weighted, unweighted which do we use?

February 26, 2010
GPA rumor scandals and otherwise weirdness Weighted, un-weighted, IB, AP, Honors what is this whole mess? Parents have asked me what are colleges looking for and what are high schools looking for as it relates to grades. The answer is surprising. What are colleges REALLY looking for in a GPA?   What you don't know […]

GPA rumor scandals and otherwise weirdness

Weighted, un-weighted, IB, AP, Honors what is this whole mess? Parents have asked me what are colleges looking for and what are high schools looking for as it relates to grades.

The answer is surprising.

What are colleges REALLY looking for in a GPA?


 

What you don't know can hurt you. Discover the truth in one of my workshops. Click the link on the right side of this page for dates and locations.

Tell a few about this website, send a note on to other families and friends, they can subscribe to these useful tips by going to the website and clicking on the free e-book link at www.AZCollegePlanning.com

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COD: Something’s fishy!

February 24, 2010
Cancellation of Debt or  COD for short. Due to the state of the economy over the last year, it is imperative to know and understand how cancellation of debt may affect the ability to get financial aid. Can I get my student loans cancelled? Yes and no. See #5 below. If a cancelled debt is […]

Cancellation of Debt or  COD for short.

Due to the state of the economy over the last year, it is imperative to know and understand how cancellation of debt may affect the ability to get financial aid.

Can I get my student loans cancelled? Yes and no. See #5 below.

If a cancelled debt is a taxable event and counts as income, it may throw your AGI through the roof and disqualify you for any need based aid. (One of the questions on the FAFSA asks what your AGI is.)

In the tax world, COD is short for "cancellation of debt." If that phrase doesn't sound familiar, you'd better read on, particularly given the state of the economy. Like it or not, when a debt you owe is canceled or discharged, in many cases the tax code treats the wiped out debt as cash income to you. If you owe $500,000 to the bank, but the bank forgives it, it's as if the bank just handed you $500,000 and Uncle Sam wants his cut.

Yes, there are other types of phantom income that incur a tax despite the fact that you've gotten no cash. The good news is that there are exceptions and exclusions that may keep you from having to write a check to the IRS. So you're not caught off guard, here are 10 things you should know about COD income.

1. Loans forgiven as gifts aren't taxable.

If your debt is canceled by a private lender--say a relative or friend--and the cancellation is intended as a gift, there is no income to you. While it's not income to you, if the lender forgives more than $13,000 in a year (the gift tax annual exclusion), it may count against his or her own $1 million lifetime exemption from the gift tax, so it's often best for these loans to be forgiven a little at a time. A debt canceled by a private lender's will, upon his death, isn't income to you either.

2. There's an exception for the mortgage on your home.

In 2007, in response to the mortgage crisis, Congress exempted up to

$2 million (per couple) in mortgage debt on a principal home, forgiven from 2007 through 2012, from income. This exemption applies if:

--You restructure "acquisition" debt on a principal residence--meaning debt you used to buy or improve a principal residence. If you used a home equity loan to buy a boat or play the stock market and the lender forgives that debt, it's not covered by this provision. (But if you're bankrupt or insolvent, it still might not be income. See Points 3 and 4 below)

--You lose your principal residence in a foreclosure (but be careful:

You may have income to the extent the canceled debt does not relate to the purchase or improvement of your principal residence), or

--You sell your principal residence in a short sale, where the sales proceeds are less than you owe and the lender writes off the balance.

Not surprisingly, if your lender writes off some of your mortgage, you will have to reduce your basis in the residence by the amount of discharged debt not counted as income to you. Note that this special relief for forgiven mortgages isn't automatic; to take advantage of it you must file IRS Form 982, with the intimidating title, "Reduction Of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)." Get professional help.

3. Bankruptcy discharges aren't taxable.

If your debt is discharged when you're in bankruptcy, as part of a court-approved bankruptcy plan, it isn't income to you. Again, the amount of the discharged debt goes to reduce certain tax attributes, such as net operating losses or the basis of property. Once again, the rules are complicated and Form 982 is required.

4. If you're insolvent, you get a pass.

Even if you are not in bankruptcy, if you are "insolvent" when your debt is discharged, there is no tax. Insolvency is a simple test meaning your liabilities exceed your assets. To escape tax, your liabilities must exceed your assets by more than the amount of the debt discharged. Say you have $1,000 in assets and $2,000 in liabilities, so you're underwater to the tune of $1,000. If your bank forgives a $500 debt, it's not income because the amount forgiven is less than the amount of your insolvency.

5. Certain forgiven student loans aren't income.

Another exception protects forgiveness of certain student loans. The student or former student escapes the tax hit if the loan is forgiven under a provision specifying that all or part of the debt is discharged if the individual works for a certain period of time in certain fields for a class of employers. So doctors, nurses and teachers agreeing to serve in rural or low-income areas in exchange for cancellation of their student loans won't have income from the cancellation.

Then there's the new federal income contingent student loan repayment program. If you work in the private sector, you must pay a certain percentage of your income for 25 years and any loan balance left after that is forgiven and counted as income to you. But if you work for the government, the balance is forgiven after 10 years of payment and doesn't count as income.

6. There's an exception for deductible interest.

There is no income from cancellation of deductible debt. That means if a lender cancels home mortgage interest (interest only, not the principal of the debt), and that interest could have been claimed as an itemized deduction on Schedule A to your Form 1040, there is no income.

