AeroBarrel

RBC's "A & B List Law Schools" Bias

13 posts in this topic

Posted (edited)

So I am in the process for getting a professional student line of credit for the law program I am enrolled in, and I have heard of many people getting Prime+0%. I would like this as well, but I recently came in to an issue.

So I have an appointment with Scotiabank tomorrow, at which point I may get a better rate. But essentially, with my credit rating being an A (best possible I am told). RBC, my lifelong bank, offered me Prime+.5% today, and although my advisor seemed very nice and helpful, he said that he may need proof of other competitive offers to get to Prime+0% or even Prime+.25%.  I have had TD Canada offer me Prime+.25% right off the hop. Hoping Scotia makes a good offer tomorrow.

Now here is the interesting part: when he was comparing rates for RBC's programs, he brought up a page that separated Canada's law schools in to Tier A and Tier B. So Tier A constituted University of Toronto, McGill, Western, and Alberta (I think that's all of them; I don't even recall UBC being on it. Tier B constituted all other law schools in Canada). Now here is the kicker! Tier A schools were offered Prime+0% and up to 120k in credit. Tier B was Prime+.5% and up to 90k! (Pretty sure I have these down to memory, may be off by 5k or so)

Anyways, I thought this was an incredibly arbitrary and weird distinction to make. I pointed it out to my advisor and asked him to put forth a request for Prime+0% for me (I don't care about the extra 30k since I don't plan to use it). I was curious as to if this was common practice between banks, or if this is just an RBC thing? Is their a solid basis for this in Canada, where tiered schools have not traditionally been a thing? I think the Tiers were based on splitting "potential future earnings", but do they even have data to support this? Even then, shouldn't that just affect the credit cap rather than the interest rate?

But most importantly, does anyone have experience negotiating through this? Leaving RBC would be a pain, but if it means a lower interest rate, I'm going to do it.

Edited by AeroBarrel

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Scotia does 150K at prime for U of T and Windsor Dual JD. U of T specifically suggests/ tells people to go with Scotia or TD. Maybe check with your school and see what they say?

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I suspect (strongly) that the tiers aren't arbitrary, even though they look that way. Financial institutions don't tend to make arbitrary decisions when it comes to doling out credit, they usually base those decisions on their analysis of the data they have available to them. 

RBC is going to have several years of data on every law student they have provided loans to. They are going to know how long it took those students to pay their loans back, among other things. What they are saying with the tier A and tier B distinction is that students at tier A schools have historically been more favourable credit risks for the bank, so they are offering those students more favourable terms because they want to attract them. 

This is simply how commercial banking works. They loan money out that they borrowed from someone else at a higher rate than they borrowed it at, this system is predicated on them getting the money back at some point so they can pay back what they owe and stay in business. 

So what the tiers are really saying is that historically, students from these tier A schools have paid them back under conditions that they like. I hope some of this helps, and I hope you have a better experience with Scotia tomorrow! 

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So I saw Scotiabank today, who offered Prime+.5%. They said they would match competitor rates. Ironically, they would not print off any sheets of their own rates and offers for me... just like the other banks.

So I went to CIBC next, where they actually offered me Prime+0% right off the hop. Apparently all law students in Canada get it! The only thing is, just like every other bank, they refused to print off their rates/policies for me. The guy wasn't even supposed to show me the screen he was looking at, but he did anyways.

This bank culture is extremely frustrating. I get it, you don't want me to take your rates as leverage for another bank because you want my business, but goddamn. All the other banks I am dealing with insist on proof of CIBC's rates now. I have basically told them "I am telling the truth, like your own bank they just won't give me proof of it. If you don't compete, I am walking."

So I guess I'll see if I have to leave RBC now to go to CIBC, or if they'll come to their senses.

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What are the caps you're being offered? There's a post detailing how Scotia offers higher caps across the board now.

