Index
Published October 31, 2007 - Want to Make Saving for College a Piece of Cake?
Published September 30, 2007 - Will the Value of Your Retirement Funds & Your Home Prevent You From Getting Need-Based Aid?
Published July 31, 2006 - How the Admissions Process Works
Published May 10, 2005 - Public Colleges See a Rise in Tuition
Published May 24, 2005 - College Sure CD
Published June 11, 2005 - Sibling's Assets
Published June 21, 2005 - Introduction to Tax Capacity
Published July 5, 2005 - Understanding a Child's Tax Capacity: Birth Through Age 13 - Kiddie Tax
Published July 21, 2005 - Understanding a Child's Tax Capacity - Age 14 through High School Years
Published August 24, 2005 - Early Admission Policies
Published September 19, 2005 - Grandparents - Funding a Grandchild's College Education
Published October 28, 2005 - Visiting the Financial Aid Office
Published November 17, 2005 - Public Colleges Tame Cost of Tuition
Published December 31, 2005 - College Costs Beyond Tuition
Published February 2, 2006 - Those Stressful Standardized Tests
Published April 4, 2006 - Alternative Ways to Help Pay for College
Want to Make Saving For College a Piece of Cake?
The only thing harder than the college admissions process is the college tuition process.
Parents with students just now entering higher education can expect to dish out an average of $25,911 for a public college or university or a hefty $98,646 for private institutions over four years just for tuition and tuition inflation. Those with younger children have it even worse with tuition at both public and private institutions expected to more than double in the next 10 years.
According to a survey by Alliance Bernstein Investments Inc., parents are not even close to being financially ready to foot those growing tuition bills. The study reports that the average amount families save for college will cover less than 25% of their child's undergraduate bills, leaving thousands to be covered by scholarships and grants that may or may not come through. The solution: to save smart, save soon and save often.
*PREPARE TO SAVE
Before starting a college savings plan, first pay off any lingering debt, such
as car loans, old student loans and personal loans. When choosing which debt
to eliminate first, credit cards are a great place to start.
*START EARLY
In today's world of tax-advantaged college savings plans, stock-piling your cash
in a regular savings account is like using an abacus to do your taxes. With 529
prepaid and college savings plans, parents can save for school without paying
any federal income tax on their savings and, if they select a state-sponsored
plan, often without paying state income taxes on the funds either.
The secret to making these plans as lucrative as possible is to maximize your contributions early on, giving your money as much time as possible to grow before your child reaches the college years.
*SAVE STEADILY
Sacrificing a few little things can amount to large savings years in the future.
Families who save $50 per week (the equivalent of one family meal out) will
have more than $68,000 in the bank when tuition time rolls around.
A possible problem is that many families simply don't choose college savings over discretionary spending. Nearly 40% of all parents surveyed admitted that they had spent more on consumer electronics, such as MP3 players and computers, in the past year than they had saved for their child's education, and more than half invested more money in dining out.
*MAKE IT AUTOMATIC
To make saving easier, use direct deposit to have a portion of one or both
parents' paychecks automatically invested in the savings plan of your choice.
That way it's done, and you don't spend your whole check and think maybe I'll
try to save something next month.
Breaking down monthly payments into weekly or even daily deposits can also help ease financial tension, turning a $200 monthly savings goal into a series of smaller, more manageable sacrifices.
*GET THE FAMILY INVOLVED
Encouraging students to become a part of the college savings process is not only
financially beneficial in the short term, it also teaches students how to live
on a budget, stay out of debt and be conscious of the funds flowing in and out
of their bank accounts-- all life skills they'll need during and after college.
With having the kids contribute to college, you're making them understand that
they should also be responsible for their future. Forty percent of these kids
return home after graduating because they are unable to live in the real world
on a real salary.
Students can help pay for school with loans, scholarships, grants, AP courses that reduce the amount of courses they have to take. Encourage students to take on summer jobs, to invite children to strategize on how to reduce household bills and to offer paid chores they can complete in their leisure time.
The key to making this strategy work is to start early, letting students know what their financial obligation will be before they enter high school so they'll have adequate time to prepare.
