Chapter 8 Homework and Review

Question 1

Academic Competitiveness Grant

Answer 1

A grant for students graduating from a rigorous secondary school program of study. Rigorous secondary school programs are designated by stated education agencies and recognized by the secretary of education.

Question 2

American Opportunity Tax Credit

Answer 2

Created by the American Recovery and Reinvestment Act of 2009. The new legislation increased the amount of the tax credit and provided other benefits. The AOTC provides a tax credit up to 2500 (2015) per student for the first four years of qualified educational expenses for post secondary education.

Question 3

College Savings Plans (529 Savings Plan)

Answer 3

A plan that allows for college savings on a tax-deferred basis with attendance at any eligible education institution. Distributions from a College Savings Plan are federal and state income tax-free, as long as they are used to pay for qualified education expenses.

Question 4

Coverdell Education Savings Account

Answer 4

A tax deferred trust or custodial account establish to pay for qualified higher education or qualified elementary/ secondary school expenses.

Question 5

Education Funding

Answer 5

Determination of the lump sum or annual savings required to pay for college.

Question 6

Employer Provided Education Assistance Program

Answer 6

A program established by an employer to reimburse employees for education expenses. The education expenses may or may not be directly related to the employee’s current job duties; it depends on the employer’s policy.

Question 7

Federal Pell Grant

Answer 7

Need based financial aid for students who have not earned an undergraduate degree or a professional degree. A Pell Grant does not have to be repaid.. Pell Grants are awarded based on financial need.

Question 8

Federal Perkins Loan

Answer 8

A program for undergraduate and graduate students with exceptional financial need. The Perkins Loan is a low insterest rate loan (5%), which is offered through a university’s financial aid office. The university serves as the leader and the federal government provides the funds.

Question 9

Federal Supplemental Educational Opportunity Grant

Answer 9

A grant awarded to students with exceptional financial need. Pell Grant recipients with the lowest EFC are considered first for a FSEOG

Question 10

Federal Work Study

Answer 10

Jobs on campus or off campus for undergraduate or graduate students to help students pay for their education expenses. To be eligible students must have financial need.

Question 11

Fellowships

Answer 11

Paid to students for work, such as teaching while studying for a Master’s degree or conducting research while working towards a Doctorate of Philosophy degree (Ph.D.). Fellowships can last anywhere from a few weeks to a few years, depending on the depth and level of work involved.

Question 12

Free Application for Federal Student Aid

Answer 12

A form used to determine a student’s eligibility for all types of financial aid, including grants, work study, and loans. The FAFSA is used to determine the Expected Family Contribution amount.

Question 13

Graduate Plus Loans

Answer 13

Loans for student’s seeking graduate and profession degrees. A Graduate PLUS Loan is based on the parent’s credit history and is not based on financial need.

Question 14

Grants

Answer 14

Money provided to students for postsecondary education that does not require repayment.

Question 15

Lifetime Learning Credit

Answer 15

Provides a tax credit up to 2,000 (2015) per family for an unlimited number of years of qualified education expenses. The qualified education expenses must be related to a postsecondary degree program or to acquire or improve job skills.

Question 16

National Science and Mathematics Access to Retain Talent Grant

Answer 16

A grant available during the third and fourth years of undergraduate studies. the National SMART Grant pays up to 4,000 per year and is paid in addition to Pell Grant.

Question 17

PLUS Loans

Answer 17

Loans for parents to borrow to help pay for a dependent’s undergraduate education expenses. PLUS Loans are not based on financial need, but are instead based on the parent’s credit history.

Question 18

Prepaid Tuition Plans

Answer 18

A plant that will allow a parent to purchase college credits today and use those credits when the child attends college.

Question 19

Qualified Tuition Plans

Answer 19

A plan that allows for families to save for education expenses on a tax-deferred basis. Section 529 of the Internal Revenue Code authorized states to adopt qualified tuition plans. The two types of qualified tuition plans are prepaid tuition and college savings plans.

Question 20

Scholarships

Answer 20

A grant of financial assistance made available to students assist with the payments of education related expenses. Scholarships are available for academic or athletic achievement. Scholarships can be provided to undergraduate or graduate students.

Question 21

Stafford Loans

Answer 21

Student loans administered by the U.S. Department of Education

Question 22

Teacher Education Assistance for College and Higher Education Grant

Answer 22

A grant that provides up to 4,000 per year for students who intend to teach in a public or private elementary, middle, or high school that serves a community of low income families.

Question 23

Uniform Gift to Minors Act

Answer 23

Allows minors to own cash or securities. The UGMA/UTMA accounts are governed by state law that requires the custodian of the account, usually a parent or grandparent to manage the account for the benefit of the minor child.

Question 24

Uniform Transfer to Minors Act

Answer 24

Allows minors to own cash, securities, and realestate. The UGMA/UTMA accounts are governed by state law that requires the custodian of the account, usually a parent or grandparent to manage the account for the benefit of the minor child.

Question 25

U.S. Government Series EE and Series I Bonds

Answer 25

Bonds that can be redeemed to pay for qualified education expenses and the interest earned on the bonds is included in taxable income. For purposes of excluding interest income using U.S. Government savings bonds, qualified education expenses included tuition and fees, but do not include room and board.