Roth Conversions Could Affect College Financial Aid

April 26, 2010
Are you thinking about converting your 401k IRA to a Roth IRA. Roth IRA rules could surprise you. The Roth IRA contribution limits 2010 could severely affect your financial aid package. Here is an article: Financial advisors are finding that clients anxious to take advantage of loosened rules on Roth IRAs aren't anticipating a possible […]

Are you thinking about converting your 401k IRA to a Roth IRA. Roth IRA rules could surprise you. The Roth IRA contribution limits 2010 could severely affect your financial aid package.

Here is an article: Financial advisors are finding that clients anxious to take advantage of loosened rules on Roth IRAs aren't anticipating a possible consequence—losing financial aid for their college-age children.

"It's not just a future tax issue, you have to understand the repercussions today," says Richard Rosso, a financial advisor with Charles Schwab Corp. in Houston. "Anything that is converted and pulled out of an IRA is considered income and that will affect your financial aid.

"No matter what income bracket you're in, you're possibly putting that scholarship in jeopardy," he says.

He recently ran the numbers for a family whose daughter could've lost about 80% of her anticipated scholarship if they had rolled over $100,000 from an IRA into a Roth IRA all at once. They're now thinking about a phased conversion over the next 10 years.

Until this year, only individuals or couples filing jointly with modified adjusted gross incomes of $100,000 or less were able to convert savings from a traditional IRA to a Roth IRA. That restriction has now been lifted completely.

Growth in a Roth IRA is not taxed, so paying taxes now and moving money there can be advantageous for high earners if income tax rates rise in the future, as is widely expected. Also, owners of Roth IRAs aren't obligated to start withdrawing a certain amount of their savings when they reach age 70 1/2. That can mean more savings for late in retirement or for heirs.

But investors, even wealthy ones, often overlook the immediate impact that a rollover could have on financial aid. "Many middle-class millionaires made their money" and expect their children to pay all or part of the educations, says Rosso.

Someone earning $100,000 may be responsible for $17,000 of a child's college expenses. But if that person rolls over $100,000 into a Roth, the higher income could increase the expected parent contribution to $48,000, says Rosso.

Schools use the data from the FAFSA [Free Application for Federal Student Aid] to determine loan and aid eligibility. The FAFSA number relies heavily on a family's income, and ignores the value of someone's home, small business or retirement assets, says Mark Kantrowitz.

Kantrowitz says that the Department of Education has asked colleges to take into account one-time increases in income from a rollover, but financial advisors recommend that families talk to the schools before making a decision and to let them know if they opt to open a Roth.

Some schools take into account real estate assets in their own assessment. But for those that don't, someone with a million dollar home and large 401(k) account could potentially receive more aid than a family with a higher income but far less assets.

For families that have younger children, this could be the right time for a rollover, since the impact on annual income will be over before any FAFSA filing has to be made, Jeffrey E. Daniher, a financial advisor in Cincinnati. Those assets also would have longer to grow tax-free.

Original article here

J.D. says: you have to understand how the game is played and legally and ethically stack the deck in your favor. Other things to look out for are other big windfalls besides Roth conversions such as inheritance and capital gains. Seeking out professional advice could be the difference between a fat award letter or a paltry award letter.

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Obama Signs Historic Health Care & Education Legislation

April 26, 2010
President Obama signed the Health Care and Education Reconciliation Act of 2010, which delivered a significant down payment on the President’s ambitious agenda to make higher education more affordable and help more Americans earn a college degree. This legislation strengthens the Pell Grant program, invests in community colleges, extends support for Historically Black Colleges and […]

President Obama signed the Health Care and Education Reconciliation Act of 2010, which delivered a significant down payment on the President’s ambitious agenda to make higher education more affordable and help more Americans earn a college degree.

This legislation strengthens the Pell Grant program, invests in community colleges, extends support for Historically Black Colleges and other Minority Serving Institutions, and helps student borrowers manage their student loan debt by capping repayments at 10% of their discretionary income. These efforts will be fully paid for by ending the government subsidies currently given to banks and other financial institutions that make guaranteed federal student loans and free up nearly $68 billion for college affordability and deficit reduction over the next 11 years.

“For a long time, our student loan system has worked for banks and financial institutions,” President Obama said. “Today, we’re finally making our student loan system work for students and all of our families.”

“This legislation is a win for students and parents struggling to make ends meet to fulfill the dream of a college education,” Education Secretary Arne Duncan said. “By ending subsidies to banks, we can make important investments that increase affordability and access to our nation’s universities and community colleges.”

This historic law:

Invests more than $40 billion in Pell Grants to ensure that all eligible students receive an award and that these awards are increased in future years to help keep pace with the rising cost of college.

These investments, coupled with the funding provided in the Recovery Act and the President’s first two budgets, will more than double the total amount of funding available for Pell Grants since President Obama took office.

 Ensures that Americans can afford their student loan payments by expanding the existing income-based student loan repayment program.

New borrowers who assume loans after July 1, 2014, will be able to cap their student loan repayments at 10 percent of their discretionary income and, if they keep up with their payments over time, will have the balance forgiven after 20 years.

Includes $2 billion over four years for community colleges to develop, improve, and provide education and career training programs.

President Obama also asked Dr. Jill Biden to host a White House Summit on Community Colleges this fall to provide an opportunity for community college leaders, students, education experts, business leaders, and others to share innovative ways to educate our way to a better economy.

Starting July 1, all new federal student loans will be direct loans, delivered and collected by private companies under performance-based contracts with the Department of Education. According to the non-partisan Congressional Budget Office, ending these wasteful subsidies will free up nearly $68 billion for college affordability and deficit reduction over the next 11 years.

  • Learn how to capitalize on everything that is rightfully available to you by attending our free workshop Paying for college & making it affordable. Arizona residents register here. AZCollegePlanning is the best Arizona college planning firm, the premier college consulting firm of Arizona, the top dog college planners of Arizona and the pinnacle college planning consultants of Arizona. 'nuf said.
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What the heck does SAT stand for?

April 22, 2010
What does SAT mean, what does SAT stand for, what does SAT test stand for? At one point in history SAT used to stand for scholastic aptitude test which was created by CollegeBoard.com. It was believed that because this was an aptitude exam, you could not study to get a better score. Either you had […]

What does SAT mean, what does SAT stand for, what does SAT test stand for?

At one point in history SAT used to stand for scholastic aptitude test which was created by CollegeBoard.com. It was believed that because this was an aptitude exam, you could not study to get a better score. Either you had ‘it’ or you didn’t. Then people figured out that there was a pattern and you could actually prepare for these tests and do better.

The result of this finding was that CollegeBoard dropped the name of ‘aptitude’ and it became the SAT. There are two incarnations of this test the SAT I and the SAT II (SAT subjects tests).

Many colleges use this as a base on entering college, meaning if you don’t score high enough you may be admitted but have to take remedial classes. Likewise, many colleges use it as a bench mark to hand out merit based financial aid. So it is in your best interest to prepare for the tests and score as high as you can.

My recommendation is to take the test multiple times. Don’t wait until your senior year in high school to start. By starting early you will have a base score. With a base score you can find out what areas need improvement and prepare, study and review, then take the test again and again.

My people have been mislead into believing that if you take the test to many times then colleges will see you as desperate and not admit you or limit your aid. This is untrue. However, if you take it multiple times and do nothing in between by preparing and studying, you will not get a better score.

It is in your best interest to get the best score (and best grades) you can. It could result in a big shiny financial aid award.

So now you know what SAT stands for by College Board.

Create a free account and check out our SAT Test Prep, How to get a perfect score.

Also check out my SAT Question of the Day app for Facebook here add it to your profile now!

