When you take out a personal loan, the amount you borrow will need to be repaid on a fixed schedule. To borrow more, you have to apply for another loan. Several repayment periods are available, and you can pay your loan off faster without penalty.
A student line of credit works more like a credit card. You get a specific credit limit, and can access your credit whenever you need to. As long as you stay in school full time, you only need to pay the interest on the balance used. You can reuse repaid credit as needed. You'll start repaying the line of credit when you take on a full-time job or 12 months after the end of your full-time studies.1
A personal loan allows you to make regular payments during your studies, making it easier to plan your budget. You can choose a fixed or variable rate. With a fixed rate, you'll know the total amount of your loan from the start. With a variable rate, you could save money by taking advantage of lower interest rates.
A student line of credit gives you more freedom to manage your credit. You can opt to only pay the interest on your outstanding balance during your studies and delay loan payments until after you graduate. Unlike a loan, a line of credit also allows you to reuse your repaid credit.
These two kinds of credit are intended to finance your school-related expenses (books, computer equipment, tuition fees, etc.). Try not to take on debt that you'll have trouble paying off in the future.
You'll start repaying your personal loan while you're still in school. Although a variable-rate loan could save you money, interest rates could also go up—extending your repayment period.
Unless you budget carefully, a student line of credit could leave you with an intimidating amount of debt. Because you'll have easy access to funds, you'll need to be prudent. Remember that this money is a loan that will have to be paid back.
1. For students in medicine, dentistry, pharmacy, optometry, veterinary medicine, chiropractic and engineering: No principal and interest payments required until 12 months after the end of studies or loss of full-time student status (subject to not exceeding the authorized credit limit). However, interest accrues during this period and is capitalized monthly.