Setting Up a Student Loan in Moneydance

Contributed principally by forum user Don-B

General comments

First, the "Loan" account type probably doesn't apply to this application. "Loan" seems to be best suited for standard, traditional loans that start with a set principal, pay monthly, and end after a preset, know number of periods; no deviations, no surprises. As I've seen in several other posts, it's probably better to use a credit card account.

The banks have come up with a fairly convenient program. I'm not convinced that it's all that great of a deal, but that's another story. Their programs offer several helpful features:

- A relationship with the school, they send monies directly to the university
- Periodic disbursements.  The loan might be $10,000 for the year, but you're charged as the money is paid ($5000 per semester).
- Rebates, they all seem to offer incentives for on-time payments
- Electronic payments; you can go online, file a promissory note and make a payment in one sitting; very convenient.
- Incentives to consolidate multiple year loans (described later)
- Your first payment is deferred until the last disbursement goes out (usually six months later).

Problem statement(s)

I have a student in college. The funding comes from a scholarship, a student loan, and a parent loan. This solution is for the "Parent Loan". The loan starts with a zero balance, receives periodic disbursement, automatically pays certain bills, and sends the remainder of the disbursement to the student for expenses (books, rent, living expenses, etc.). In MoneyDance terms, the transactions fit the credit card model better than a conventional loan.

Special account characteristics

-	The account starts with a zero balance
-	You will receive occasional disbursements, similar to a cash advance from a credit card.
-	You will receive occasional credits (rebates, incentive, etc.).
-	You will pay with a single check, but it actually goes to multiple places, so you will want to do a split transaction
-	Payments vary from month to month if you pay more than the monthly minimum
-	Interest rate tend to change with each new loan

Transactions

(First year - assume a $10,000 loan) In July we apply for loan, which requires the signing of a Mater Promissory Note. The note secures this year’s loan. It also may be used to secure loans on following years

In August, the loan agency issues a disbursement of $5000. They send all the money directly to the school. The school takes payment for tuition and fees and deposits any remaining balance directly into my daughter’s checking account. She will use the extra for living expenses.

My loan balance goes up by $5000. The whole process repeats in January and my loan balance increases to $10,000. With this loan, interest payments are deferred for six months. I make my first payment in February

(Second and ensuing years - assume a $10,000 loan each year) In July, I renew the promissory note with the loan agency. The loan agency extends the loan, but it's really a completely new loan. In August the whole cycle repeats, but now I have two loans, with two interest rates and offers to consolidate.

MD setup

Create a new account
-	Account -> Select “New Account” -> Select “Credit Card”
-	Account Name - My Parent Loan
-	Bank Name -  My Bank
-	Card Number - 12345xxxxx
-	APR - 8.0
-	Start Date - 06-01-2007
-	Initial Dept - $0.00
-	Expires - 6 / 2017
Create a new category for disbursements
-	Tools -> Edit Categories -> highlight “Education” -> click “New”
-	Type of account - Expense
-	Account Name - Parent Loan Disbursement
-	Currency Type - Leave default
-	Parent Account – Education
-	Comments - As desired
Create a new category for interest payments
-	Tools -> Edit Categories -> highlight “Education” -> click “New”
-	Type of account - Expense
-	Account Name - Parent Loan Interest for 2007
-	Currency Type - Leave default
-	Parent Account - Education
-	Comments - As desired

MD accounting

08/15/2007 - First disbursement of $5000 from “My Bank”
-	Access “My Parent Loan” account -> Click “New Transaction” button
-	Date - 08/15/2007
-	Tax Date - As desired
-	Check Number - Leave blank
-	Description - “2007 - First Semester”
-	Memo - As desired
-	Category - Select “Parent Loan Disbursement”
-	Tags - Leave blank or as-desired
-	C - Leave blank
-	Charge - $5000
-	Rate - Leave blank
-	Payment - Leave blank
-	Balance - Calculated by MD
12/30/2007 - Second disbursement of $5000 from “My Bank”
-	Note - This bank did not require a payment during the first six months
-	Use the same “New Transaction” process as first disbursement
02/15/2008 – First payment to “My Parent Loan”
-	Write a check to “My Bank” from your checking account (assume a $500 payment)
-	Access your MoneyDance checking account -> Click “New Transaction” button
-	Date - 02/15/2008
-	Tax Date - As desired
-	Check Number - Enter check number
-	Description - “My Bank”
-	Memo - As desired
-	Category - Select “Split” at the top of the category list, the split editing window will open
-	Split window - Click “New” to create an additional row in the ledger
-	Split window - Row 1 “Description”, leave default
-	Split window - Row 1 “Category”, select “My Parent Loan”
-	Split window - Row 1 “Tags”, leave blank
-	Split window - Row 1 “Payment”, $429 (the amount applied to loan principal)
-	Split window - Row 1 “Deposit”, leave blank
-	Split window - Row 1 “Rate”, leave blank
-	Split window - Row 2 “Description”, leave default (blank)
-	Split window - Row 2 “Category”, select “Parent Loan Interest for 2007”
-	Split window - Row 2 “Tags”, leave blank
-	Split window - Row 2 “Payment”, $71 (the amount applied to loan interest)
-	Split window - Row 2 “Deposit”, leave blank
-	Split window - Row 2 “Rate”, leave blank
-	Click “Done” to close the split window
-	Tags - Leave blank or as-desired
-	C - Leave blank
-	Payment - $500 (calculated by MD)
-	Rate - Leave blank
-	Deposit – Leave blank
-	Balance – Calculated by MD