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Record low admitted-Harvard-Stanford-Yale-MIT- et all

April 20, 2010
Stanford received more than 32,000 applications to the Class of 2014, and admitted 2,300 students. Stanford Admits 7.2% - Record Low A record-low 6.9% of applicants were accepted to the Harvard College Class of 2014. Applications exceeded 30,000 for the first time ever, Columbia College received 21,747 applications total, up from 21,274 last year and […]

Stanford received more than 32,000 applications to the Class of 2014, and admitted 2,300 students. Stanford Admits 7.2% - Record Low

A record-low 6.9% of applicants were accepted to the Harvard College Class of 2014. Applications exceeded 30,000 for the first time ever,

Columbia College received 21,747 applications total, up from 21,274 last year and 19,117 the year before. This year, 1,805 of these applicants were admitted. Columbia College, combined with the School of Engineering and Applied Science, reported that 9.16% of overall applicants for the Class of 2014 were accepted.

Duke University offered admission this year to 3,972, or 15% of applicants, down from 18% last year.

The University of Pennsylvania in Philadelphia admitted 14% of nearly 27,000 applicants.

Cornell University in Ithaca, New York, admitted 18% of a record 36,337 applicants.

The University of Chicago offered admission to 3,560, or 18% of 19,370 applicants. 27% of applicants were admitted to the Class of 2013.

MIT, in Cambridge, Massachusetts admitted 9.7% of 16,632 applicants. Last year MIT admitted 11%.

Dartmouth College in Hanover, New Hampshire received 18,778 applications for the Class of 2014 and admitted 11.5%.

Northwestern University in Illinois, accepted 23% of applicants well below the 27% accepted last year.

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Who we know we are

April 18, 2010
Quoted on Good Morning Arizona as “local expert on everything when it comes to college.” People all across the United States turn to the premier college planning consultants in Arizona, which can be found at AZCollegePlanning.com, this website.

Click the Share on Facebook button at the bottom of this article.

AZ College Consulting LLC also known as AZCollegePlanning.com founded by J.D. Wyczalek (why-zall-ick) is Arizona’s premier college planning firm. Quoted on Good Morning Arizona as “local expert on everything when it comes to college.”

People all across the United States turn to the premier college planning consultants in Arizona, which can be found at AZCollegePlanning.com, this website.

If you are looking for a college solution and solutions to college financial aid or have questions to ask when visiting a college, this is your opportunity to browse this site.

If you have questions about AIMS, AIMS scholarships and what to know if they will be around, check out the links found here in the search window.

Did you ask how to finance college and wonder if your ugma, your uniform gift to minor act will be enough or perhaps you have a 529 plan or maybe you are considering using the American opportunity tax credit, child college tax credit, child tax credit on your next tax return only to wonder how it will affect future financial aid award letter.

College success starts with goal setting for college, success in college starts with choosing the right college. Have you asked how to choose the right college or choosing a college major.

Admission requirement vary college to college. While one school may ask for 2 years of foreign language, others ask for 3 years of foreign language and some even 4 years of foreign language. Are you taking the correct class load and requirements in high school to get into college? Many high school counselors are overworked and most definitely under paid.

We had released many press release concerning college solutions.

Visiting colleges, visiting schools and choosing a college is an important decision that should not be overlooked or looked upon lightly. By foregoing the FAFSA, aka F.A.F.S.A. aka Free Application for Federal Student Aid thousands of dollars could be left on the table.

A high income earner who has six figures or even seven figures who does not thoroughly investigate college tax credit is turning his back upon a golden chance an opening in the tax code, a tax loophole. Seeking fafsa advice is prudent when so many millions of dollars go unclaimed.

Barack Obama, George W. Bush and William Jefferson Bill Clinton opened the door on the overhaul student aid reform and the ball is rolling. Do not be mistook the price of college admission is out of control unless families understand how to capitalize and take advantage of hidden opportunities.

The Arizona board of regents agrees that the rising college tuition costs are going up and not down. Choosing the right college can be rewarding.

If you like it click the digg or facebook button.

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Student loan overhaul crammed into Obamacare

March 28, 2010
Are Feds robbing Peter to pay Paul? - Student loan overhaul crammed into Obamacare By J.D. Wyczalek (why-zall-ick) founder of AZCollegePlanning.com The big buzz is the health care bill, the Reconciliation Act of 2010 aka Obamacare. Packed tightly into those 2000 plus pages of convoluted lawyer-speak is the Student Loan Overhaul Proposal or SLOP for […]

Are Feds robbing Peter to pay Paul? - Student loan overhaul crammed into Obamacare

By J.D. Wyczalek (why-zall-ick) founder of AZCollegePlanning.com

The big buzz is the health care bill, the Reconciliation Act of 2010 aka Obamacare. Packed tightly into those 2000 plus pages of convoluted lawyer-speak is the Student Loan Overhaul Proposal or SLOP for short.