7. You must account for Form 1099-Cs

No one likes IRS Forms 1099, but they're a fact of life. Any government agency, financial institution or credit union forgiving a debt of $600 or more has to issue a Form 1099-C to you and send one to the IRS too. If you receive one and disagree with the amount shown, write the lender requesting that it issue a corrected Form 1099-C showing the proper amount of canceled debt. If you believe the canceled debt isn't income to you because you're insolvent or for any other reason, don't ignore the 1099-C. Instead, fill out Form 982 explaining why it isn't taxable.

8. A price adjustment isn't income.

There is no income if an individual purchases property and the seller later reduces the price of the property. The purchaser's basis in the property, however, is reduced by the amount of the adjustment. These days this exception can be particularly important. Say you bought a rental unit five years ago for $500,000 from the bank, and still owe the bank $400,000. The unit is now worth only $350,000. The bank agrees to reduce the debt by $50,000. If this is just debt discharge, it's COD income. But if it is written as an adjustment to the purchase price, it's not.

9. Certain farm and real business property debt gets special treatment.

Even if you are solvent, there are special rules for certain qualified farm debt. These rules apply only after you already apply the insolvency and bankruptcy rules. Similarly, a discharge of debt incurred to acquire or construct certain property used in a trade or business ("qualified real property business debt") won't trigger income (subject to limits). In both cases, the amount of forgiven debt excluded from gross income reduces your basis in property.

10. You can sometimes delay the tax hit.

Congress created yet another limited time rule allowing an individual or corporate taxpayer to delay the normal tax hit from reacquiring its own debt at a discount. The delay only applies if the debt was issued in connection with a trade or business and reacquired in 2009 or 2010.

Debt that qualifies can be recognized over five years, beginning in 2014.

The bottom line is that COD income has always been a confusing and complicated issue. But in this economy, with the special exceptions Congress has made, it's even more so.

Student Loan Forgiveness Programs

While all this is good and dandy, part of the key is graduating with the least amount of student loans. Check out one of our free workshops for info on how to graduate college without going broke!

There are several student loan forgiveness programs available. These programs will reduce or eliminate your student loan debt in exchange for years of service. You should not choose a career because you hope to have your student loan debt forgiven. It is more important to select a career based on your interests, skills, and personality. However, if you might qualify for any of the following programs, you should research and apply for that program.

Teacher Loan Forgiveness: If you teach full-time in a low-income school or certain teacher-shortage subject areas, you may be eligible to have a portion of your Stafford or Perkins loans forgiven for each year of service. To learn more, visit http://studentaid.ed.gov. also check out https://www.tcli.ed.gov/CBSWebApp/tcli/TCLIPubSchoolSearch.jsp

Child-care Provider Loan Forgiveness: If you work full-time in certain child care facilities that serve low-income families and meet other qualifications, you may be eligible to have up to 100 percent of your student loans forgiven. This federal program is not currently accepting new applications. For information on the program and guidelines visit the loan discharge section of www.studentaid.ed.gov.

Lawyer Loan Forgiveness: Some law schools offer loan repayment programs to graduates who serve in the public interest or work for nonprofit groups. Visit your school’s financial aid office to determine if there is a school sponsored loan repayment assistance program (LRAP) or visit the National Association for Public Interest Law for more information at http://www.equaljusticeworks.org/finance. For information on Arizona loan repayment programs visit http://www.azflse.org.

Doctor Loan Forgiveness: If you agree to practice in communities where there is a shortage of health professionals, you may be eligible to have a portion of your student loans forgiven. The National Health Service Corps, under the Department of Education, will pay up to $50,000 for two years of service, based on your loan balance. To locate your state program visit http://bhpr.hrsa.gov. For information on the Arizona loan repayment program visit http://www.azdhs.gov.

Peace Corps: Offers a loan repayment program that reduces your outstanding debt on Perkins loans by a specific percentage for each year of service. You may also be eligible for a deferment of all federal loans while you serve in the Peace Corps. Visit www.peacecorps.gov to learn more.

Americorps: Offers a student loan payment program of up to $4,725.00 for each term of service. The award amount varies based on the number of service hours. For more information visit http://www.americorps.org/

Armed Forces: Offers loan payment programs for people who enlist in the Army, Navy, or Air Force after college. For each year of military service, a percentage of your student loan balance is paid. Visit www.military.com/resources to learn more on student loan repayment programs.

If you did not find a program listed here, you should also search the Internet for other programs offered through specific employers, state agencies, and the federal government. One federal resource is fedmoney.org, a free search engine for federal grants and loan programs.

Important Note: If you hope to have your student loans forgiven, do not consolidate your Perkins loan. If consolidated, Perkins loans become ineligible for loan forgiveness programs. Double check everything BEFORE you implament any plan.

Need help sorting out this whole mess? Contact us we'd love to help.

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Higher Ed Tax Guide for 2009

February 18, 2010
Higher Education Federal Tax Benefits Guide - 2009 Tax Year There's great news for parents and students: the federal government provides a number of tax incentives that can help defray the cost of higher education. These incentives come in a couple of forms: Tax credits, which directly reduce the amount of tax you are liable […]

Higher Education Federal Tax Benefits Guide - 2009 Tax Year

There's great news for parents and students: the federal government provides a number of tax incentives that can help defray the cost of higher education. These incentives come in a couple of forms:

Tax credits, which directly reduce the amount of tax you are liable for; and Tax deductions, which reduce the amount of income that you pay taxes on.

You may qualify to use more than one of the benefits, but there are some restrictions against this as well. It's a good idea to figure your taxes multiple ways so you can get the maximum benefit available to you.

