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42 Cards in this Set
- Front
- Back
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Financial Aid |
Need Based Non-need based |
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Expected Family Distribution EFC |
-when applying for fin aid, income, assets, fam size #of fam members in college at the same time, special circumstances (job loss / death)are considered -adjusted gross income AGI, allows for taxes &living expenses -asset contributions, 12% of parents' net worth -AGI+assets is expected parents contribution from adjusted available income -when parents adj available income increases rates rise from 22-47% |
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EFC cont'd |
-students are expected to contribute, 50% of their income after a certain allowances, $6260 income protection allowance -asset contribution 20% of their net worth -income and asset added for student contribution |
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Assets counted towards EFC |
-checking, savings, MM, CDs -investments funds, stocks, stock options, bonds, commodities, and precious metals -real estate equity, biz, investment farms and trust funds -college savings plan, 529 plans, Coverdell ESA in parents and students' names are included -assets owned by independent students/spouses are reported as students' *accounts held by relatives not reported (aunts /grandparents) -Retirement and home equity not counted |
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Assets counted towards EFC cont'd |
-assets owned by students will result in greater reduction in aid -UGMA/UTMA (Unified Gift / Transfer Minor Accounts) were once the best way to save for college. Since intro of 529 and Coverdell, they're less desirable -UGMA/UTMA are counted as assets and may increase student income if interest, dividends, capital gains were reported. |
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Qualifying for Fin Aid |
-FAFSA determines if student qualifies for pell grant, stafford loan or perkins loan. -Exclusions from EFC: home equity, biz owned and run by fam, cash value life ins, annuities, retirement (IRA, 401k) -Avail income includes: tax&untaxed income, IRA deductions, child support, cap gains investments -avail income doesn't include: earned income credit, funds from public assistance |
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Qualifying for Fin Aid cont'd |
-w/d from Trad & ROTH IRA incur no penalty when used for qualifying education expenses but principal &earnings must be filed on next year's taxes -w/d from 529 and Coverdell ESA are not added back as income -w/d not used as educational expenses are taxable income |
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Asset protection allowance |
-allows parents to exclude certain portions of their asset from consideration, however, students do not have this allowance -offset against fam income and based on fam size, #of fam members in college &age of oldest parent at time student applies for aid -range from $25k to $75k. in 2015, parents 45 y.o. w/college age students have $30700 allowance |
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Accumulation of Assets |
-assets are countable or non-countable, no matter who owns them. The more countable assets you own, the higher your EFC -consider saving more money in parents countable asset (real estate / stock), up to the parents allowable asset protection -then invest in non-countable assets: cash value life ins, home equity, and retirement plans |
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Financial Aid Standardized Process |
-FAFSA: fam size, income, benefits, assets -Student Aid Report-SAR, EFC used, sent to student &college fin office -CSS / Fin Aid Profile, data used to award college's fin aid -Fin Aid Eligibility or Fin Need-college calculated cost of attendance minus EFC -Fin Aid Package, package or combo of fin funds may include grants, loans, scholarships, and work study programs |
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Govt Grants and Loans |
-Pell Grant -Supplemental Educational Opportunity Grants -Perkins Loans -Federal Direct/Stafford Loans -Plus Direct/Plus Loans -Work-Study Programs |
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Federally subsidized loans |
-Federal Direct/Stafford Loans -PLUS Direct/PLUS Loans Fed Direct and PLUS direct are lent from govt directly Stafford and PLUS loans are from private banks and credit unions |
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Pell Grant |
-doesn't have to be repaid -awarded to FT or PT vocational or undergrad schools for students who haven't completed a bachelor's or professional degree -provide a foundation of fin aid where other aid may be added. -1 Pell Grant /award yr/school, income <$31K, award not only depends on EFC but cost of attendance and whether FT or PT -$5730 max for 2014-15 academic year |