The card shuffling begins with the call to end those evil banks stealing our money through commissions, fees and whatever else they can get their paws on. Without the banking industry money would not move from hand to hand keeping our economy moving.

The call to end private origination of federally backed student loans made by banks (No more commission for selling federally backed student loans) is their key selling point. The estimated savings from this is $68 Billion.

But are private banking institutions completely out of the picture? The answer may surprise you, no. Banks can still compete to service student loans, so they will get paid on the backend instead of through the entire process, cutting into their profits which could lead to more layoffs.

Desert Hills Bank here in Arizona is the latest casualty in the banking fiasco. Experts estimated 30,000 bank related jobs will be lost to the already teetering banking industry, as a side dish of this plan.

On the bright side an estimated $10 Billion would go to help poorer students and increase Pell grant monies. By 2017 the maximum annual dollar amount of Pell Grants would increase to $5,975. Currently Pell Grants are capped at an annual maximum of $5,350. Pell Grants would also be tied to inflation, adjusting accordingly.

Of the $68 billon proposed savings over the next 10 years (original estimation of savings was $89 Billion, we’ll see what it actually turns out to be in the coming months and years), $10 Billion would go to boost Pell Grants and $9.1 Billion would be redirected toward the health care plan.

Changes are to go in effect July 1st. Colleges & Universities are nervous that this is too fast for them to make the transition from the old way to the new way. Is one and a half months enough time for colleges to make this transition before the new school year starts? Looks like there will be a lot of over time in those offices to deal with this chaos.

With this change, will the Feds be shooting themselves in the foot trying to get national health care while mortally wounding the already limping banking industry as a side lash from student loan reform?

The key take away point is parents and students need to take the bull by the horns and not just casually apply to college without first exhausting every resource to maximize the amount of financial aid. Graduating with excessive student loans will put a huge burden on our children.

The question remains, are the Feds robbing Peter to pay Paul? Time will tell.

J.D. Wyczalek (why-zall-ick) is the founder of AZCollegePlanning.com, Arizona’s premier college planning firm. His mantra is to help make college affordable by helping with student positioning and helping parents understand how to capitalize legally on the financial aid system.

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More colleges turn to Common Application

March 25, 2010
Concordia, Columbia University, the U of Michigan and 22 other colleges and universities, will, for the first time, permit students to apply using the Common Application. As of July 2010, 414 colleges and universities will accept the application. Students find that the Common App saves time by reducing redundant entry and allowing them to easily […]

Concordia, Columbia University, the U of Michigan and 22 other colleges and universities, will, for the first time, permit students to apply using the Common Application. As of July 2010, 414 colleges and universities will accept the application. Students find that the Common App saves time by reducing redundant entry and allowing them to easily submit the same essays to multiple institutions.

Increased use of the Common App is considered a key factor in significant increases in applications to certain member colleges in recent years (**see J.D.’s comments). Columbia University will join the seven other Ivy League schools that already accept the Common Application.

The 25 new member institutions include: (* indicates a public institution):

  • Alaska Pacific University (AK)
  • Albany College of Pharmacy & Health Sciences (NY)
  • Columbia University (NY)
  • Concordia University (OR)
  • DePaul University (IL)
  • Fontbonne University (MO)
  • Husson University (ME)
  • Jacobs University Bremen (Germany)
  • Johnson State College* (VT)
  • Maritime College (SUNY)* (NY)
  • Mount Saint Mary College (NY)
  • Morrisville State College (SUNY)* (NY)
  • Otterbein College (OH)
  • School of the Art Institute of Chicago (IL)
  • St. John’s College (MD/NM)
  • Stephens College (MO)
  • SUNY Potsdam* (NY)
  • University of Maryland Baltimore County* (MD)
  • University of Connecticut* (CT)
  • University of Michigan* (MI)
  • University of North Carolina Asheville* (NC)
  • Western New England College (MA)
  • Westmont College (CA)
  • Xavier University of Louisiana (LA)
  • Yeshiva University* (NY)

