How Do I Reflect Student Loan Payments to an External Institution?
BV00
Member Posts: 13
I have a question in need of clarification regarding reflecting my student loan repayments to external institutions like Sallie Mae and Nelnet. I have made loan accounts in the "Loan and Line of Credit" section of my Chart of Accounts. However, being that it is a student loan, the loan funds were not disbursed to me directly in any of my bank accounts, but rather accredited to the school attended. How does this impact the manner in which I reflect my payments in Wave? Additionally, whenever I make such a payment, the funds are highlighted GREEN as if to represent a debit to that account as if it were an asset, and the figure in the loan account is always a negative number. Is this the correct representation? How can I more accurately reflect that these are outgoing funds to satisfy loan payment? Thank you for any clarification.
Comments
Hey there @BV00 !
We have a great article in our help centre that walks you through the process of Creating a Loan Account in Wave, and the accounting for receiving and repaying the loan funds.
As always, if you need advice more tailored to your business's specific needs we recommend you get in touch an accountant or bookkeeper who can provide information based on your business’s situation. The Wave Pro network connects you with accountants and bookkeepers who are familiar with Wave – you can check that out here: https://www.waveapps.com/pro-network/
In general accounting for asset accounts, debits will be used to represent deposits into your account while credits will be used to represent withdrawals. For liability accounts (like credit cards and loans), debits will be used to represent payments to the account while credits will be used to represent expenses.
We also have a great Help Center article that sheds light on this. Feel free to check it out here: