Loans and Credit
Generating loans is quite simple in Classonomics, only requiring a few simple inputs from you into the loan generator in order to determine student eligibility for loan funding. To get to the Loan Generator, click on that button from the First Bank and Trust screen.
As you can see, the top half of the Loan Generator asks you for only a few pieces of information: Customer Name, Loan Amount, Term, Origination Date, and Minimum Credit Score. These are the only cells on the Loan Generator that you are able to enter values for, the others are automatically calculated for you based on the student’s performance and other financial decisions they have made throughout the year.
Once you have selected the student’s name, the Loan Generator immediately looks up the student’s credit score to determine whether any values are required to move forward. If the student credit score does not return sufficient based on the minimum score you have set in the corresponding cell on the Loan Generator page, the loan program will return a value of “Credit Score Too Low” and “Check Loan Factors for Problems.” This will prevent you from having to proceed further while enabling you pass on to the student why they have not qualified for a loan at this time and the items they need to improve before reapplying.
If the student credit score is sufficient to proceed further, the Loan Generator will return the values “Credit Score Passed” and “Loan Approval Suggested.” This will signal you to continue entering in the remaining information requested by the Loan Generator. Using the student loan application (which can be found and printed under the Printables section), enter in all the remaining information. The loan program automatically returns the interest rate the student will qualify under based on their credit score and the rates you set early on, and it will use the remaining information and analyze if the student qualifies for loan funding based on the criteria set forth in the graphic below.
If any of the values here come back as problematic, the determination cell will turn red and issue a warning that loan funding should not proceed based on the reason given. This, once again, will enable you to pass on to the student the areas that need improvement before loan funding can be obtained. The exception to this rule will be if the student has sufficient funds to leverage as collateral against whatever loan they are seeking to take out. In a case such as this, you will freeze those assets under the appropriate account screen until the secured debt has been repaid.
If all loan factors have cleared, loan details will appear in the bottom window for the student to review before decided to proceed with loan funding or not.
Once the student has reviewed the details and has determined they do wish to proceed, it is important that you print the promissory note in order to contractually bind them to the loan provisions. You should take some time on your own to review the promissory note so that you can quickly go through the details of it before the student signs. This way you can avoid any complaints later on that they did not know what they were getting into.
If there are any questions remaining regarding loans or real estate, drop by the Classonomics website and visit the Forum. If a thread is not already there answering your question, start one to get one of the many users of Classonomics to help you out or drop me an e-mail in the Contact section of the website and I will get back to you as soon as possible.
You may feel free to hire a banker from amongst your students, offer them an increased wage or guaranteed overtime for serving in the capacity of banker, and have them come in either during lunch or breaks to process loan applications to keep you from having to do this.
The credit center is where you will be able to pull student credit reports, access all outstanding loan accounts, and visit the Classonomics real estate agency to enter various bits of information in regards to student ownership of desks. The first item we will discuss in this section will be the credit reporting center, otherwise known as the Clasifax Credit Agency.
Here you will take note of several panes, all clearly separated from one another. The first to look at is the Classroom Annual Averages pane on the bottom left of the screen. Here you will find information on the averages from the various measured categories from within PaySoft. These are the baseline values for determining what impact a student’s achievement levels will have on their overall credit score.
Once the credit score calculator has determined score baselines based on class averages, it then weighs those averages against the student’s achievement levels in the Individual Student Credit Scoring Factors pane. Here you have individual columns reporting the student’s individual achievement level, the percentage difference in that achievement level vs. the base classroom average, a text representation of what impact that achievement level has on the overall credit score, and the actual point change each individual category has on the current credit score.
Credit scores will fluctuate through each category based on the formulas the credit calculator uses to determine individual category scores. While these formulas are not going to be discussed here due to their being mundane and semi-complicated, there is a point cap of 75 points on each category listed in this pane. Meaning that a student cannot increase or decrease their overall credit score more than 75 points in any individual category.
While this 75 point cap exists on some of the scored categories, no such ceiling exists for the pane directly beneath the Individual Student Credit Scoring Factors window. This pane is where the score impact of late payments and collection items are calculated.
The scoring on these categories will be discussed for the simple fact that they hold the potential to have such a significant impact on student credit scores. Scoring is calculated for these categories as such:
- Late Payments: A payment is considered late if payment has not been made within 90 days of the established bill due date on the Cost of Living page. All late payments result in a 10 point loss in a student’s credit score until such a point in time as they are paid in full and can be removed from a student’s file.
- Collections: A payment is sent to collections if payment has not been made within 90 days of the established bill due date on the Cost of Living page. All collections present on a student’s account will result in a 20 point decrease in the student’s credit score. Given this, it is very easy to see just how detrimental to a credit score collection items can be and should be avoided at all costs.