  • Tax Credits
  • The American Opportunity Tax Credit
  • The Hope Tax Credit
  • The Lifetime Learning Tax Credit
  • How to Claim Tax Credits
  • Tax Deductions
  • Tuition and Fees Deduction
  • Student Loan Interest Deduction
  • More Tax Topics
  • The 1098-T Statement
  • Taxability of Educational Assistance

 The American Opportunity Tax Credit

The American Opportunity tax credit is new for the 2009 tax year. It offsets the cost of tuition, fees, course-related books, supplies, and equipment for higher education by reducing the amount of income tax you are liable for. In addition, the credit is partially refundable—meaning that you may be able to claim the tax credit and receive a check from the IRS even if you owe no income tax!

The amount of the credit can be up to $2,500 per student. Up to $1000 of the credit can be refunded to you if your credit is more than the amount of tax you owe. You are eligible for the credit if your modified adjusted gross income is $90,000 or less (for married couples filing a joint return, $180,000 or less). The amount of the credit varies depending on income and how much you spent on higher education expenses, and how many eligible students are in your family.

The American Opportunity tax credit is a temporary replacement, for 2009 and 2010 only, for the Hope credit. It has more generous benefits than the Hope credit and was authorized by the economic stimulus bill, the American Recovery and Reinvestment Act of 2009.

Qualifications:

Expenses that count towards this credit are tuition, fees, course-related books, supplies, and equipment for higher education (less the amount of certain scholarships and grants received) during  2009 for yourself, your spouse, or someone whom you claim as a dependent on your tax return.

Only expenses incurred for the first four years of undergraduate study count for purposes of this credit. The student must have been enrolled at least half-time in 2009 in an eligible program leading to a degree, certificate, or other recognized credential at an  eligible* school.

You must file a federal income tax return to get the credit (even if you are otherwise not required to file a return). If you are claimed as a dependent on someone’s tax return, only the person who claims you can apply for the credit. If you are not claimed as a dependent on someone else’s return, but were under age 24 at the end of 2009 and your earned income was less than one-half of your support, you can claim the credit to reduce any tax you owe, but are not eligible to get any refund.

Students convicted of a felony for possessing or distributing a controlled substance are not eligible for the American Opportunity tax credit.

  The Hope Tax Credit

Because the Hope credit was temporarily replaced for the 2009 tax year by the American Opportunity tax credit, only families which have at least one student attending an eligible* institution in a Midwestern disaster area can claim a Hope credit.

The amount of the credit can be up to $3,600 per student, but it is non refundable— the maximum credit that you can receive is limited to the amount of tax you owe. Eligible families can take this credit only if they choose not to claim the American Opportunity credit for any student in the family. The maximum Hope credit for other students in the family, if they do not attend school in a Midwestern disaster area, is $1800. You are eligible for the credit if your modified adjusted gross income is $60,000 or less (for married couples filing a joint return, $120,000 or less). The amount of the credit varies depending on income and how much you spent on higher education expenses, and how many eligible students are in your family.

Qualifications:

Expenses that count towards this credit are tuition, fees, course-related books, supplies, equipment, and a room and board allowance (less the amount of certain scholarships and grants received) paid during 2009 for yourself, your spouse, or someone whom you claim as a dependent on your tax return who attended a school in a Midwestern disaster area. Other students in the family can only claim tuition, fees, and amounts required to be paid to the institution for books, supplies and equipment if they didn't attend school in the Midwestern disaster area.

The expenses must have been incurred for the one of the first two years of undergraduate study, and the student must have been enrolled at least half-time in 2009 in an eligible program leading to a degree or certificate at an eligible school.

You must file a federal income tax return and have a 2009 income tax liability of any amount to get the credit. If you are claimed as a dependent on someone’s tax return, only the person who claims you can apply for the credit.

You may only take a Hope credit for two years for any one student. If you have already claimed the Hope credit in two previous tax years for a student, that student may qualify for the American Opportunity tax credit.

Students convicted of a federal or state drug felony before the end of 2009 are not eligible for the Hope credit.

The Lifetime Learning Tax Credit

The Lifetime Learning credit is available for all types of post secondary education, unlike the other credits. Use the Lifetime credit once you have exhausted your eligibility for more advantageous credits. This credit may be particularly helpful to graduate students.

You can claim a tax credit of up to $2000 per tax return (not per student). The maximum is $4,000 if at least one family member was a student in a Midwestern disaster area school. The qualifying student(s) can be anyone in the family. The Lifetime Learning credit is non refundable— the maximum credit that you can receive is limited to the amount of tax you owe. You are eligible for the credit if your modified adjusted gross income is $60,000 or less (for married couples filing a joint return, $120,000 or less).

Qualifications

Expenses that count towards this credit are tuition, fees, and amounts required to be paid to the institution for books, supplies and equipment (less the amount of certain scholarships and grants received) during 2009 for yourself, your spouse, or someone whom you claim as a dependent on your tax return. If a student attended school in a Midwestern disaster area, other expenses may be included.

You don't have to be pursuing a degree or certificate to qualify for the Lifetime Learning Credit. You can claim it for all years of post secondary education and for courses to acquire or improve job skills.

You must file a federal income tax return and have a 2009 income tax liability of any amount to get the credit. If you are claimed as a dependent on someone’s tax return, only the person who claims you can apply for the credit.

If you claim the American Opportunity credit or the Hope credit for one or more students in your family, you can't use their expenses to figure your Lifetime Learning Credit. You can still take a Lifetime Credit for family members for whom you are not claiming the other credits.

Unlike other credits, students who have felony drug convictions do qualify to take the Lifetime Learning credit.

