Option 2: Student to Take Some Responsibility
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Parents will use the BLOC for college costs, but expect the student to share in paying college expenses.
Steps:
- student and parent estimates
how much money will be needed for the academic year. Use this budgeting worksheet to budget available aid and costs:
download college budgeting worksheet
- student applies for a Private Student Loan,
you can borrow up to cost of education as certified by the school.
The parent will need to co-sign for the loan since the student will not have the credit criteria to qualify
more information about private student loans
- upon application,
request the option for immediate repayment of loan and interest:
see loan repayment terms
as the parent, you will use your BLOC to make the principal and interest payments while the student is attending college
- student and parent use pre-paid credit cards
to manage monthly spend. Pre-paid's set limits on the amount spent each month. You can use the BLOC to load up monthly amounts based on the college budget:
view how pre-paid cards can work
- parent accesses their BLOC
to pay educational expenses. Parent uses money management techniques to pay down the borrowed amount
jump to slide show to view how program works
- never let your BLOC drop below $0 balance
use the BLOC to payoff other debts, including your mortgage
In the example below, the parent will be making monthly payments that will be less than the discretionary income in the BLOC. The parent decides to use their BLOC to payoff their mortgage
view how the BLOC can be used to pay down your mortgage
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The parent will use the BLOC to make monthly payments on the private student loan. You will continue to make payments while the student is attending school.
The student may need to borrow more money for each academic year. You can repeat the process by co-signing the private student loan application with the option of immediate principal and interest loan payments.
You will then use the BLOC to make the loan payments on each loan borrowed. |
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Upon graduation and acceptance of a career salary, the student takes over the payments for the remaining term of the loan.
Parent can then ask for a co-signer release if certain parameters are met. Student has total responsibility of loan repayments.
see information about co-signer release
program benefits:
- your BLOC functions like a bank when you need funds
- use to pay down the private student loan
- student shares some responsibility for the loan
your BLOC account may look like this if you had the following spending plan:
- net monthly income: $5,000
- living expenses: $4,000
- discretionary income: $1,000
- monthly loan payment on the private student loan: (example) $171.00
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For Year 1 |
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Opening Credit Line Balance |
$0 |
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Paid Student Loan Payments |
- $2,052 |
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Spending Money for Student |
-$300 |
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Paid Travel Home |
-$350 |
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Paid Down Mortgage |
-$10,000 |
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Pay Living Expenses |
- $48,000 |
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Balance Owned |
- $60,702 |
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Deposit Income Payments |
+ $60,000 |
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Ending Balance Owned |
- $702 |
- parent used BLOC to pay the monthly payments on the private student loan that was borrowed to pay for college expenses minus financial aid received
- spending money was sent to the student
- travel money for the holiday was sent to the student
- living expenses include mortgage payment, food, family care and other living expenses
- you made 2 additional mortgage payments to reduce your mortgage loan balance
- your starting balance was $0
- you borrowed $60,702 from the BLOC
- you made payments of $60,000 into the BLOC
- your ending balance was $702
- you never made a schedule payment to the BLOC:
your income represented your monthly payment
- you will only pay interest on the average daily balance
Starting in Year 2
- student get a 2nd private student loan to pay for college expenses minus financial aid received
- parent uses BLOC to pay the loan payments on both loans
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Search
- [view] Intro: College Costs
- [view] OP1: Parent Pay
- [view] OP2: Shared Costs
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