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Federal Supplemental Educational Opportunity Grant (FSEOG) |
-undergrad w/exceptional fin need, students with lowest EFC, gives priority to students who receive Pell grant, doesn't have to be repaid -students at each school may be awarded FSEOG depending on FSEOG availability at that school -$100-4K/ yr depending on when applied, fin need, funding level and policy at that school -academic competitive grant also available, low income students who receive Pell grant can get $750 during their freshman &$1300 sophomore yr, maintain 3.0GPA. Jr / Sr majoring in math, science, tech, engineering, some lang. can apply for SMART, $4k, 3.0GPA |
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Perkins Loans |
-LT 5% i rate for students w/ fin need made through school fin office, school is lender, money is from fed govt -9 mos after leaving or graduating school -monthly pmt depends on loan amt & how long they have to pay back -may take up to 10 yrs to repay -may borrow $5500 per year, upto $27500 for undergrad -grad / professional degree, $8K or $60K total for grad +undergrad -depends on fin need and fund availability |
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Fed Direct / Stafford Loans |
-60% of undergrad use them -Direct Loan lent by govt -if school doesn't participate in direct loan, then money is from banks, credit unions &other lenders in FFEL program, may be available to fam of income topping $150K for high cost schools |
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Stafford Loan, Subsidized |
-doesn't accrue i until 6 mos after graduation, leaving school, or drop below 1/2 time -$3500-5500 depending on grade level -i rate cannot exceed 8.25%, currently at 4.66% -repayment for up to 10 yrs, or longer if loans are deferred or consolidated |
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Stafford Loan, unsubsidized |
-i accrues as soon as loan is disbursed until paid. Option to pay i as it accrues -$2k-12k -i rate cannot exceed 8.25%, currently at 4.66% -repayment for up to 10 yrs, or longer if loans are deferred or consolidated |
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Stafford Deferment |
-enrolled in at least 1/2 time in post-secondary school -enrolled in approved fellowship -approved rehab training program for disabled -econ hardship up to 3 yrs -inability to obtain FT employment for up to 3 yrs |
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Fed Direct / Stafford Loan Perks |
-students who pay on time for the first 4 yrs earn 0.5% discount, but less than 10% do this as most miss the first pmt -grad with direct loans working in public service for 10 yrs and have made 120 pmts after Oct 1, 2007 will have their loan forgiven |
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Dependent student loan limit |
-$5,500 for freshmen students in a full academic year program -$6,500 for sophomore students enrolled in a full academic year program -$7,500 for students who have completed two years of study and are enrolled in a full academic year program -Max total debt upon graduation is $31,000 w/no more than $23,000 in subsidized loans |
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Independent undergrad or dependent w/o PLUS |
-$9,500 for 1st-yr students enrolled in full academic year program (only $3,500 may be in subs. loans). $10,500 for sophomore students who have completed the 1styear of study & remainder of the program is at least a full academic year (only $4,500 of this amount may be in subsidized loans). -$12,500/ for Jr & Sr who have completed 2 yrs& remainder is at least a full academic year (only $5,500 of this amount may be in subsidized loans). -Max total debt upon graduation is $57,500 with no more than $23,000 in subsidized loans |
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Grad Student limits |
-$20,500 / yr unsub -max total debt is $138,500, no more than $65,500 subs which included Stafford Loan from undergrad |
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PLUS Direct / PLUS Loans |
-allow parents w/ good credit to borrow for students enrolling at least 1/2 time -i variable but never more than 9% -4% origination fee -i accrues as soon as loan is disbursed -10 year repay period -disbursed in 2 pmt, each never more than 50% of loan amt. Must be used for education exp only |
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Work Study Program |
-must pay at least min wage, only institution work, not profit-related -from Fed, State, or Crimson Scholar -employers must match fed / state money: 50% crimson which depends on funds availability |
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Qualified Tuition Programs / 529 plans |
-allows you to prepay or contribute to acct estab for qualified education expenses at an eligible educational institution. Est. and maintained by state or eligible institutions -all 50 states offer 529 prepaid or 529 savings -lock in future cost at today's price, guaranteed to pay for in-state tuition cost. Transferable to private or out of state institutions -independent plans available at >300 institutions |