How to Claim Tax Credits

To claim any of the three tax credits, you must report the amount of your qualified expenses (less certain scholarships, grants, and untaxed income) on IRS Form 8863 - Education Credits. Complete instructions for using this form and more details are available from the IRS.

Tuition and Fees Tax Deduction

The Tuition and Fees tax deduction can reduce your taxable income by as much as $4,000. This deduction may be helpful to you if you are not eligible to take one of the tax credits. It is taken as an adjustment to income, which means you can claim this deduction even if you do not itemize deductions on Schedule A of Form 1040.

You are eligible to take the deduction if your modified adjusted gross income is $80,000 or less ($160,000 if filing a joint return). The amount of the Tuition and Fees deduction you are eligible for depends on the amount of qualified tuition and related expenses paid for eligible students.

Qualifications:

Expenses that you can deduct are tuition, fees, and amounts required to be paid to the institution for books, supplies and equipment (less the amount of certain scholarships and grants received) during 2009 for yourself, your spouse, or someone whom you claim as a dependent on your tax return. The expenses must have been for a student enrolled in one or more courses at an eligible* educational institution.

You can't claim both an education credit and the tuition and fees deduction for the same student for the same year, but you can take the deduction for one student and a credit for another.

You can't take this deduction if you deduct tuition and fees expenses under any other provision of the law (for example, as a business expense).

You can't claim this deduction if your filing status is married filing separately or if another person can claim you as a dependent on his or her tax return.

Figure your Tuition and Fees deduction on IRS Form 8917 - Tuition and Fees Deduction.

Student Loan Interest Deduction

The Student Loan Interest tax deduction can reduce your taxable income by as much as $2500. It is taken as an adjustment to income, which means you can claim this deduction even if you do not itemize deductions on Schedule A of Form 1040.

You can deduct interest paid on a student loan for yourself, your spouse, or your dependents. You are eligible to take the deduction if your modified adjusted gross income is $75,000 or less ($150,000 if filing a joint return). The amount of the Student Loan Interest deduction you are eligible for depends on the amount of interest paid and your income.

Qualifications:

Qualified student loans must have been used to fund educational expenses such as tuition, room and board, fees, and books for a student enrolled at least half-time and pursuing a degree, certificate, or similar program at an eligible* institution.

You cannot claim this deduction if your filing status is married filing separately or if another person can claim you as a dependent on his or her tax return.

Figure your Student Loan Interest deduction using the Student Loan Interest Deduction Worksheet.

The 1098-T Statement

You will receive information about your 2009 educational expenses in a 1098-T statement from the institution of higher education. Schools are required to send this information to each student and to the IRS by Jan. 31, 2010. (You might receive this by mail or electronically. Be sure to save this information, or give it to the person who claims you on their tax return if you don't claim yourself.)

Some schools report only tuition and fees on this form. If your 1098-T doesn't include amounts you paid for course-related books, supplies, and equipment, and these expenses are allowed for the credit you are taking, you can use your own records to figure the amounts paid for these items and report the total on your tax return.

Taxability of Student Financial Aid and Loan Forgiveness Programs

Scholarships, fellowships, and grants that you received and that are reported on the 1098-T may need to be reported as taxable income in certain circumstances, but are often tax-free. In general, if you are pursuing a degree, certificate, or program of training towards gainful employment, and used the funds to pay tuition, fees, or required books, supplies and equipment, these sources of assistance are not counted as taxable income.

If you've received a student loan that states it can be forgiven, cancelled, or paid if you work for a certain period of time, in certain professions, for any of a broad class of employers, then the amounts forgiven may qualify for tax-free treatment.

*An eligible educational institution is any college, university, vocational school, or other post secondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. According to the IRS, "it includes virtually all accredited, public, nonprofit, and proprietary post secondary institutions." The educational institution should be able to tell you if it is an eligible educational institution. Certain educational institutions located outside the United States also participate in the U.S. Department of Education’s Federal Student Aid (FSA) programs.

*Please consult with your CPA or other professional before implementing any of these ideas

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Obama, college tax credit & debt forgiveness

February 2, 2010
Did you catch Obama’s speech the other day, here is a recap on his comments related to college and education. Obama Calls For College Tax Credit and Debt Forgiveness President Barack Obama touted education among his top priorities in his first State of the Union address, proposing a $10,000 higher-education tax credit for families and […]

Did you catch Obama’s speech the other day, here is a recap on his comments related to college and education.

Obama Calls For College Tax Credit and Debt Forgiveness

President Barack Obama touted education among his top priorities in his first State of the Union address, proposing a $10,000 higher-education tax credit for families and debt forgiveness for people who have been repaying their college loans for at least 20 years.

Obama urged the U.S. Senate to join the House in overhauling the federal student-loan system, saying such a move would end “unwarranted taxpayer subsidies” to banks and help revitalize community colleges. He also supported an update of No Child Left Behind, the Bush administration education effort.

Obama said the cost of the higher-education initiatives would be offset by money saved from his plan to provide all new federal loans directly to students, instead of through private lenders. While some Republican lawmakers have opposed this plan saying it may raise college costs, the Congressional Budget Office said it may save the government $80 billion in 10 years.

“In the 21st century, the best anti-poverty program around is a world-class education,” Obama said in his speech. “No one should go broke because they chose to go to college.”

The repayment plan reflects an understanding by the administration that student debt can handicap middle class families.

Policy makers have become increasingly aware over the last several years about the burden that student debt can create in already tough times. This proposal gives a signal that if you do need to borrow to pay to go to college, and you’re responsible about repayment, you can do it in a way that doesn’t jeopardize your future.

