Education Planning (L7)

Question 1

Expenses to Consider for Education Planning

Answer 1

• Tuition
  
  • Books
  • Lodging
  • Transportation
  • Insurance
  • Meals
  • Entertainment
  • Fraternity/sorority
  • Computer
  • Internet access
  • And MUCH MORE

Question 2

Financial Aid

Answer 2

• All Student should complete Free Application for Federal Student Aid (FASFA)
• FASFA begins the Financial Aid process
• FASFA information is sent the college of the student’s choice
  ○ Used to calculate the Expected Family Contribution

Question 3

Expected Family Contribution (EFC)

Answer 3

Question 4

Student = INDEPENDENT

Answer 4

• Over age 23
  
  • Married
  • Working on Masters or Doctorate
  • If they have legal dependents other than a spouse
  • Veterans of the US armed forces

Question 5

Federal Pell Grant

Answer 5

a. Strictly NEED based and DEPENDENT on the EFC amount

b. EFC determines eligibility and the amount of aid awarded

c. ONLY students that have NOT earned bachelors or professional degree qualify

Question 6

Stafford Loan (Federal Direct Loans)

Answer 6

a. PRIMARY TYPE of financial aid, provided by the US Dept of Education

b. STUDENT LOAN

c. Repayment begins AFTER a 6-months grace period of leaving school or falling below part-time status (6 semester hours)

d. 2 types:
i. Subsidized (interest paid for by Fed Govt while student is in
school - NEED BASED)
ii. Unsubsidized (interest beings to accrue when funds are
disbursed - NOT NEED BASED)

e. NOT APPRPRIATE when the parents plan to repay the loan

Question 7

Parent Loans for Undergraduate Students (PLUS)

Answer 7

a. Loan for parents to pay for children’s undergrad studies

b. NOT NEED BASED (dependent on the parent’s credit score)

c. NOT SUBSIDIZED

d. Appropriate for parents who can afford to make a loan payment, but may not have saved anything for education

Question 8

Grad PLUS Loan for Graduate Students (PLUS Direct)

Answer 8

a. Graduate or Professional student enrolled AT LEAST half-time at a eligible school in a program leading to graduate or professional degree/certificate

b. Dependent on STUDENT CREDIT SCORE

c. Maximum PLUS Loan amount you can borrow
i. = (Cost of Attendance) - (any other financial assistance you
receive)

d. Begin making payments 6 months after you graduate, leave school, or drop below half-time enrollment

e. Interest accrues as you go.
i. You can pay it as you go OR let it be added to your balance

Question 9

Federal Perkins Loan Program

Answer 9

a. Expired on September 30, 2017

b. For students with exceptionally low EFC amounts

c. NEED BASED

Question 10

Campus-Based Financial Aid

Answer 10

1. Federal Supplemental Education Opportunity Grant (FSEOG)
   a. Awarded to students with VERY LOW EFC
   b. NEED BASED
2. Federal Work Study
   a. On or Off Campus employment to help pay education
   expenses

Question 11

Income Based Repayment (IBR)

Answer 11

• Monthly student loan repayment of 10-15% of discretionary income, with remaining debt forgiveness after 25 years (taxable income in the year forgiven)
  ○ Recalculated each year based on income, family size, spousal
  income (if filing MFJ)
• Stafford Loans and most Federal loans are eligible for IBR
• PLUS loans (other than PLUS loans to graduate students) are not eligible for IBR

Question 12

Pay as You Earn Repayment (PAYE)

Answer 12

• Available if the borrower has a high debt-to-income ratio
• Monthly student loan repayment of 10% of discretionary income, with remaining debt forgiveness after 20 years
• ONLY Direct Federal Loans (aka Stafford) and PLUS loans to graduate student are eligible
• PLUS loans (other than PLUS loans to graduate students) are NOT eligible for IBR

Question 13

Revised Pay as You Earn Repayment (REPAYE)

Answer 13

• Monthly student loan repayment of 10% of discretionary income with remaining debt forgiveness after 20 years
• ONLY Direct Federal loans (aka Stafford) and PLUS loans to graduate students are eligible

Question 14

Graduate Repayment

Answer 14

• Loan paid over 10 years starting off lower than Standard Repayment Plan and increases every 2 years
• Results in more interest being paid than the Standard Repayment Plan by may be MORE advantageous for student starting off in an entry-level job

Question 15

Extended Repayment

Answer 15

• Available when the loan balance is over $30,000.
• Payments can be either FIXED or GRADUATED, and are payable over 25 years

Question 16

Income Contingent Repayment

Answer 16

• Similar to Pay as You Earn, EXCEPT 20% of discretionary income or payment amount on a FIXED payment over 12 years.
• Loan balances after 25 years will be forgiven

Question 17

Tax Advantaged Plan for Education Savings

Answer 17

Pre-Paid Tuition

Savings Plan (529 Savings Plan)

529 ABLE Accounts

Coverdell Education Savings Account (ESA)

Roth IRA

Series EE/Series E Savings Bonds

Uniform Gift to Minor’s Act / Uniform Transfers to Minors Act (UGMA/UTMA)

Question 18

Pre-Paid Tuition

Answer 18

Question 19

529 Savings Plan

Answer 19

Question 20

529 ABLE Accounts

Answer 20

Question 21

Coverdell Education Savings Account (ESA)

Answer 21

Question 22

Roth IRA

Answer 22

Question 23

Series EE / Series E Bonds

Answer 23

Question 24

Uniform Gift to Minor’s Act (UGMA)
Uniform Transfers to Minor’s Act (UTMA)

Answer 24

Question 25

Additional Tax Advantages for Education Funding

Answer 25

Question 26

SUMMARY

Answer 26