We are setting up PELs and are confused. We want to use a single payment note for 12 months and then renew it with the interest in 12 months. Is this a reasonable way to structure the loans? If so, do we disclose the “term” as 12 months? Or, do we disclose it as 18 months because of the 6 month deferral period? Do we disclose the finance charge for 18 months? Do we have to factor in the potential repayment term of 120 monthly payments? (4 years in school, 6 mo. deferral plus the 120 months?)
Do we need to disclose three programs? The deferral period, the interest only option and the fully amoritized option. Help!
Do I understand your program? You will make a loan to a freshman for the cost of the first year of tuition. The loan has a 12 month term. At the end of each 12 month period you refinance the balance of the note, plus accrued interest. At the end of four years payments are deferred for six months. Then is the full balance due and payable or is the loan converted to an amortizing loan?
Confirm that I understand your proposal and then we can discuss documentation options. If I understand your proposal correctly there are a number of easier options that you may choose to pursue, if your systems are capable.