Obama, who plans to send Congress his budget request for fiscal 2011 next week, said he’ll propose the $10,000 tax credit for families paying for four years of college and more money for Pell Grants that help low-income students afford college. He also called for an expansion of an income-based student-loan repayment program the Education Department started in July.

“Let’s tell another 1 million students that when they graduate, they will be required to pay only 10 percent of their income on student loans, and all of their debt will be forgiven after 20 years

-- and forgiven after 10 years if they choose a career in public service,” Obama said.

Colleges welcome anything that will help students pay for their education, particularly the increased Pell Grants.

These are really positive initiatives for private colleges. Anything that can reduce the load for students paying for colleges will help.

The plan to provide federal college loans directly, approved by the House in September, aims to protect student loans from turmoil in financial markets and end federal payments that Obama says are wasteful. It would discontinue the 43-year- old Federal Family Education Loan Program that subsidizes and guarantees loans made by private lenders.

Starting in July, all new federal loans would be provided through a separate program, created in 1993, that lets the Education Department lend directly to students.

Representative John Kline of Minnesota, the top Republican on the House Education and Labor Committee, said such a plan may create new expenses for students.

“Making the federal government responsible for a larger share of student debt is likely to do nothing more than exacerbate high college costs,” Kline said.

Obama’s budget plan, set to be released Feb. 1, includes a $3 billion raise in discretionary education funds next year, shielding federal school programs from his proposed freeze on some domestic spending. That’s about 6 percent more than this year’s $47 billion discretionary budget for education programs other than Pell Grants.

The $3 billion contains Obama’s proposed $1.35 billion expansion of the Race to the Top competitive grant program, which rewards states that make the most progress in raising academic standards, boosting teacher quality, tracking student gains and improving failing schools.

That program, which will award $4.35 billion in stimulus grants to states this year, has “broken through the stalemate between left and right” on how to improve the nation’s public schools, Obama said.

“Instead of rewarding failure, we only reward success,” Obama said. “Instead of funding the status quo, we only invest in reform -- reform that raises student achievement, inspires students to excel in math and science, and turns around failing schools that steal the future of too many young Americans.”

The budget proposal would allow another $1 billion in K-12 education spending, for a total of $4 billion, if lawmakers reauthorize No Child Left Behind this year.

The 2002 law, enacted under President George W. Bush, requires states to measure student achievement through standardized tests. (Crack the test here!)

While states can set their own standards to determine what constitutes an adequate education, they can lose some federal funds if they don’t show yearly progress toward those goals.

Obama and Duncan have said the law prompted many states to weaken their academic standards and led schools to devote too much time to standardized test preparation. They want states to agree on a common set of tougher, nationwide standards. They also want to give states more flexibility in meeting those standards than they now have under No Child Left Behind.

“In this country, the success of our children cannot depend more on where they live than on their potential,” Obama said.

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the best anti-poverty program around is a world-class education

January 29, 2010
"In the 21st century, the best anti-poverty program around is a world-class education,” Obama said in his speech. “No one should go broke because they chose to go to college.” No one should go broke because they chose to go to college, which is EXACTLY the accurate reason why AZCollegePlanning.com is here! We are here […]

"In the 21st century, the best anti-poverty program around is a world-class education,” Obama said in his speech. “No one should go broke because they chose to go to college.”

No one should go broke because they chose to go to college, which is EXACTLY the accurate reason why AZCollegePlanning.com is here!

We are here to help.

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How to score better

January 18, 2010
There is a selfish reason why colleges want you to score higher on your SAT & ACT test. Did you know that if your child scores a specific number on the test or higher, then colleges will clamor over one another to recruit your child. Do you want to learn how to get a higher […]

There is a selfish reason why colleges want you to score higher on your SAT & ACT test.

Did you know that if your child scores a specific number on the test or higher, then colleges will clamor over one another to recruit your child.

Do you want to learn how to get a higher score on your SAT and ACT in 2-Hours or less?

Click this link --> Show me how to score higher in 2 hours or less
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Double FAFSA warning:

January 6, 2010
Double FAFSA warning: financial aid what you need to know By J.D. Wyczalek (why-zall-ick) What you need to be aware of, or should I say beware of. Some families believe their income and assets warrant them to not fill out any financial aid forms because of the unfounded belief of ineligible. Many other facets of […]

Double FAFSA warning: financial aid what you need to know

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

What you need to be aware of, or should I say beware of.

Some families believe their income and assets warrant them to not fill out any financial aid forms because of the unfounded belief of ineligible. Many other facets of financial aid come into play such as number in the household, age of the oldest parent, how many children are in college among a few things. These things can push your student into the “Yes, you are eligible” category.

Let’s get up to speed. The main “mother of all financial aid forms” is the FAFSA (Free Application for Federal Student Aid). It can be found at fafsa.ed.gov.

Every family needs to fill out the FAFSA because, even if they believe they are not eligible for aid, it may be surprising that they actually are eligible or may be eligible for low cost, low interest rate student loans. Families won’t get these loans or aid if they don’t apply.

Primarily many families render themselves ineligible for financial aid because of inaccuracies on the form resulting in incomplete or erroneous data. Filling out the form correctly could be the difference between financial aid or zip. Reporting assets and income incorrectly can adversely affect aid eligibility.

Similar to a good CPA who knows tax laws, can fill out tax forms accurately. So when the tax forms are filed then you can rest assured the CPA did everything in their power (legally) to get your tax bill as low as possible.

