to the same maximum basic amount for every student who has received the PSLP loan.
For example, if students receive a $10,000 scholarship:
- Should they have a PSLP loan sufficient to cover full tuition fees, the award will show as a credit balance once it is applied in late September to the University of Toronto fees invoice.
- Should the PSLP loan be less than tuition fees, the award will pay down student fees. Students can pay the fees invoice balance minus any PSLP and Rotman award amount by the fee deadline.
What are the criteria for eligibility?
Domestic students (Canadian citizens and permanent residents) must have a valid Social Insurance Number (SIN) and satisfactory Canadian credit bureau report to be eligible to apply for the PSLP.
Students who have recently become permanent residents and have neither a Social Insurance Number or credit bureau report will require a qualified Canadian co-signer, cash collateral, or a Standby Letter of Credit (if applying to BMO) to qualify for PSLP.
All international students holding a valid study permit will be considered with a qualified Canadian resident co-signer (citizens or permanent residents currently residing in Canada with excellent Canadian credit history) or cash collateral. BMO will also consider loans secured with a Standby Letter of Credit.
Do students require a co-signer?
Most domestic students do not require a co-signer to receive the PSLP loan; however, if credit history is not satisfactory, or if students are a new or non-resident of Canada, the banks may allow the opportunity to provide a qualified Canadian resident co-signer for the loan. If students have ever filed for bankruptcy, they will not be eligible to receive a PSLP loan. All decisions regarding loan approval are solely governed by the banks.
International students without cash collateral or a BMO Standby Letter of Credit will required a Canadian-resident co-signer.
Is it difficult to get approval for the loan?
The banks make all decisions regarding loan approval, and most students receive the loan without any difficulty. A qualified Canadian resident co-signer may be required if the student has a poor credit history. The banks will not approve a loan application if the student has previously filed for bankruptcy.
If a student has debt from other student loans, do they still qualify?
Many students still carry a balance on loans taken out for their undergraduate program. The banks will ask for information regarding other government loans and current debt load when they assess risk. Each case will be reviewed on an individual basis.
Can students still apply for OSAP if they receive the PSLP loan?
Students can still apply for OSAP or other government student financial assistance. Students should ensure, however, to report to the bank the amount of OSAP and/or other government funding they will receive. In most cases, receiving an OSAP loan will not affect the amount of PSLP loan.
Should students consider a co-signer, Standby Letter of Credit, cash collateral, or a loan from a bank in their country?
The Standby Letter of Credit may work well for international students who have excellent credit-worthiness, collateral, or a co-signer in their home countries, and who do not have qualified Canadian co-signers or cash to use as collateral. The Standby Letter of Credit allows international students to apply for a BMO loan at a relatively low interest rate compared to interest rates available at banks in their home countries.
Using cash collateral to secure a loan is a good option for those who may have funds available, but wish to use a Canadian loan. For those planning on staying in Canada, a PSLP loan will help to establish Canadian credit history necessary with future financial activities (e.g. purchasing home/automobile, applying for other credit).
International students may consider using a Canadian co-signer to secure their loans if they have family or friends who are Canadian citizens or permanent residents who are currently residing in Canada and have excellent Canadian credit histories.
For students who are unable to secure a PSLP loan or a loan from a bank in their home country, Prodigy Finance provides access to funds to finance their education at the Rotman School. Loans from Prodigy Finance or lenders other than the designated branches of the Bank of Montreal and Royal Bank of Canada are not part of the PSLP. These third-party loans may be eligible for interest subsidy under the Rotman Interest Subsidy Program (RISP).
If a student’s legal status will change soon, what should they do?
If a student becomes a permanent resident during the academic year, the bank may reassess their eligibility and loan limits. The maximum basic amount will also be adjusted to reflect the assessed fees. Please contact the Office of the Registrar immediately regarding legal status changes.
How can students qualify for a loan using cash collateral?
Both BMO and RBC will consider loans for international students secured with cash collateral. The loan limit will be approved at an amount equal to the amount of cash provided (1:1 ratio). The cash must be held at the bank in a secured account. Similar to other types of loan applications, this can be initiated prior to arrival in Canada. Please speak with the loan representative about details of this feature.
What about Prodigy Finance?
Prodigy Finance is a third-party lender specializing in helping to finance international studies. Although Rotman has no formal agreement in place, this firm has indicated a willingness to entertain loans for international students attending Rotman. Loans from Prodigy Finance are not part of the PSLP.
