Ch7 Flashcards
American Opportunity Credit
up to $2,500 per student
avail only until first 4 years of post secondary education
must be pursuing undergrad or a recognized education credential
minimum of half-time student
no felony/drug conviction
Lifetime Learning Credit
up to $2,000 per student
avail for all years of post secondary ed and job improvement courses
unlimited amount of time
no felony/conviction applies
Allowable educational tax deductions
up to 4,000 per year
AGI must be < 80,000 or 160,000 if filing joint
Calculate financial aid amount
Amount = cost of attendance - Estimated family contribution
Direct subsidized loans
needs-based. Federal government will pay interest while in school.
Direct unsubsidized loans
interest begins as soon as loans approved. Make payments immediately
Identify two funding requirements associated with financing a college education
Lump sum requirement
Monthly savings requirement
Discuss how cost, inflation investment returns and tax considerations shape investing into college
College cost inflation has historically outstripped consumer price inflation
conservative investment allocations may not keep up with with the pace of college inflation
this influences client to select a college funding strategy like prepaid tuition plans and Section 529 college savings plans
Compare and contrast availability of scholarships, grants, and loans for funding
Loans are more widely available than grants which are more available than scholarships. Need-based aid vs merit-based aid is also a consideration
Discuss the financial aid process from filling out FASFA form and establishing the expected family contribution
Parental assets/income combined with student assets/income minus any exclusions/allowances will determine parental and student contributions
PAYE
For newer borrowers
10% discretionary income
loan forgiveness over time
does not include spouses income
REPAYE
All borrowers
10% discretionary income
loan forgiveness over time
includes spouses income