This is the same with the professional service here at AZCollegePlanning.com. We know and understand the financial aid intricacies and provide an estimate of what your FAFSA would look like and in many cases, months before so that we can plan accordingly.

Like an unsuspecting child who was not paying attention to the cookie they were holding that was snatched up by a hungry dog, student and parent need to be on guard when filling out this form. If the form is filled out incorrectly resulting in little or no aid, this just simply puts more money back in the pockets of the big tycoons on the college boards.

Don’t kid yourself college is big business. Many college and university endowment funds have reached the seven digit mark and in some cases, the Billion dollar endowment fund mark. Go ahead; I dare you to Google “Colleges with the largest endowment funds.” You may be shocked at the money that is out there.

The key is to properly position your child (and your assets) so that you can get the biggest slice of the pie that you can.

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Colleges with the largest endowment funds

January 5, 2010
Here is a list of colleges with huge endowment funds. Institution   Endowment (2005) billion USD   Endowment (2006) billion USD   Endowment (2007) billion USD   Endowment (2008) billion USD   Amherst College $ 1.155[1] $ 1.337[2] $ 1.662[3] $ 1.705[4] Baylor College of Medicine $ 1.008[1] $ 1.059[2] $ 1.278[3] $ 1.091[4] Baylor University $ 1.008[1] $ 0.870[2] […]

Here is a list of colleges with huge endowment funds.