Is your college listed? Check here https://www.commonapp.org/CommonApp/Members.aspx

J.D.’s comments: With the disguise that applying to colleges using the Common Application will make it easier for students, it will also generate more applications for individual colleges. More applications equates to more application fees. Bottom line is that this helps the student, Yes, and it will generate greater revenue for the colleges. A Win-Win, sort of…

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Obama’s Race to the Top vs. dropouts

March 15, 2010
President Obama desire is that America is once again the leader in college graduates. An educated society is a prosperous society. So why do kids drop out of college? Reasons range from homesick, finances and having the wrong expectations. Homesickness and feeling that you don’t fit in. It’s a whole new world out there, and […]

President Obama desire is that America is once again the leader in college graduates. An educated society is a prosperous society.

So why do kids drop out of college? Reasons range from homesick, finances and having the wrong expectations.

  • Homesickness and feeling that you don’t fit in. It’s a whole new world out there, and you may not be ready to embrace it. Avoid this by plugging into the college systems
  • Educational burnout. While college gives you control and flexibility over your schedule, the hard demanding schedule, challenging courses, and boatload of homework certainly has turned a lot of students away from the desire to continue. Avoid this by have a graduation goal & stick to it. Have a minimum 4 year school goal.
  • Academic unpreparedness. Sometimes, high school didn’t really prepare students for college. Other times, students slacked off in high school and paid the price during their post-secondary years. The high school goal was to pass (so that students could get into college); in college, it is to succeed. Avoid this by create positive study habits. Seek help from others.
  • Personal or family issues. You may have had an unfortunate illness in the family or you yourself just got totally get stressed out from the workload. If this happens, speak with the admissions office and ask them to hold a spot for you to return & have a plan to return and finish your goal.
  • Financial constraints. Tuition costs continue to soar, and scholarships or grants are not always available. Additionally, financial situations can change from year to year. There are many options from federal, state and institutional aid (however, picking the right college, a college that has generous historical giving pattern is part of the key to unlock dollars) Look at careers that have a student loan forgiveness program. Also consider community college.
  • Too much fun — but not enough education. Some students take advantage of their friendships, which could put them on academic probation due to suffering grades or absence in classes. This is not a viable excuse because it is a cause and effect resulting from improper study habits.
  • The school isn’t a good academic fit for the student. You’ve selected a great school that is very arts-centric. However, you realize that you like the sciences better. Similarly, you may hate the average class size of 100 and prefer much smaller classes for more individualized attention. This can be avoided by properly researching colleges BEFORE picking a school. College selection research should start in the Sophomore year of high school.
  • Setting sights on the wrong major. You may have wanted to be a doctor but after taking several science classes, you decided that you’re rather go into marketing. Does your school have a marketing major? If not, you’re likely to go elsewhere. This can be avoided by properly researching majors BEFORE picking a school. Internships and career research are essential, as well as career assessment tools.
  • No guidance or mentors. In high school, teachers and counselors were there to guide you, as high school classes are typically smaller than the entering freshman class. It’s a lot harder to get the personalized attention that you’ve been used to and that could turn people off quickly. Avoid this by Plug into the college system, the college staff can’t help you if you do not actively seek help.
  • External demands, particularly within part time or full time employment. Can we say Mark Zuckerberg - Facebook? When the job puts too many demands on you, you may have to choose, and money usually wins out. If you make a billion dollars on a venture go for it. But don’t drop out until after the bucks start rolling in.

AZCollegePlanning.com has programs that educate kids (and parents) about the entire college process. The goal is to get in, STAY IN (but not stay too long) and graduate on time and as a bonus, do all this without busting the piggy bank. Check us out, we’re here to help. We help make college affordable!

-J.D. Wyczalek (why-zall-ick)

Founder AZCollegePlanning.com

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Reduce dropout rate & prep kids for college

March 10, 2010
We are with you Mr. President!  Steps to Reduce Dropout Rate and Prepare Students for College and Careers President Barack Obama highlighted steps his Administration will take to combat the dropout crisis and invest in strategies to ensure students graduate prepared for college and careers. President Obama challenged states to identify high schools with graduation […]

We are with you Mr. President! 

