General Principles Flashcards
how may days of nonpayment will cause federal student loans to go into default?
270
for FAFSA who is considered the primary parent
- where the student lives the longest during the year
2. if 50/50, then whoever provides more support
emergency reserves
total monthly expenses - (savings contributions + taxes)
x 3 months or 6 months
American opportunity tax credit
$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)
lifetime learning credit
$2,000 per family
do not need to be full time or undergrad
can claim for an unlimited number of years
EFC calc
total cost
- (22-47% parent income + max 5.64% parent assets)
- (50% student income + 20% student assets)
= EFC
529 and Coverdells effect on EFC
if parent owned then counts towards parent rate
relative owned 529 effect on EFC
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
student loan forgiveness
generally forgiven amount is taxable income
unless death, disability, or provision in loan (certain professions, certain time, class of employers)
when is a federal student loan delinquent
after first payment is missed
when default of student loan occurs what happens
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
Fiduciary duty
- duty of loyalty
- duty of care
- duty to follow instructions
6 sections of The Standards
- duties owed to clients
- financial planning process and application of the practice standards for financial planning process
- practice standards for financial planning process\
- duties owed to firms and subordinates
- duties owed to CFP board
- prohibition on circumvention
forms of discipline
private censure
public letter of admonition
suspension
revocation
must report incidents of adverse conduct within
30 days
conduct that is unacceptable and will ALWAYS bar an individual from being certified
- theft, embezzlement, other financial crimes
- tax fraud or tax crimes
- revocation of financial professional license
- felony for any degree of rape or murder
- felony for any other violent crime within the last 5 years
conduct that is presumed to be unacceptable
will bar an individual from being certified unless the individual petitions the disciplinary and ethics commission
- two or more personal bankruptcies
- revocation or suspension of non financial license
- suspension of a financial professional
- felony conviction for nonviolent crimes within the last 5 years
- felones conviction for violent crimes other than murder or rape that occur more than 5 years ago
Ch 7 bankruptcy
discharge of debts
voluntary and involuntary liquidation
ch 7 debts that will NOT be discharged
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
ch 11 bankruptcy
reorganization
debtor remains in possession and may continue to operate business
ch 13 bankruptcy
adjustment of debts of individuals with regular income
economic and resource approach
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
classical economics approach
cost benefit and risk return trade offs
believes in increasing financial resources or reducing financial expenditures
strategic management approach
clients goals and values drive the client planner relationship
conducting a SWOT analysis
cognitive behavioral approach
clients attitudes, beliefs, and values influence their behavior
planners attempt to substitute negative believes that lead to poor financial decisions with positive attitudes
psychoanalytic approach
Freudian psychodynamic theory or Gesalt theory
not widely used by planners