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529 cont'd |
-Tax-deferred growth. No AGI phase-out. -beneficiary/student is not taxed on the grossincome earned within the plan. -contributor can remove assets from their taxableestate. $14,000 x 5 years = $70,000 for 2015. -Many states provide state tax deductions and/or taxexemptions for contributions. -contributor/owner has full control of the assetsand can change the beneficiary. |
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529 disadv. |
-parents assume risk if student's don't meet school admissions reqt -students get scholarship |
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Coverdell Education Savings Account / ESA |
-non-taxable gift to benefiary -can be used free of Fed income tax as long as spent on qualified education expenses. If not earnings subject to ordinary tax rate &10% penalty -elementary or secondary school, K-12, or post secondary -$2K annual limit -made to child under 18, used by age of 30 or rolled over to another child -if leftover, subject to ordinary tax&10% penalty |
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Coverdell AGI limits |
-MFJ $190,000 - $220,000; - Single $95,000 - $110,000 -tax-free distribution will preclude Hope Scholarship Credit or Lifetime Learning Credit in the same year |
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Coverdell may pay for the following |
-Tuition, fees, room and board, academic tutoring, -Books, supplies, and other equipment such ascomputers, -Uniforms, transportation, and supplementary items orservices. |
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Hope Scholarship Credit |
-100% of the first $2K for qualified educational expenses for the tax year plus 25% of $2k for the next tax year, totaling $2500 max / student -must be enrolled at least half time -AGI limits: Single $80,000 - $90,000 MFJ $160,000 - $180,000 -40% (max $1800) for students w/no tax liability |
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Hope Scholarship Credit cont'd |
-credit eligible for first 4 years of education: taxpayer, spouse, dependent |
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Lifetime Learning Credit |
-$10K base annual amt -based on 20% factor of qualified expenses -max credit is $2K ($10Kx20%), /fam, not /child -can be claimed for unlimited #of yrs |
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Lifetime Learning Credit Cont'd |
If 2 more children incur same educational expenses in the same year, parents may claim the following: -Lifetime Learning Credit -Hope Scholarship for both -Lifetime Credit for one and Hope for the other Only one credit allowed per child pear year AGI limits: Single $55,000 - $64,000; MFJ $110,000 - $128,000 |
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Series EE bonds |
-for i to be tax-free must meet the following criteria: 1. bond must be purchased in name of one or both parents of child 2. parents must be 24 years old before the first day of month of issue date of bond AGI Limitations: Single $77,200 - $92,200 MFJ $115,750 - $145,750 |
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Series EE bonds |
-can be purchased at as little as $25. Price is quarter its face value $100-10K. -can be cashed at anytime, considered liquid. Reduced yield if cashed before maturity -safe, backed by govt. i rate set at 90% of 5-yr Treasure security rate over 6 mos -tax-free if used for education purposes |
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Uniform Gift to Minor Act (UGMA) Uniform Transfer to Minor Act (UTMA) name depends on state where you live |
-allows parents to put assets into custodial acct for child -state will determine age (18, 21, or 25) -possible kiddie tax issue -UGMA assets belong to child when determining fin aid |
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UGMA and UTMA drawbacks |
-the gift belongs to child once they reach maturity. They can spend it how they'd like even for non-educational purposes -fin aid can be less for assets held in UGMA / UTMA |
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UGMA vs UTMA |
-UTMA more flexible, allows greater use of various investments ie. real estate, partnership interest, and oil and gas interests. also allows for testamentary transfer -UGMA terminates at 18 while UTMA can be 21 or 25 |
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Student Loan Interest |
-max $2500 can be deducted as adjustment to AGI -loans funds must have been spent on: tuition, enrollment fees, books, supplies, room / board, transportation Phase out for eligible interest StudSingle $65,000 - $80,000. MFJ $130,000 - $160,000 |
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Student Loan Interest |
-employer can pay $5250 /yr for employee's: tuition (undergrad&grad), enrollment fee, books, supplies, equipment -no phase out, doesn't count towards job related classes |
