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 Lawsbrown@fordham.edu

Priscilla Armsby, Siena Collegeparmsby@siena.edu