The panes to the far right of the credit agency screen contain the overall student credit score and the area where you establish the interest rates that will be paid by a student based on their credit score. The interest rate pane needs to be discussed for a moment to explain how the credit score ranges are determined.
Based on FICO scores, the overall range for credit scores go from a maximum of 850 to a minimum of 300 (all based on current FICO standards).
to a minimum of 300 [the lowest FICO score possible]. From this already established credit score range, PaySoft determines the different tiers based on the grading scale you use in your class. In the case of the 6 ½ point scale entered on the Control Panel, we take 93.5% of 850 (850 * .935) to establish the top tier minimum of 795 [rounded up to the nearest whole number]. This process is repeated to establish the score range for each tier, down to the lowest level culminating in an ultimate low of 300.
Credit scores and applicable interest rates for loans are automatically reported to the Loan Generator page to establish the terms under which credit will be extended to a potential debtor. For the reason just mentioned, it was necessary to only be able to change the referenced student under the credit family of tools in only one place, and that place is only on the loan generator. I apologize for any inconvenience this may cause and will look into permitting you the ability to change the referenced student in both places in later versions of the PaySoft software. Hopefully the next version of PaySoft will have moved to an online environment that offers much more versatility than this initial phase of Classonomics.
Current Outstanding Credit Accounts
Once a loan has been generated from the Loan Generator, all details for that loan must be entered into Outstanding Credit Accounts page. This page can be accessed from either the Loan Generator or First Bank and Trust page. Just follow the columns and their headers to easily see what information the liability tracker needs to correctly track loans throughout the year.
Mortgages will be a bit different to input into the Outstanding Credit Accounts page than a regular installment loan, so we will spend a brief moment discussing them here. First, you will only have access to certain cells in which to enter loan information. The following table breaks down where you can and cannot enter information, and what type of information needs to be entered.
|CATEGORY||CAN USER INPUT VARIABLES||INFORMATION TO INPUT|
|Original Loan Amount||YES||Total amount of loan applied for.|
|Date Loan Generated||YES||Date loan was applied for.|
|Loan Generator Payment Determination||YES||Payment determined by the loan generator for the loan in question.|
|Number of Payments||YES||Total number of payments for loan.|
|Loan Interest Rate||YES||Int. rate as determined by PaySoft.|
|Property Tax Rate||YES||Rate at which property taxes are set.|
|Final Payment Amount||NO||—–|
|Property Taxes Due||NO||—–|
|Property Tax Escrow Payment||NO||—–|
|PMI Payment Due||NO||—–|
|Desk/Home Purchased Address||YES||Select from drop down list.|
|Escrow Property Taxes (Yes/No)||YES||Select from drop down list.|
|Was 20% Down Payment Made (Yes/No)||YES||Select from drop down list.|
To expand briefly on the chart above:
- Current outstanding loan amounts are calculated by PaySoft and include any applicable late fees or penalties if the student is delinquent on any of their payments.
- Final payment amount will be different than the loan payment as determined by the Loan Generator. The difference in payment is based on the inclusion of property taxes and PMI insurance (which is determined to be required if a 20% down payment is not made).
- Property tax rates can be set at 0% (or left blank) if you do not wish to include them.
- Property Tax Escrow—If the student decides they do want to escrow their property taxes, their property taxes will be broken up over the number of payments selected during the loan generation phase and will increase the amount of their monthly payment for the duration of the loan. If the student opts to not escrow their taxes, they will receive a property tax bill for a lump sum payment due by the 15th of April of the current school year.
- 20% Down Payment—If no, PMI insurance will be added to the monthly payment amount due.
- For more on mortgaging desks, click here.
For the information fields pertaining to other loans that can be taken out by students during the year, with your permission, inputs are straightforward. You will only not be able to input information into the Current Outstanding field, as this amount is calculated by PaySoft based on student payment history.
Once all necessary information has been entered and it is time to start processing student payments, you will look to the left of the student name for whom you need to insert payment information and press the Access Loan Accounts button. Pressing this button will bring you to the following page:
Please note the read message near the top left of each individual loan page. It is a reiteration of something that we discussed earlier, that being that you cannot enter mortgage payment information on this page. The mortgage “card” is merely provided for you to be able to reference a student’s mortgage payment standing.
The “Loan #1” and “Loan #2” panes ARE where you will enter loan payment information for all loans that are not mortgage in nature. Each student has their own loan payment processing page, so you will have to access each page individually to process payments as they come into your possession. Since this will be a time consuming process, I recommend this to be yet another area where you utilize the overtime system to get a student to help with the processing of payments.