When paying for college, parents often make common mistakes that end up costing them financially. Listed below are five tips parents should read to avoid making these common mistakes.
1. Assuming 529 Plan distributions are always tax free
529 plan earnings withdrawals may be taxable. Distributions of earnings from the 529 plan will be subject to income tax if the amount withdrawn from the 529 plan exceeds the qualified education expenses. Therefore, it is very important to be sure the amount withdrawn from the 529 plan does not exceed the qualified education expenses if you do not wish to pay tax on the earnings. Keep in mind that any expenses used in determining the Lifetime Learning or Hope credit will reduce the total qualified expenses used in calculating the tax exclusion for distributions from a 529 plan. For example, if you claim the Lifetime Learning credit based on qualified expenses of $10,000, the qualified expense is reduced by $10,000.
2. Assuming private schools always cost more than public schools
A student who attends an expensive private school may qualify for more financial aid than a student attending a lower-cost public school. The difference in the true cost may actually be less than you might expect because the student may receive gift aid from the private school.
3. Not reading the Award Letter carefully
Often times the colleges are awarding you debt! There are two types of financial aid: gift-aid and self-help aid. Gift aid includes grants based on your financial need, and scholarships usually based on academic performance. Self-help aid includes loans, which must be repaid, and government work-study programs. Most of the financial award at public institutions is self-help aid, however most financial aid at private schools is gift aid.
4. Not filling out the FAFSA because you think your income is too high to qualify for financial aid
Even if you do not qualify based on financial need, many schools will not consider you for non-need based aid if you do not apply for need-based aid. So regardless of what you think your eligibility status might be, it is important to fill out the FAFSA (Free Application for Student Aid). Federal student loan applications (Unsubsidized Stafford and Plus) also require the completion of the FAFSA. It is important to check with each school for its requirements.
5. Borrowing too much from Life Insurance to pay for college
Some parents use life insurance loans as a source of college funding. You should beware of taking out a life insurance loan. What typically happens when you take out a life insurance loan for a long period of time is that the loan balance increases because you do not pay the interest. Therefore, as the loan value increases, your family gets very little, if any death benefit. Also, the loan balance can eat up all the cash value, and there is not cash value left in the policy to sustain it. The policy will terminate unless you can pay back the loan.
- By: Karen Bolton
Showing posts with label mother. Show all posts
Showing posts with label mother. Show all posts
Monday, September 26, 2011
Mothers: Junior College and You
To many people junior college isn't "real" school. If you’re a hard-working mom, however, the junior college environment may be exactly what you’re looking for. Two-year colleges present many interesting possibilities for gaining an education. Financial aid is a common concern, but taking care of that is part of the package as well.
In the past the dominating perception has been that community colleges are for slackers or students who can’t get admitted to “real” colleges. There are actually some very enticing benefits to go to these schools, including the lower tuition costs. The flexibility and opportunity are great for moms who want to go to school. Championed by President Obama in 2009, the Grants for Moms incentive is an effort to help more moms enroll in junior colleges and other schools of their choice. The $5,000 grant is a huge bonus for going to college.
One of the biggest attractions to junior colleges is the financial savings. Even with a $5,000 Pell Grant for a mother, saving money is always important. The cost of attendance at junior colleges is often half that of 4-year schools. Furthermore, community colleges frequently offer full-ride scholarships to high school students with high standardized test scores and GPA. This is a significant prize for young moms who still managed to do well in school. Even with some expenses paid, the scholarship for moms can be used to pay for travel expenses, childcare and other school-related expenses.
Increasingly, the curriculums at 2-year colleges are becoming more rigorous and offering more academic opportunities. According to a 2002 New York Times article, 168 community colleges maintain honors programs. Certain community college are beginning to mirror the syllabi at big-name colleges and universities. For example, many junior colleges now offer study abroad courses in places like China and Mexico. All of these diverse courses and study opportunities expand students’ knowledge and help them enroll in 4-year colleges.
Grants for ambitious moms will certainly make junior colleges even more attainable. The $5,000 grants for moms can ensure that junior college is within reach. These schools also allow a mom to prepare for a productive career in two years or a transfer to a 4-year college. A quality associate degree could lead to great career development.
By: Fred Jackson
In the past the dominating perception has been that community colleges are for slackers or students who can’t get admitted to “real” colleges. There are actually some very enticing benefits to go to these schools, including the lower tuition costs. The flexibility and opportunity are great for moms who want to go to school. Championed by President Obama in 2009, the Grants for Moms incentive is an effort to help more moms enroll in junior colleges and other schools of their choice. The $5,000 grant is a huge bonus for going to college.
One of the biggest attractions to junior colleges is the financial savings. Even with a $5,000 Pell Grant for a mother, saving money is always important. The cost of attendance at junior colleges is often half that of 4-year schools. Furthermore, community colleges frequently offer full-ride scholarships to high school students with high standardized test scores and GPA. This is a significant prize for young moms who still managed to do well in school. Even with some expenses paid, the scholarship for moms can be used to pay for travel expenses, childcare and other school-related expenses.
Increasingly, the curriculums at 2-year colleges are becoming more rigorous and offering more academic opportunities. According to a 2002 New York Times article, 168 community colleges maintain honors programs. Certain community college are beginning to mirror the syllabi at big-name colleges and universities. For example, many junior colleges now offer study abroad courses in places like China and Mexico. All of these diverse courses and study opportunities expand students’ knowledge and help them enroll in 4-year colleges.
Grants for ambitious moms will certainly make junior colleges even more attainable. The $5,000 grants for moms can ensure that junior college is within reach. These schools also allow a mom to prepare for a productive career in two years or a transfer to a 4-year college. A quality associate degree could lead to great career development.
By: Fred Jackson
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