How much are students eligible for?
Students are eligible to apply for loans to cover the cost of mandatory tuition fees for their program. Should they be interested in applying for a loan to cover both tuition and living expenses, ensure to speak to the loan representative.
If using a Standby Letter of Credit, the bank in the student’s home country will determine the amount it is willing to guarantee in the Standby Letter of Credit. Students may wish to note the maximum basic amount for the entire program. If the bank guarantees an amount higher than the maximum basic amount, and BMO approves a loan at this higher amount, students may ask BMO to apply this excess loan amount as a separate product to use for personal/living expenses. However, the excess amount will not be eligible for interest subsidy.
If students have a qualified Canadian co-signer, they are eligible to apply for a loan equal to the maximum basic amount for the entire program. The approved loan limit is determined by the strength of the co-signer’s application.
If using cash collateral, the amount of cash students are able to use as security will determine the amount of loan they are eligible to apply for at a 1:1 ratio.
Standby Letter of Credit
What is a Standby Letter of Credit?
A Standby Letter of Credit is a document issued by a BMO-approved bank in a student’s home country. With this document, the bank in the home country promises to pay BMO the amount it has guaranteed on the Standby Letter of Credit, should a student end up not re-paying the BMO loan. The bank will then collect from the student for the amount it pays to BMO. A Standby Letter of Credit acts as a security for the BMO loan, in the same way that cash collateral or a qualified Canadian co-signer does.
How does a student qualify for a Standby Letter of Credit?
The bank in your home country will check credit-worthiness using its normal credit approval process. This may include asking for collateral or requiring a co-signer.
How do students apply for a BMO loan using a Standby Letter of Credit?
To ensure that the interest on the PSLP loan will be subsidized by the Rotman School, the loan must be handled only through the branch specified on the BMO information sheet (University and College branch).
Contact a Financial Services Manager listed on the BMO international student information sheet, making sure to cite the Rotman School. A loan application will be opened after providing basic biographical information. Students will be provided with information on what is required on the Standby Letter of Credit, an application number, and a list of preferred lenders in their home country.
With this information, apply to a bank on the preferred lenders’ list for a Standby Letter of Credit. Once this Standby Letter of Credit is received at BMO, BMO will continue processing the loan.
Once approved for a BMO loan, students should book an appointment to meet with their BMO loan representative and sign the documents upon arrival in Toronto. Students are encouraged to arrange the appointment well in advance of the 1 September fee deadline.
Can students approach any branch of a lender from the preferred lender list?
As a Standby Letter of Credit is more commonly used for commercial banking purposes, retail bank branches may not be as familiar with this document. It is advised that students ask to speak with the commercial arm of the bank, specifically in Trade Finance.
Do students have to use a bank from BMO’s preferred lender list?
It is best to use the banks on BMO’s preferred lender list, as BMO has already established relationships with them, and dealing with them should result in a smoother approval process. If students would like to approach a bank which is not on the preferred lender list, they are advised to contact the BMO Trade Finance Operations:
Srinath Perera – (416) 598-6109
Ameeta Singh – (416) 598-6402
Krishna Ramaswamy – (416) 598-6592
How quickly can students receive an approval from BMO?
It depends on how fast the Standby Letter of Credit is received at BMO. Once the document is received, it should take approximately five business days for BMO to finish processing the loan application.
Are there additional fees to obtain a Standby Letter of Credit?
BMO will charge students an administrative fee of $500 annually to process loans using Standby Letters of Credit. This fee will be added to the loan principal, and will also be eligible for interest subsidy via the PSLP.
The bank in a student’s home country may also assess an administrative fee for issuing the Standby Letter of Credit. We anticipate this fee to be 1–8% of the approved amount, but this will determined by the bank. This amount will not be eligible for interest subsidy through the PSLP.
Can students still take out a loan with their local bank?
Students can still take out a loan with their local bank, especially in cases when the amount guaranteed on the Standby Letter of Credit or by cash collateral is lower than the maximum basic amount. For Interest-Subsidized Programs, any loan amount from the local bank used towards payment of the mandatory tuition fees is eligible for interest subsidy via the RISP – Rotman Interest Subsidy Program.
If students cannot obtain a Standby Letter of Credit, will BMO continue to process the loan application?