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12 hours ago, AeroBarrel said:

So I saw Scotiabank today, who offered Prime+.5%. They said they would match competitor rates. Ironically, they would not print off any sheets of their own rates and offers for me... just like the other banks.

So I went to CIBC next, where they actually offered me Prime+0% right off the hop. Apparently all law students in Canada get it! The only thing is, just like every other bank, they refused to print off their rates/policies for me. The guy wasn't even supposed to show me the screen he was looking at, but he did anyways.

This bank culture is extremely frustrating. I get it, you don't want me to take your rates as leverage for another bank because you want my business, but goddamn. All the other banks I am dealing with insist on proof of CIBC's rates now. I have basically told them "I am telling the truth, like your own bank they just won't give me proof of it. If you don't compete, I am walking."

So I guess I'll see if I have to leave RBC now to go to CIBC, or if they'll come to their senses.

Unfortunately, that is (in my experience) exactly the approach you need to take: "I have offer X from bank Y, don't believe me? Fine, I'll give bank Y the business."

I couldn't get written offers from banks when I was looking to re-finance my student loans, so when RBC basically said "we'd match Prime + 0% if we believed that BNS offered it", I told them to immediately start the process for transferring all my products to BNS (which, to their credit, was a smooth process, but this was after I'd been with the bank since I was a child! I had one of those Leo accounts for my summer jobs since I was like 8 years old!)

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All you have to do is e-mail and ask them what rate they can offer you.. then it's written - super simple I literally did it with every bank. E-mail any advisor from the bank, on their respective websites, just Google.

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2 hours ago, echan59100 said:

All you have to do is e-mail and ask them what rate they can offer you.. then it's written - super simple I literally did it with every bank. E-mail any advisor from the bank, on their respective websites, just Google.

While that might be possible, I suspect ppl are getting better rates from sitting down and filling out the forms, etc. But maybe not - if they are issuing written offers over email for Prime + 0% (or 0.5% or whatever) then that would be a much easier way to get them to compete.

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23 hours ago, conge said:

While that might be possible, I suspect ppl are getting better rates from sitting down and filling out the forms, etc. But maybe not - if they are issuing written offers over email for Prime + 0% (or 0.5% or whatever) then that would be a much easier way to get them to compete.

With all the banks I've asked (RBC, Scotia, TD), prime minus is only for dental/med students. But these three all offered me prime +0.5 at first, then all I typed to them was "but RBC/other bank is offering prime"... then they just gave me prime. They didn't even ask me for written offer/confirmation from them, they knew all the banks are offering prime. I'm confused as to why so many people are having trouble getting prime, almost seemed standard to me (based on my experiences, in BC). Not sure what games these banks are playing..

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Odd that UBC would not be considered tier A. I don't think many would dispute its rank as the best (or at least most prestigious, though that doesn't mean much) law school in Western Canada. 

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3 hours ago, beentheredonethat4 said:

Odd that UBC would not be considered tier A. I don't think many would dispute its rank as the best (or at least most prestigious, though that doesn't mean much) law school in Western Canada. 

I suspect, as mentioned above, that these lists have more to do with the repayment history of students, rather than some arbitrary measure of prestige. UBC may be "prestigious" enough to be considered a top Canadian law school but the extremely high COL in Vancouver (where many UBC grads will work) probably affects repayment rates in a way that makes them view UBC as a higher risk. 

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Perhaps fuck RBC and go with Scotia? It being your lifelong bank isn't relevant. Honestly, anyone who doesn't go to Scotia first hasnt done their research

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On 2017-08-12 at 5:16 PM, randominternetperson said:

I suspect, as mentioned above, that these lists have more to do with the repayment history of students, rather than some arbitrary measure of prestige. UBC may be "prestigious" enough to be considered a top Canadian law school but the extremely high COL in Vancouver (where many UBC grads will work) probably affects repayment rates in a way that makes them view UBC as a higher risk. 

That would be my guess.  Not only is cost of living high, but salaries start lower as well.

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