Institution  

Endowment (2005)
billion USD  

Endowment (2006)
billion USD  

Endowment (2007)
billion USD  

Endowment (2008)
billion USD  

Amherst College $ 1.155[1] $ 1.337[2] $ 1.662[3] $ 1.705[4]
Baylor College of Medicine $ 1.008[1] $ 1.059[2] $ 1.278[3] $ 1.091[4]
Baylor University $ 1.008[1] $ 0.870[2] $ 1.278[3] $ 1.060[4]
Berea College $ 0.862[1] $ 0.949[2] $ 1.102[3] $ 1.023[4]
Boston College $ 1.270[1] $ 1.448[2] $ 1.670[3] $ 1.631[4]
Boston University $ 0.777[1] $ 0.916[2] $ 1.101[3] $ 1.145[4]
Brown University $ 1.844[1] $ 2.167[2] $ 2.781[3] $ 2.747[4]
California Institute of Technology $ 1.418[1] $ 1.581[2] $ 1.860[3] $ 1.892[4]
Carnegie Mellon University $ 0.837[1] $ 0.939[2] $ 1.116[3] $ 1.068[4]
Case Western Reserve University $ 1.516[1] $ 1.599[2] $ 1.841[3] $ 1.766[4]
Columbia University $ 5.191[1] $ 5.938[2] $ 7.150[3] $ 7.147[4]
Cornell University $ 3.777[1] $ 4.321[2] $ 5.425[3] $ 5.385[4]
Dartmouth College $ 2.714[1] $ 3.092[2] $ 3.760[3] $ 3.660[4]
Duke University $ 3.826[1] $ 4.498[2] $ 5.910[3] $ 6.124[4]
Emory University $ 4.376[1] $ 4.870[2] $ 5.562[3] $ 5.473[4]
George Washington University $ 0.823[1] $ 0.963[2] $ 1.147[3] $ 1.256[4]
Georgetown University $ 0.741[1] $ 0.834[2] $ 1.059[3] $ 1.059[4]
Georgia Institute of Technology
(Georgia Tech Foundation only)
$ 0.937[1] $ 1.047[2] $ 1.281[3] $ 1.344[4]
Grinnell College $ 1.391[1] $ 1.472[2] $ 1.718[3] $ 1.472[4]
Harvard University $ 25.473[1] $ 28.916[2] $ 34.635[3] $ 36.556[4]
Indiana University (system-wide)[5] $ 1.107[1] $ 1.276[2] $ 1.557[3] $ 1.546[4]
Johns Hopkins University $ 2.177[1] $ 2.351[2] $ 2.800[3] $ 2.525[4]
Lehigh University $ 0.845[1] $ 0.939[2] $ 1.086[3] $ 1.127[4]
Massachusetts Institute of Technology $ 6.712[1] $ 8.368[2] $ 9.980[3] $ 10.069[4]
Michigan State University $ 0.906[1] $ 1.048[2] $ 1.248[3] $ 1.282[4]
New York University $ 1.548[1] $ 1.775[2] $ 2.162[3] $ 2.475[4]
Northwestern University $ 4.215[1] $ 5.141[2] $ 6.503[3] $ 7.244[4]
Ohio State University $ 1.726[1] $ 1.997[2] $ 2.338[3] $ 2.076[4]
Pennsylvania State University $ 1.175[1] $ 1.326[2] $ 1.590[3] $ 1.545[4]
Pomona College $ 1.299[1] $ 1.457[2] $ 1.761[3] $ 1.794[4]
Princeton University $ 11.207[1] $ 13.045[2] $ 15.787[3] $ 16.349[4]
Princeton Theological Seminary $ 0.864[1] $ 0.945[2] $ 1.109[3] $ 1.018[4]
Purdue University (system-wide)[5] $ 1.341[1] $ 1.494[2] $ 1.787[3] $ 1.736[4]
Rice University $ 3.611[1] $ 3.986[2] $ 4.670[3] $ 4.610[4]
Rockefeller University $ 1.557[1] $ 1.772[2] $ 2.144[4] $ 2.021[4]
Smith College $ 1.036[1] $ 1.156[2] $ 1.361[3] $ 1.366[4]
Southern Methodist University(SMU) $ 1.014[1] $ 1.122[2] $ 1.328[3] $ 1.368[4]
Stanford University $ 12.205[1] $ 14.085[2] $ 17.165[3] $ 17.200[4]
Swarthmore College $ 1.164[1] $ 1.245[2] $ 1.441[3] $ 1.413[4]
Syracuse University $ 0.818[1] $ 0.908[2] $ 1.086[3] $ 0.985[4]
Texas A&M University System (system-wide)[5] $ 4.964[1] $ 5.643[2] $ 6.590[3] $ 6.659[4]
Texas Christian University $ 0.942[1] $ 1.016[2] $ 1.187[3] $ 1.260[4]
Trinity University (Texas) $ 0.733[1] $ 0.814[2] $ 0.931[3] $ 1.035[4]
Tufts University $ 0.845[1] $ 1.215[2] $ 1.452[3] $ 1.446[4]
Tulane University $ 0.780[1] $ 0.858[2] $ 1.009[3] $ 1.036[4]
University of California (system-wide)[5] $ 5.222[1] $ 5.734[2] $ 6.439[3] $ 6.217[4]
University of California, Los Angeles
(UCLA Foundation only)
$ 0.668[1] $ 0.805[2] $ 0.975[3] $ 1.054[4]
University of Chicago $ 4.137[1] $ 4.867[2] $ 6.204[3] $ 6.632[4]
University of Cincinnati $ 1.032[1] $ 1.101[2] $ 1.185[3] $ 1.099[4]
University of Delaware $ 1.077[1] $ 1.223[2] $ 1.397[3] $ 1.340[4]
University of Florida (UF Foundation only) $ 0.836[1] $ 0.996[2] $ 1.219[3] $ 1.251[4]
University of Illinois (system-wide)[5] $ 1.148[1] $ 1.252[2] $ 1.515[3] $ 1.460[4]
University of Kansas (system-wide)[5] $ 0.955[1] $ 1.049[2] $ 1.239[3] $ 1.218[4]
University of Michigan $ 4.931[1] $ 5.652[2] $ 7.090[3] $ 7.572[4]
University of Minnesota $ 1.969[1] $ 2.224[2] $ 2.804[3] $ 2.751[4]
University of Missouri (system-wide)[5] $ 0.849[1] $ 0.944[2] $ 1.098[3] $ 1.025[4]
University of Nebraska (system-wide)[5] $ 1.042[1] $ 1.153[2] $ 1.277[3] $ 1.221[4]
University of North Carolina at Chapel Hill $ 1.486[1] $ 1.149[2] $ 2.164[3] $ 2.359[4]
University of Notre Dame $ 3.650[1] $ 4.437[2] $ 5.977[3] $ 6.226[4]
University of Oklahoma $ 0.777[1] $ 0.960[2] $ 1.114[3] $ 1.155[4]
University of Pennsylvania $ 4.370[1] $ 5.313[2] $ 6.635[3] $ 6.233[4]
University of Pittsburgh $ 1.530[1] $ 1.803[2] $ 2.254[3] $ 2.334[4]
University of Richmond $ 1.208[1] $ 1.388[2] $ 1.655[3] $ 1.704[4]
University of Rochester $ 1.370[1] $ 1.491[2] $ 1.726[3] $ 1.731[4]
University of Southern California $ 2.746[1] $ 3.066[2] $ 3.715[3] $ 3.589[4]
University of Texas System (system-wide)[5] $ 11.610[1] $ 13.235[2] $ 15.614[3] $ 16.111[4]
University of Virginia $ 3.219[1] $ 3.618[2] $ 4.370[3] $ 4.573[4]
University of Washington $ 1.490[1] $ 1.794[2] $ 2.184[3] $ 2.262[4]
University of Wisconsin–Madison
(UW Foundation only)
$ 1.125[1] $ 1.426[2] $ 1.645[3] $ 1.735[4]
Vanderbilt University $ 2.628[1] $ 2.946[2] $ 3.487[3] $ 3.524[4]
Wake Forest University $ 0.907[1] $ 1.042[2] $ 1.249[3] $ 1.254[4]
Washington University in St. Louis $ 4.268[1] $ 4.684[2] $ 5.658[3] $ 5.350[4]
Wellesley College $ 1.276[1] $ 1.412[2] $ 1.657[3] $ 1.611[4]
Williams College $ 1.348[1] $ 1.462[2] $ 1.892[3] $ 1.808[4]
Yale University $ 15.224[1] $ 18.031[2] $ 22.530[3] $ 22.870[4]
Yeshiva University $ 1.149[1] $ 1.273[2] $ 1.410[3] $ 1.345[4]
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Who does the IRS audit?

December 31, 2009
"Keep IRS auditors away: Earn less than $200,000" Want to keep IRS auditors away? Keep your earnings under $200,000 and they won't bother you 99 percent of the time. IRS enforcement numbers, released Tuesday, show that returns under that amount have a 1 percent chance of getting audited. Returns showing income of $200,000 and above […]

"Keep IRS auditors away: Earn less than $200,000"

Want to keep IRS auditors away? Keep your earnings under $200,000 and they won't bother you 99 percent of the time.

IRS enforcement numbers, released Tuesday, show that returns under that amount have a 1 percent chance of getting audited.

Returns showing income of $200,000 and above have a nearly 3 percent audit chance. The percentage jumps to more than 6 percent for returns showing earnings of $1 million or more.

The percentages apply to both individual and joint returns.

The number of audits jumped 11 percent from 2008 to 2009 for returns with earnings of $200,000 or more, but rose 30 percent for returns showing earnings of $1 million or more. For those under $200,000 the number of audits remained steady.

