Education Funding

Question 1

American Opportunity Credit (AOC)

Answer 1

• $2k + 25% of next $2k of expenses (Max $2.5k)
• MAGI phaseouts
•First four years of college only!

Question 2

Lifetime Learning Credit

Answer 2

• 20% of first $10k of qualified tuition
• $2k max
• Unlimited period
• Any higher learning institution (undergrad, grad, continuing education)
• MAGI phaseout $160k - $180k (j) and $80k - $90k (s)

Question 3

Coverdell ESA

Answer 3

• Can contribute $2k/yr per bene (under age 18)
• Not deductible, tax deferred
• Free of taxes + penalties of qualified
• phaseout between $95k and $110k of MAGI ($190k - $220k married)
• Elementary and Secondary expenses!
• MUST be used by age of 30
• Can be rolled to another family member

Question 4

Series EE Savings Bonds

Answer 4

• Fund eligible education expenses
• Purchased in Parents’ names
• Can’t be issued in name of child or in custodial account
• Must be redeemed in a year which qualified education expenses occur (tuition and fees only)
• Interest is fully exempt from federal income tax only
• Phaseout = $145.2k - $175.2k (M) or $96.5k - $111.8k (S)

Question 5

Pell Grant

Answer 5

• Max $7k/year
• undergraduate only (6 or more credits)
• Amount of Family Contribution must fall below certain amount to be eligible

Question 6

Parent Loan for Undergrad Student (PLUS)

Answer 6

• Parents can borrow entire cost of college, including tuition and living expenses
• non need based on

Question 7

Supplemental Education Opportunity Grants

Answer 7

Available for Pell Grant recipients only and offer up to $4k/yr

Question 8

Subsidized Stafford Student Loans

Answer 8

• Available to students who show financial need after their EFC, Pell Grant, and aid from other sources.
• Amount is limited

Question 9

Public Service Loan Forgiveness

Answer 9

• Govt and qualifying non profit employees w/ federal STUDENT loans can have remaining balance forgiven tax-free after making 120 loan payments

• Must work in qualifying field for 10 years (firefighting, teacher, military, govt, nursing)

Question 10

Total and Permanent Disability Discharge

Answer 10

• If borrower can’t work due to disability, remaining student loan balance may be cancelled

Question 11

Teacher Loan Forgiveness Program

Answer 11

• Motivates teachers to take jobs at elementary schools, secondary schools and educational service agencies serving low income families.
• must teach Ft for 5 full years
• $5k - $17.5k in loans forgiven
• PLUS loans don’t apply