Education Funding Flashcards
Are there limits to federal student loans?
Are there different limits for subsidized, unsubsidized?
Yes! Limits are different for dependent and independent students (independents can borrow more) and increase by college year.
The maximum subsidized amount is the same for independent/dependent but also increases by year.
Does tuition have to be paid directly to the university for the AOC? The LLC?
For the AOC no, for the LLC yes
Are Stafford maximums fixed?
Do they increase for each year of school?
Yes, they increase each year but cap out at junior year.
Is the subsidized loan maximum different between dependent and independent undergraduate students?
Is the unsubsidized amount?
No, and yes.
Can graduate students receive subsidized loans?
Are they eligible for a higher maximum loan than undergrads?
No and yes
Is room and board an AOC expense?
What are the AOC expenses?
No! AOC expenses are tuition, books, fees necessary to attend.
What is form 709?
706?
709 is the gift tax form.
706 is the estate tax form
What is a custodial account?
Is an UGMA? A 529?
An account that one holds for the benefit of another.
An UGMA is one. A 529 is not because the parent owns it and can change beneficiaries or use it for their own purposes.
What is the difference between a 2503(b) trust, and a 2503(c)?
How do they figure into qualifying for financial aid?
2503b is the “bad boy” trust—it pays the beneficiary a yearly something, but not the trust principle.
2503c is the “choir boy” trust—it pays no income but pays all its principle when the beneficiary reaches a certain age.
For education funding a b trust gives the student income, thereby increasing their EFC.
How do you calculate family income for the FASA?
AGI - deductions + HSA/IRA contributions - taxes (You add HSA/IRA back in because they could’ve been spent on tuition for those years).
Are loans from LI a good way to finance college?
They can be. You don’t have to pay them back if you keep paying the premiums; they just reduce your death benefit. Also people tend to need less LI when they’re children are old enough for college.
