Fundamentals Chapter 8 (Education)

Question 1

What is EFC?

Answer 1

Expected Family Contribution

Question 2

When does filing for FAFSA begin?

Answer 2

October 1st of prior year

Question 3

No repayment, typically awarded based on financial need.
Only for undergraduate studies

Answer 3

Grants

Question 4

Administered by U.S. Dep of Ed.
Students with low incomes and large loan balances are only required to repay up to 10% of their income each year.
Loan forgiveness.
Subsidized vs Unsubsidized loan

Answer 4

Stafford Loans

Question 5

What type of loan does interest does not accrue while in school

Answer 5

Subsidized loan

Question 6

What is EFC used for?

Answer 6

Used to determine eligibility for financial aid

Question 7

What allows you to purchase college credits today and use those credits when attending college?

Answer 7

Prepaid Tuition

Question 8

Tax-deferred.
Distributions for qualified education expenses are federal and state income tax-free.
No federal income tax deduction for contributions.
No phase-outs.

Answer 8

529 Plan

Question 9

Can deduct $2,500 of interest expense per year for what?

Answer 9

Student loans

Question 10

Two tax credits for education related expenses, cannot claim both

Answer 10

American Opportunity Tax Credit (Up to $2,500) (First 4 years)
Lifetime Learning Credit (Up to $2,000/family, for life)

Question 11

Do IRA distributions count as income on FAFSA?

Answer 11

Yes

Question 12

Allows the guardian