The IRS conducted 1.4 million audits of individual returns in the financial year ended Sept. 30, with more than 1 million conducted through correspondence with the taxpayer. The others were conducted through face-to-face meetings with IRS auditors.

The IRS does not do random audits, but does conduct "research audits"

that will test compliance in business tax categories. In 2010, the target will be payroll taxes, according to Steve Miller, deputy commissioner for enforcement.

What happens if you're audited while unemployed? The IRS may give you a break.

"While our assessments were up, the ability to pay went down drastically" due to the economy, Miller said. "We have a series of tools. We can have them pay partially, over time. If the money is not collectible, it's treated as non-collectible. It's going to depend on each case.

"We have to ensure there's a balance between our responsibility to collect taxes with economic realities. We give people more time and determine how fast they can pay and whether they can pay."

The total revenue collected from IRS enforcement actions, $48.9 billion in 2009, is a drop from $56.4 billion in 2008 and $59.2 billion in 2007.

Miller said the higher numbers in 2007 and 2008 reflect collections from settlements of several major tax shelter cases and other enforcement actions.

In 2007, for example, the IRS resolved disputed tax issues with drug maker Merck & Co., Inc. and its subsidiaries. Merck has agreed to pay approximately $2.3 billion in federal tax, net interest and penalties to resolve issues that had been in dispute for tax years 1993-2001.

The resolution was one of the largest achieved in recent years by the IRS and a taxpayer through the examination process.

The IRS has stepped up its examination of tax-exempt organizations, checking the books of more than 10,000 groups in 2009 compared to 7,800 the previous year.

The number of business tax returns examined was down slightly in 2009 from the previous year.

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The American Graduation Initiative: Obama’s plan

December 17, 2009
"The American Graduation Initiative" The American Graduation Initiative will build on the strengths of community colleges and usher in new innovations and reforms for the 21st century economy. It will: Call for 5 Million Additional Community College Graduates: President Obama called for America to once again lead the world in college degrees by 2020. Affordable, […]

"The American Graduation Initiative"

The American Graduation Initiative will build on the strengths of community colleges and usher in new innovations and reforms for the 21st century economy.

It will:

Call for 5 Million Additional Community College Graduates: President Obama called for America to once again lead the world in college degrees by 2020. Affordable, open-enrollment community colleges will play a critical role in meeting that goal. He has set a complementary goal: an additional 5 million community college graduates by 2020, including students who earn certificates and associate degrees or who continue on to graduate from four-year colleges and universities.

Create the Community College Challenge Fund: Too often community colleges are underfunded and underappreciated, lacking the resources they need to improve instruction, build ties with businesses, and adopt other reforms. Under President Obama’s plan, new competitive grants would enable community colleges and states to innovate and expand proven reforms. These efforts will be evaluated carefully, and the approaches that demonstrate improved educational and employment outcomes will receive continued federal support and become models for widespread adoption.

Colleges could:

Build partnerships with businesses and the workforce investment system to create career pathways where workers can earn new credentials and promotions step-by-step, worksite education programs to build basic skills, and curriculum coordinated with internship and job placements.

Expand course offerings and offer dual enrollment at high schools and universities, promote the transfer of credit among colleges, and align graduation and entrance requirements of high schools, community colleges, and four-year colleges and universities.

Improve remedial and adult education programs, accelerating students’ progress and integrating developmental classes into academic and vocational classes.

Offer their students more than just a course catalog, through comprehensive, personalized services to help them plan their careers and stay in school.

In addition, the initiative will support a new research center with a mission to develop and implement new measures of community colleges’

success so prospective students and businesses could get a clear sense of how effective schools are in helping students -- including the most disadvantaged -- learn, graduate, and secure good jobs.

• Fund Innovative Strategies to Promote College Completion: Nearly

half of students who enter community college intending to earn a degree or transfer to a four-year college fail to reach their goal within six years. The College Access and Completion Fund will finance the innovation, evaluation, and expansion of efforts to increase college graduation rates and close achievement gaps, including those at community colleges. Promising approaches include performance-based scholarships, learning communities of students, professors and counselors, colleges tailored to promote the success of working adults, and funding formulas based on student progress and success as well as initial enrollment. Resources would also be provided to improve states’ efforts to track student progress, completion, and success in the workplace.

• Modernize Community College Facilities: Often built decades ago, community colleges are struggling to keep up with rising enrollments. Many colleges face large needs due to deferred maintenance or lack the modern facilities and equipment needed to train students in technical and other growing fields. Insufficient classroom space can force students to delay needed courses and reduce completion rates.

President Obama is proposing a new $2.5 billion fund to catalyze $10 billion in community college facility investments that will expand the colleges’ ability to meet employer and student needs. The resources could be used to pay the interest on bonds or other debt, seed capital campaigns, or create state revolving loan funds.

• Create a New Online Skills Laboratory: Online educational software has the potential to help students learn more in less time than they would with traditional classroom instruction alone. Interactive software can tailor instruction to individual students like human tutors do, while simulations and multimedia software offer experiential learning. Online instruction can also be a powerful tool for extending learning opportunities to rural areas or working adults who need to fit their coursework around families and jobs. New open online courses will create new routes for students to gain knowledge, skills and credentials. They will be developed by teams of experts in content knowledge, pedagogy, and technology and made available for modification, adaptation and sharing. The Departments of Defense, Education, and Labor will work together to make the courses freely available through one or more community colleges and the Defense Department’s distributed learning network, explore ways to award academic credit based upon achievement rather than class hours, and rigorously evaluate the results.

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