Beyond Financial Aid
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Transcript of Beyond Financial Aid
Beyond Financial Aid
NYSFAA 2012
Priscilla D Armsby, Siena CollegeStephen G Brown, Fordham Law School
Who Cares? Why are you doing this?
Student Loan Debt
In the news, how much is true? Increased as federal limits have
increased– Especially at Grad/Prof level
Families and choices Easy to borrow federal loans
– Harder to be creative
Payment Plans
No interest Fee Can cover charges not covered by aid 10 months-8 months-4 months Earnings from “float” TMS, NELNET, Sallie Mae
PLUS and GradPLUS
Federal– Guarantee, Consolidate, IBR, ICRa,
FPSLFP, death/disability– Published credit criteria– Parent as borrower or endorser– Grad Student as Borrower– 7.9%, but 4 % fees
Private Loans Imagine walking into a bank… Fixed v variable interest Fees Credit worthiness Credit score Parents on behalf of students Lack of federal benefits School certified or not
Employer tuition benefits
Not only for schools Benefit – often awarded through HR Undergrad no tax implications for education employees Grad no tax if perform teaching or research Taxed above $5,250 May require certain grades Payment may be after completion of the course Waiting period? Commitment after payment? May require courses related to job
Student work for School Resident Assistant
– Room– Perhaps meal plan and some tuition
Teaching or Research Assistant– Tuition– Other employee benefits?
Really depends on school At REAL job
– Part time school, but free or reduced!
The Tuition Exchange tm
Consortium of IHEs 600 schools Worked mainly through HR/Benefits
office Offers tuition benefits at many
institutions– Ties to school policies
Schools require application Balance of trade Admissions requirements
Veterans Benefits Montgomery Bill
– Chapter 30– Contributed while enlisted– Up to 36 months
Chapter 35– Dependents of dead or disabled vets
Post 911 GI Bill– Chapter 33– Tuition and fees – $17,500 maximum unless grandfathered– Housing stipend– Books stipend– May be transferable to beneficiaries
Yellow Ribbon
In conjunction with Post 911 GI Bill Schools “opt- in” For schools that are more expensive
than highest public tuition – often private
VA will match schools contributions up to half of costs in excess of Post 911 GI Bill
UGMA/UTMA
Uniform Gift to Minors Act Uniform Trust for Minors Involves planning Irrevocable Reverts to minor at age of majority Asset? For FAFSA reporting – owned
by student
529 Plans Section 529 of the Internal Revenue Code
– “Qualified Tuition Programs” Pre-paid tuition or college savings Allows anyone to set up a plan for beneficiary Sponsored by states in cooperation with investment
firms Large selection of investments Accrues tax free and withdrawals federal tax free for
– Tuition and fees – Room and board– Books, computer
Coverdell Education Savings Account
Section 530 of IRC Many investment options Beneficiary must be under 18 when set
up $2,000 annual limit Accrues tax free Tax free withdrawals for educational
expenses Must liquidate at age 30 Contribution limits based on
contributor’s MAGI
Home Equity
Can you (your parents) afford to lose your home?
Long term debt Secured by house Up to $100,000 over the amount
needed to purchase home is deductible “Second Mortgage” Home Equity Line of credit
Is my Scholarship Taxable?
117c qualified Scholarship– Degree candidate– Qualified educational expenses
• Tuition, fees, books, supplies, equipment– Not compensation for teaching, research,
work
Qualified Tuition Reduction
Received from eligible education institution
Used at eligible education institution– Need not be the same
Employee or dependant Undergraduate not taxed Graduate – requires teaching or
research
American Opportunity Credit
TAX CREDIT up to $2,500 MAGI Limits
– $90,000 single, $180,000 married/joint Up to 40% refundable First 4 years Only 4 years Tuition, fees and books No LLC or T & F deduction Loans used for Qualified expenses count Not Coverdell exemption
American Opportunity credit …
100% of first $2,000 in expenses 25% of next $2,000 Reduction for MAGI $80-90k ($160-
180k) Form 8863
Lifetime Learning Credit TAX CREDIT of up to $2,000 Cannot be combined With American Opportunity
Credit MAGI limits
– $61,000 (s) $122,000 Married Joint Non Refundable, Unlimited years No matriculation required Tuition and fees and books paid to institution $20% of first $10,000 Reduction at $51 – 61k ($102-122k) Form 8863
Student Loan Interest Deduction
Qualified Student Loan Reduce Income by up to $2,500 Enrolled at least half time when borrowed MAGI $75,000 ($150,000) Not from a related person Tuition, fees, housing, books, transportation
(COA) Amortize fees ( but not reported on 1098-E) Voluntary interests OK
Student Loan interest…
Phaseouts $60-75k ($120-150k)
Directly deductible– Line 33 1040– Line 18 1040 A– Line 9 1040 EZ
Tuition and Fees Deduction
Not if AOC or LLC Not if married filing separately MAGI $80,000 ($160,000) $4,000 income deduction Tuition and related expenses paid to
institution Not required matriculation
Tuition and Fees…
Income from $65k - $80k (130k-160k)– Max deduction $2,000
Income below $65k ($130k)– Max deduction $4,000
Form 8917
Coverdell ESA MAGI less than $110,000 ($220,000)
– MAGI = AGI for most taxpayers Can establish account for beneficiary
under 18 (or special needs) Distributions tax free for ADJUSTED
Qualified Educational Expenses $2,000 annual contribution limit Must be distributed by time beneficiary
is 30
Coverdell ESA
Tuition and Fees Books, supplies, equipment Special needs Room and board (if registered at least
half time) Transfer to other family member 530
QTP (529) Plans No income restrictions on contributions Withdrawals for Qualified Educational
Expenses --Tax free Tuition and Fees Books, supplies, equipment Special needs Room and board (if registered at lesat
half time)
Transfer to other family member QTP
Early IRA Distribution penalty
Not subject to 10% penalty– May be subject to regular taxation
Tuition and Fees Books, supplies, equipment Special needs Room and board (if registered at least
half time)
Education Savings Bond Interest
Phaseouts MAGI $71,100 and $86,100– $106,650 to $136,650 married jointly
Series EE issued after 1989 or series I– Owner older than 24 at bond issue date– Only for DENENDENT for whom you claim
exemption on tax return Tuition and fees Form 8515
Employer provided Educational Assistance
Up to $5,250 Tuition and fees Books and supplies
Business Deductionfor Work Related Expenses
Must be working Must itemize or Must file Schedule C or F Must be Qualifying Work Related or maintain or
improve skills– Required by employer or law to keep job– Serve bona fide business purpose– Not needed to meet minimum requirements for current
job– Does not qualify for a new trade or business
Qualifying Work Related
Must be Qualifying Work Related or maintain or improve skills– Required by employer or law to keep job– Serve bona fide business purpose– Not needed to meet minimum requirements
for current job– Does not qualify for a new trade or
business
Maintain or Improve skills Refresher Current developments Academic Tuition and Fees Books and Supplies Transportation--Work to school and
school to home Travel—Is this session deductible?
Contact Information
Stephen Brown, Fordham [email protected]
Priscilla Armsby, Siena [email protected]