General Principles

Question 1

how may days of nonpayment will cause federal student loans to go into default?

Answer 1

270

Question 2

for FAFSA who is considered the primary parent

Answer 2

1. where the student lives the longest during the year

2. if 50/50, then whoever provides more support

Question 3

emergency reserves

Answer 3

total monthly expenses - (savings contributions + taxes)

x 3 months or 6 months

Question 4

American opportunity tax credit

Answer 4

$2,500 - dollar for dollar credit for 100% of first $2,000 of qualified expenses, and 25% of next $2,000

first 4 years of post secondary education
student must be enrolled at least half time
refundable up to 40% of credit
per student, not per family

no hope for dope (can’t use if you have a felony drug conviction)

Question 5

lifetime learning credit

Answer 5

$2,000 per family
do not need to be full time or undergrad
can claim for an unlimited number of years

Question 6

EFC calc

Answer 6

total cost
- (22-47% parent income + max 5.64% parent assets)
- (50% student income + 20% student assets)
= EFC

Question 7

529 and Coverdells effect on EFC

Answer 7

if parent owned then counts towards parent rate

Question 8

relative owned 529 effect on EFC

Answer 8

two year look back for FAFSA
would reduce future financial aid eligibility by 50% of the distribution amount

use in the last two years of college to limit impact on financial aid

Question 9

student loan forgiveness

Answer 9

generally forgiven amount is taxable income

unless death, disability, or provision in loan (certain professions, certain time, class of employers)

Question 10

when is a federal student loan delinquent

Answer 10

after first payment is missed

Question 11

when default of student loan occurs what happens

Answer 11

entire balance is due and no longer eligible for federal student loans or grants

gov can collect debt by
seizing refund, garnishing 15% of wages, taking 15% of SS or railroad benefits

Question 12

Fiduciary duty

Answer 12

1. duty of loyalty
2. duty of care
3. duty to follow instructions

Question 13

6 sections of The Standards

Answer 13

1. duties owed to clients
2. financial planning process and application of the practice standards for financial planning process
3. practice standards for financial planning process\
4. duties owed to firms and subordinates
5. duties owed to CFP board
6. prohibition on circumvention

Question 14

forms of discipline

Answer 14

private censure
public letter of admonition
suspension
revocation

Question 15

must report incidents of adverse conduct within

Answer 15

30 days

Question 16

conduct that is unacceptable and will ALWAYS bar an individual from being certified

Answer 16

1. theft, embezzlement, other financial crimes
2. tax fraud or tax crimes
3. revocation of financial professional license
4. felony for any degree of rape or murder
5. felony for any other violent crime within the last 5 years

Question 17

conduct that is presumed to be unacceptable

will bar an individual from being certified unless the individual petitions the disciplinary and ethics commission

Answer 17

1. two or more personal bankruptcies
2. revocation or suspension of non financial license
3. suspension of a financial professional
4. felony conviction for nonviolent crimes within the last 5 years
5. felones conviction for violent crimes other than murder or rape that occur more than 5 years ago

Question 18

Ch 7 bankruptcy

Answer 18

discharge of debts

voluntary and involuntary liquidation

Question 19

ch 7 debts that will NOT be discharged

Answer 19

back taxes  (3 years) 
debts associated with fraud 
alimony and child support 
debt due to intentional torts 
student loans 
consumer debts with more than $650 for luxury goods or services owed to a single creditor

Question 20

ch 11 bankruptcy

Answer 20

reorganization

debtor remains in possession and may continue to operate business

Question 21

ch 13 bankruptcy

Answer 21

adjustment of debts of individuals with regular income

Question 22

economic and resource approach

Answer 22

clients are assumed to be rational
financial planner is the agent of change
focus on obtaining and analyzing data such as cash flows, assets, and debts

Question 23

classical economics approach

Answer 23

cost benefit and risk return trade offs

believes in increasing financial resources or reducing financial expenditures

Question 24

strategic management approach

Answer 24

clients goals and values drive the client planner relationship
conducting a SWOT analysis

Question 25

cognitive behavioral approach

Answer 25

clients attitudes, beliefs, and values influence their behavior
planners attempt to substitute negative believes that lead to poor financial decisions with positive attitudes

Question 26

psychoanalytic approach

Answer 26

Freudian psychodynamic theory or Gesalt theory

not widely used by planners