Students should notify their BMO loan representative that they have not been successful in getting a Standby Letter of Credit. Students can then ask for advice on what other security (e.g. collateral, qualified Canadian co-signer) they can provide to support their loan application.
Can students switch from using a Standby Letter of Credit to another option in their second year of studies?
If able to procure a qualified Canadian co-signer with an excellent Canadian credit history, students can ask their BMO loan representative if this is possible.
If students have a Canadian resident co-signer or cash collateral, do they need a Standby Letter of Credit?
If students have cash collateral available or a friend/relative who is a Canadian citizen or permanent resident that resides in Canada and has an excellent Canadian credit history, then they do not need to obtain a Standby Letter of Credit from a bank in their home country. Students (and their co-signer) can apply directly to BMO by contacting either of the Financial Services Managers listed on the BMO information sheet, making sure to cite the Rotman School, and that they are applying with a co-signer or cash collateral.
At the end of studies, to which bank do students re-pay their BMO loan?
Students will re-pay BMO for the loan that it has issued to them. Students would only re-pay the bank which provided the Standby Letter of Credit if they do not re-pay BMO.
If a student isn’t in the Toronto area, can they apply at a branch near them?
To ensure students receive the benefits of the PSLP, their loan must be handled only through the BMO and RBC branches specified in the bank feature sheets.
The PSLP loan application can be submitted remotely, online, via fax, or via email. Once submitted, a bank representative will contact the student within five business days, and they must make an appointment to sign your documents at the specified branch once the loan is approved. We recommend that students apply for the loan as soon as possible and arrange an appointment ahead of time so that they may sign documents upon arrival in Toronto.
How do students apply for the Professional Student Loan Plan (PSLP)?
Loan applications must be made through the designated Bank of Montreal or Royal Bank of Canada branch specified in the banks’ information sheets, as the PSLP is available only at these locations.
Up to 12 months prior to the start of the program, student should submit a loan application to the bank of their choice. Choose only one bank; students can apply to the other bank after receiving a decision from the first.
Within 5 business days of submitting the applications, the bank will contact students about their loan application. At that time, students should book an appointment to sign loan documents at the branch (applicable for new loan applications only).
Submit the Declaration of Need to the Rotman School (this is available as of 1 June each year the loan is needed)
Students approved for a loan with the specified BMO and RBC branches and have submitted a Declaration of Need will have their monthly interest payments subsidized.
Bank of Montreal (BMO)
Complete the online Line of Credit application. A link and specific instructions can be found in the Application Keying Guide found in Application Information.
Contact a Financial Services Manager at the University and College branch listed on BMO’s information sheet. Students should Introduce themselves as Rotman international students to begin the application.
Royal Bank of Canada (RBC)
Complete the application form found in the Application Information and submit directly to the branch by fax or email to the contact information on the form.
What if students don’t have a valid Social Insurance Number (SIN)?
On the Declaration of Need form, students may enter a placeholder text of “999999999” in the SIN field. If they have recently become a permanent resident, students should apply for a SIN as soon as possible, and contact the Office of the Registrar for further guidance regarding the loan process. We will also advise you of any impact your change of legal status may have in relation to your program fees.
Why must students use their legal name when applying for the loan?
The banks use the legal name stated on official identification. If there is a discrepancy with a student’s name between the PSLP online loan application and the Declaration of Need, the Rotman School may not be able to confirm eligibility, and the bank may not be able to process/prepare the documents. Students must ensure their legal name is used to prevent the loan from being delayed/denied. Many students use a preferred name at the Rotman School (it may even be printed on a driver’s license or other identification), but for loan purposes, students must ensure they use their full legal name when applying, and match this when filling in the legal name on the Declaration of Need. The following are recognized as proofs of legal name:
What does the Declaration of Need form mean?
The Declaration of Need form indicates that students require the PSLP loan to pay fees. It is also used by the Rotman School to confirm enrollment and maximum basic amount with the banks. However, further documentation to prove financial need is not required in order to access the interest subsidy.
The Declaration of Need will be available as of June. It is not required for pre-approval of the loan by the banks. Students can apply for a loan prior to submitting the Declaration of Need to the Rotman School.
If students have submitted a loan application, but the bank has not contacted them, what should they do?
If students have successfully submitted a loan application and have not been contacted by the bank within seven business days, they should email the Registrar’s Office for assistance.
