How to categorize student loans?

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1

Hello Tiller Community,

I recently went back to school (yay!) and have student loans (boo!), but I am not quite sure how to handle this in my budget. I want to be able to transfer a set monthly amount to my checking account from my overall student loan disbursement that I keep in Savings and treat the student loans like income for the purpose of monthly budgeting. But, I don’t want my student loans to show up as income on my yearly budget since it is debt. Any advice?

Thanks for your help!

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Hello @misha.a.white , thank you for being part of the Tiller Community. Congratulations on going back to school. I’m still paying for my doctoral loan (and I dropped out! )

You can create a specific category on the Categories Sheet and choose “Hide” from reports.

One of the best features of Tiller is that you’re not locked into doing it a particular way. Do you have your student loan account synced with Tiller or are you adding it as a manual account?

I downloaded the help center into Notebook LM to help me share the steps to a process faster. Here is what it suggested:

Hello! It’s great that you’re organizing your finances as you head back to school. Tiller spreadsheets offer the flexibility to handle this unique budgeting situation. Here’s some advice based on the information in the sources on how you can treat your student loan funds for your monthly budget without having them appear as income on a yearly basis.

This approach involves using a Transfer category for the initial loan disbursement and then a separate set of Income and Expense categories for your monthly “paycheck” from your savings.

Step 1: Categorize the Initial Loan Disbursement as a Transfer

When you receive the lump sum student loan disbursement into your savings account, it’s technically a transfer of debt, not earned income. To prevent it from distorting your annual income figures, you should categorize it as a transfer.

  1. Create a “Loan Disbursement” Category: On your Categories sheet, create a new category named something like “Loan Disbursement” or “Student Loan In”.
  2. Set the Type to “Transfer”: In the “Type” column for this new category, select Transfer. Categories with a “Transfer” type are designed for moving money between accounts and are typically excluded from budget dashboards and cash flow calculations. This ensures the large sum doesn’t appear as income on your Monthly or Yearly Budget sheets.
  3. Categorize the Transaction: When the loan funds appear in your Transactions sheet as a deposit into your savings account, assign it your new “Loan Disbursement” category.

Step 2: Set Up Categories for Your Monthly “Income”

To treat a portion of the loan money as monthly income for budgeting, you’ll essentially pay yourself from your savings account. This requires a specific category setup to correctly reflect this in your monthly budget while allowing you to exclude it from your yearly overview.

  1. Create a Monthly “Income” Category: On the Categories sheet, create a new category called “Student Loan Living Stipend” or a similar name. Set its Type to Income. This will allow you to budget for it as monthly income.
  2. Create an “Internal Transfer” Expense Category: Create another new category like “Internal Loan Transfer” and set its Type to Expense.
  3. Assign a “Transfer” Group: To keep these related, you can assign both new categories to a custom group named “Student Loan Funds” or similar.

Step 3: Record the Monthly Transfer as Income and Expense

Each month, when you transfer the set amount from your savings to your checking account, you will see two transactions in your Transactions sheet:

  • A withdrawal (negative amount) from your Savings account.
  • A deposit (positive amount) into your Checking account.

You will categorize these two transactions as follows:

  • Categorize the withdrawal from Savings using your “Internal Loan Transfer” (Expense) category.
  • Categorize the deposit into Checking using your “Student Loan Living Stipend” (Income) category.

This method correctly reflects the funds as “income” for your monthly budget, which will appear on the Monthly Budget sheet and be counted toward your cash flow for that month.

Step 4: Exclude the “Income” from Your Yearly Budget

To prevent this “income” from showing up on your yearly reports, you can use the “Hide from Reports” feature.

  1. Navigate to your Categories sheet.
  2. Find the “Student Loan Living Stipend” (Income) and “Internal Loan Transfer” (Expense) categories you created.
  3. In the “Hide from Reports” column for both of these categories, type “Hide”.
  4. This action will exclude these transactions from certain reports, and you can apply filters on other reports to exclude them as needed.

By taking these steps, you can successfully manage your student loan funds as monthly income for your budget while ensuring your yearly financial reports accurately reflect that it is debt, not earned income.

-Alice
Tiller Evangelist

Bluesky, Instagram, Facebook, LinkedIn

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Hi Alice,

This is really helpful! One follow up question, how can I see the student loan on my annual budget? I would like to track it since it is debt and I want to make sure I am keeping in mind the balance in relation to my monthly spending. For example, I want to be able to look at the yearly budget and tell how much I have left of the disbursement or if I can take out less in the future because I used less than anticipated. The hide category is helpful, but it seems like there is no way to hide on monthly budgets without also hiding on the yearly budget.

Appreciate any follow up advice you have, thanks!

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Hi @misha.a.white , there are certainly multiple ways to address your student loan balance. You might be able to connect your account in the tiller console (my.tiller.com) and the balance would show just like your credit card balance. If the student loan account is not supported by our aggregator (work with the customer support team who can help you identify if your account is compatible) you can add your student loan as a manual account.

-Alice
Tiller Evangelist

Bluesky, Instagram, Facebook, LinkedIn

1 Like