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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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?

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