Steps to Reduce Dropout Rate and Prepare Students for College and Careers

President Barack Obama highlighted steps his Administration will take to combat the dropout crisis and invest in strategies to ensure students graduate prepared for college and careers.

President Obama challenged states to identify high schools with graduation rates below 60% and discussed the Administration’s investments to help them turn those schools around. The Obama Administration has committed $3.5 billion to fund transformational changes in America’s persistently low-performing schools.

Additionally, the President’s FY 2011 budget includes $900 million to support School Turnaround Grants.

President Obama also emphasized the importance of investing in dropout prevention and recovery strategies to help make learning more engaging and relevant for students, and announced new efforts to invest $100 million in a College Pathways program to promote a college readiness culture in high schools, through programs that allow students to earn a high school diploma and college credit at the same time. (Dual enrollment)

“This is a problem we can’t afford to accept or ignore,” President Obama said. “The stakes are too high – for our children, for our economy, for our country. It’s time for all of us to come together – parents and students, principals and teachers, business leaders and elected officials – to end America’s dropout crisis.”

AZ College Consulting, LLC AZCollegePlanning.com is committed to help President Obama reach his goal as we “Race to the Top” and show the world that the United States of America is once again the great nation that she was destined to be.

Do you need help with planning for college? Give us a call!

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Try this one on for size, $550,000 in student loan debt

March 5, 2010
Try this one on for size, two college graduates racking up a mind numbing $990,000 in student loan debt. That a small breeze away from ONE MILLION DOLLARS! (I can hear Dr. Evil cackling http://www.youtube.com/watch?v=cKKHSAE1gIs) I had report about 8 or 9 months ago that a law graduate racked up $270,000 in student loan debt […]

Try this one on for size, two college graduates racking up a mind numbing $990,000 in student loan debt. That a small breeze away from ONE MILLION DOLLARS! (I can hear Dr. Evil cackling http://www.youtube.com/watch?v=cKKHSAE1gIs)

I had report about 8 or 9 months ago that a law graduate racked up $270,000 in student loan debt and with penalties it jumped to $435,000. The article was published in the New York Times.

Now there is a second one that popped up on the scene. A medical doctor graduated with $250,000 in student loan debt and with penalties this one jump (no not jumped, rocketed) rocketed to $555,000 in student loan debt. This article was published in the Wall Street Journal.

You think this is just two isolated cases? Here is another one totaling $180,000. Huffington Post

This is truly unbelievable. I mean I don’t want to believe that something like this can happen. Take this warning. This is soon going to be the norm as students are instructed to take out loans to cover colleges that are way above their budgets. (You think the Obama administration is going to wipe out student loan debt? Think again. Private student loans will not fall under this jurisdiction.)

It will soon be the norm that kids are racking up $100,000 plus in student loans.

It is imperative and of the utmost nature that each and every high school student is critically aware that this can happen. This tsunami of student loan debt can be avoided by doing a few things.

• First, know what your EFC (expected family contribution) number is. This is akin to a deductable. This amount is what parents are required to pay before getting any aid.

• Second, know the HGP (historical giving pattern) of the college, are they typically generous or not.

• Third, with the EFC and the HGP we can determine with a fair amount of accuracy how much student loan debt your child will graduate with. Is it too much?

• Fourth, research the career your child is interested in and ask will the starting salary for this career be able to give me the lifestyle I want AND be able to pay off the student loan debt. If the answer is no, rethink the college or the career field.

How much debt do you want your child to graduate with, seriously? If you think you can just wing it without doing research, good luck. I can still hear Dr. Evil cackling as the fat cats rub their greedy stained hands together.

Don’t believe me yet? The Star Tribune reports another student racking up $350,000.

Do something now.

We help make college affordable! Please I implore you to tell 11 friends about this article and website and tell them there is hope. Your and their child does not have to graduate college with excessive debt and be a slave to the monthly payments. Do something now.

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