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11 Cards in this Set
- Front
- Back
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EE saving bond & Series I to pay for education…. |
Tax free if tuition and fees Room & board NOT permitted Purchased in the name of the parent, owner at least 24 yr old when issued, redeemed in the year expenses incurred Child can NOT be a co-owner |
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EFC: Regular formula |
Income & assets, dependent status, household size, # of children in college, cost of supporting the family Expected to be 12% of discretionary assets but does not include retirement assets, home equity, annuities, cash value of life policy |
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EFC: regular formula max assets |
Parent: 47% net max of 5.64% Student: 50% of income, as reduced by income protection allowance, plus 20% of net worth |
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EFC: Simplified method |
Does not consider families assets. 2 things to qualify if child is a dependent … Parents not required Fed tax return or anyone in parent’s household receive government benefits such as Medicaid, WIC, etc Total AGI of parents less than $50k |
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EFC: Automatically assessed formula |
Calculates EFC at 0, no tax return, AGI less than $27k |
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FAFSA: when is it filed |
October 1 of prior year (sr year) income is looked at in the previous year “prior-prior year” |
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Federal Pell Grant |
Need-based financial aid for students for undergraduate degree $6,495 max |
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Stafford Loan (subsidized) |
Admin by US dept of Ed Based on student financial need Fed govt pays interest on loan while borrower is in school and 6 month grace period after graduation |
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Stafford Loan (unsubsidized) |
Not needs based Borrower is responsible for interest from the time the loan is dispersed |
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Max limits for Stafford loans both un- and subsidized |
Year 1: $5,500 ($3,500 max sub.) Year 2 : $6500 ( $4,500 max sub.) Year 3: 7500 ($5500 max sub.) |
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Disadvantages to using UGMA/UTMA for education |
1. Once child is age of majority, can use it for other things besides education 2. *May cause “kiddie tax” if income above threshold taxed at parents rate and not child’s (under 19 or FT student under 24) *control by owning growth stocks and muni bonds |