If a student has been told by the bank that their name is “not on the list,” what does this mean?
This is usually caused by a simple timing issue. The Rotman School sends the banks a periodic reports of all students who have submitted the online Declaration of Need. If students have not yet submitted the Declaration of Need, it is important that this be done as soon as possible to ensure their name will be included in the next list. If it has been 10 days since submitting the form, students should contact the Registrar’s Office and we will check for any technical issues that may have delayed receipt of the form. A student’s name must be on the list in order for the bank to disburse their approved loan.
Why is the bank asking for a copy of a Declaration of Need or a letter to confirm enrollment?
If students applied for the loan at a specified branch and they have also submitted their Declaration of Need online, the Rotman School will forward the Declaration of Need information directly to the bank to confirm enrollment.
Are students required to purchase the bank’s loan insurance?
Loan insurance is offered to all students applying for the PSLP loan, and each bank provides its own product. This option will be discussed with students during their appointment to sign documents. Although it is not a requirement, it is a safety net when things don’t go as planned in life, and is highly recommended.
Note that any insurance premiums are billed monthly and are not covered by the Rotman School in the interest-subsidy.
Are students required to open a bank account with the bank in addition to the loan?
The banks may offer separate bank account options. While a chequing account will facilitate transactions, they are not mandatory for Rotman’s PSLP program, and are a personal choice.
Loan Disbursement and Fee Payment
How do students make the fee payment with the PSLP loan?
Full details on fee payment, including how to use the PSLP loan, are found at Fee Payments.
How long does it take for a payment to appear in the University of Toronto student account?
Once the banks have processed the loan to pay fees, students may see the funds transferring out of their loan account. It usually takes an additional three to five days for the payment to be reflected in the University of Toronto student account. Students can monitor their fees balance through their University of Toronto student account on ACORN. Students should not process a duplicate online bank payment during this time.
How much of the loan can students use for each year of their program? What is the annual loan limit?
The annual loan limit for each year will match the mandatory tuition fees. The banks will begin to disburse funds from each interest-subsidized student’s loan to their respective University of Toronto student account as of September. Students (including returning students) who have submitted the Declaration of Need lists will have their loans disbursed following the appropriate schedule.
Do students have to pay for the entire program at once?
No, students will be required to pay fees by each term’s fee deadline.
Can students use the loan to pay their deposit?
The banks will disburse interest-subsidized loans beginning in September, and the interest subsidy will only be provided beginning that date. Therefore, students must pay their deposit from their other financial resources.
The Rotman School provides the banks the amount of loans to disburse towards fees (as long as loan limit allows for it) to the University beginning in September. Any payments already made, such as the admissions deposit, will also appear on the University of Toronto student account. If fees are paid in full, any credit balance will subsequently be issued back as a refund (via direct deposit) from the University of Toronto starting in November.
Can students use the PSLP loan for other purposes?
As the majority of the loan limit may be required to cover full tuition fees, the PSLP loan is only to be used for this purpose. Should students require further funding for personal/living expenses, the banks may offer other products to meet their needs. Students should speak with their bank representative regarding these options. If students withdraw funds exceeding the interest-subsidized amount, they will be responsible for the interest on that portion of the loan.
How do students access the funds from their loan?
Students in interest-subsidized programs will have their loans locked by the banks. Loan disbursement will issue directly to the University of Toronto student account for the purposes of paying mandatory fees. In instances when tuition will be paid through third-party sponsorship or must be pre-paid as a requirement for meeting Canadian study permit requirements, students must notify the Registrar’s Office as it will affect access to PSLP loan funds. The only disbursement happens in September in each year to pay fees, or under special circumstances at the Rotman School’s approval and instruction. Although the banks may offer cheques, ATM, or online access to the loan account, students will not be able to use these to access the loan. Access to the loan must be approved by the Rotman School prior to any disbursements.
For students in non-interest-subsidized programs (i.e. Full-Time MBA and Graduate Diploma in Professional Accounting), their loans will be unlocked once the banks have received the Declaration of Need from Rotman. After which, students will have access to the loans in order to make fees payments.
Do students have to use the entire amount of the loan?
No, in fact, students may apply for the loan and not withdraw any funds at all if their tuition fees are paid by other means. Some students do not require the loan, but choose to apply just in case the funds are needed throughout the year.