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— Slide 4: How the BLOC Can Be Used —
Let's Look at Another Example

Let's say that you have a student going to college. The cost for annual tuition is $10,000.

You can get a parent PLUS loan to finance the tuition fee at the following terms (sample only, actual terms may differ):

Loan Amount: $10,000*
Fixed Rate: 7.50% (see actual rates)
Repayment Term: 120 months
Monthly Payment: $118.70

*PLUS loans can charge up to 4% origination fees, which means your loan amount may be greater in order to pay the full $10,000 tuition bill


The total amount of interest and principal paid over the 120-month term at 7.50%:

Total Payments $14,244
Total Interest Paid $4,244
Total Principal Paid $10,000

Your loan repayment plan would look like this:


Month

Starting
Balance

Monthly
Payment

Interest

Prin
1 $10,000.00 $118.70 $62.50 $56.20
2 9,943.80 118.70 62.15 56.55
3 9,830.34 118.70 61.80 56.91
4 9,773.08 118.70 61.44 57.26
117 467.48 118.70 2.92 115.78
118 351.70 118.70 2.20 116.50
119 235.20 118.70 1.47 117.23
120 117.96 118.70 0.74 117.96
Total: $14,244 $4,244 $10,000
In this example:

An amortization schedule is calculated that shows that the borrower must pay $118.70 each month for 120 months in order to meet the interest obligation and to pay down the borrowed amount to $0 over 10 years.

The interest charges for the first month is calculated as such:

$10,000 X 7.50% (divided by) 12 months = $62.50

In the first payment, the borrower pays the lender $62.50 in interest. The remaining amount of $56.20 will repay the loan and reduce the borrowed amount to $9,943.80.

The interest charges for the second month is calculated as such:

$9,943.80 X 7.50% (divided by) 12 months = $62.15

In the second payment, the borrower pays the lender $62.15 in interest. The remaining amount of $56.55 will repay the loan balance and reduce the borrowed amount to $9,830.34.

This will continue all the way through the 120th payment, where the borrower pays the lender $0.74 in interest. The remaining amount of $117.96 will repay the loan balance and reduce the borrowed amount to $0. The loan obligation has been paid off.

 

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Home Equity Application

BANK EQUITY for College Aid