Ch 5 Flashcards
Have education costs increased more than or less than inflation?
More than.
After completing FAFSA, what does the student get?
Student aid report listing the Expected Family Contribution (EFC)
How much weight are a students assets given over the parents’ on the EFC?
Up to six times
Has Federal funding for postsecondary education increased or decreased over the years?
Decreased
What does CSS (College Scholarship Service) incorporate that EFC does not?
Equity in the family home; value of qualified retirement plans; income and assets of non-custodial parents
What is the benefit to a student being classified as independent?
Only student’s income is included in EFC formula.
Primary grant for undergraduate students. It is available to full and part-time students, needs based, and designed for low and middle income students.They can be used for online or vocational programs.
Pell Grants
Needs-based grants that are designed for students with extreme financial need and are administered by the aid office at each school.
Supplemental Education Opportunity Grants
Needs-based student loan where the school is the lender and payments begin and interest accrues after the student leaves the school.
Perkins loan
Needs-based student loan which must be repaid within 10 years. It is the major source of borrowing.
Subsidized Stafford Loans
Non-needs-based loan where interest is charged beginning on the date loan proceeds are received. One can borrow the entire cost of education and graduate students are eligible.
PLUS loan (Parent Loans for Undergraduate Students)
Irrevocable custodial account (parent is custodian) where money is transferred to a minor child. When they reach age of majority the child has full control of the account and can do what he wants with the funds.
UTMA or UGMA account.
Savings vehicle that can be established by parents or custodian where the owner controls the investments and withdrawals. Anyone can contribute but contributions are limited to $2,000/year and are phased-out depending on adjusted AGI.
Coverdell ESA
Education funding vehicle that is sponsored by the state and can be either a prepaid tuition plan or savings plan.
529 Plan.
This education savings plan allows contributions regardless of income, has a high contribution limit, contributions are not tax deductible, and rate of return is based on investments the owner selects. Can only change once per year.
529 Savings Plan