Will the Value of Your Retirement Funds & Your Home Prevent You From Getting Need-Based Aid?
Under the federal calculus for distributing aid, retirement plans are completely excluded and so is the home you live in. In addition to that, the federal government shelters a certain amount of general parent savings, for retirement purposes. This "asset protection allowance" differs based on age, but for a typical parent of a college-age child, the figure is around $45,000 to $50,000.
How the Admissions Process Works (July 31, 2006)
Colleges have, over the years, defined "merit" in different ways at different times. Sometimes it means "character," sometimes "brains." Who gets into the college is largely dependent on just what "merit" the college is looking for.
It is important for students to keep in mind that the minority of applicants to selective colleges are accepted or rejected right away. But what factors will get the student in? What exactly do those much-discussed college admissions officers look for when they peruse a student’s application? The majority of applicants are reconsidered, reevaluated, and discussed several times before a final decision is made. What often makes a difference about a student’s application is what the admissions officers see as outstanding or worth taking a second look at. Colleges look for a number of factors when evaluating applicants for admission. It’s important to know what these factors are and to keep them in mind as the student progresses through high school and then enters the college application process. If students know what each particular college is looking for, they can make sure that their activities and applications show them in the best possible light. Colleges want to see something special that would make a particular student an asset to their college. They are looking for a student with a unique ability, something distinct about his background or individuality, something enlightening and sincere a teacher may have said about the student in his letter of recommendation. Anything that makes the student more noticeable gives the admissions officers a reason to consider or reconsider the student. Although the student cannot always predict what that special "something" might be, he should make certain to portray himself in the finest, most appealing, and most genuine way he can throughout the application.
This strategy is especially important when it comes to writing the college essay and selecting who the student asks to write his letters of recommendation. Before a student can write a college application essay, he first has to come up with a topic to write about. The first stage in coming up with a topic is to brainstorm: to come up with several potential topics, a whole collection of topics from which he can then pick and choose the topic that he thinks is both the most interesting and which will best highlight his unique qualities. The student should spend at least a few weeks coming up with different ideas before selecting a topic and starting to write his essay.
The student may want to consider the following questions when considering his essay topics:
ü What are my accomplishments? How did I realize them? The accomplishments do not necessarily have to be good grades or being an outstanding athlete. They could be a life experience that you believe made you a better person or moment in your life that had a profound influence on you.
ü What are your strengths? Your weaknesses? What are your best qualities?
ü What is your favorite book, artist, movie, etc.? How have they effected or motivated you?
ü What challenges have you overcome and how have they affected or motivated you?
ü What are your hopes and dreams? Do you have a particular goal in mind that you want to succeed at? How are you going to achieve your goals?
The student should first collect and organize potential ideas for his essay's focus. Keep in mind that the college regards the student’s essay choices as a way to evaluate the student’s preferences, values, mental processes, creativity, sense of humor, and depth of knowledge.
Sometimes the hardest part of writing a college essay is just getting started. Writing a rough draft and then setting it aside for a few days can be very helpful. It also helps to take a second (or third) look at the college application forms and review what questions they ask. Before sending in the completed application, the student should proof-read his essay, making sure that it contains the most important characteristic he wants to convey to each college. When the student has a good final draft, it is time to make final improvements to the draft, find and correct any errors, and get someone he trusts to give him feedback. Remember - a great application essay will present a vivid, personal, and compelling view to the admission officers. It rounds out the rest of the application and helps the student stand out from the other applicants. The essay is one of the only parts of the application over which the student has complete control, so he should take the time to do a good job on it.
The following was taken from The Chronicle of Higher Education, October 29, 2004 issue.
Public colleges see a 10% rise in tuition for 2004-05. (May 10, 2005)
Rates also increase at private institutions and community colleges.
The sticker price for attending a four-year public college rose 10% in 2004-05, according to the College Board’s annual tuition survey. The increase was smaller than last year’s surge of 14% but still high by historical standards.
Tuition at two-year public colleges rose by 9%, and the price of attending a four-year private college increased by 6%.
Although data on student-aid levels for the current academic year are not yet available, this increase in tuition raised the average net price of tuition, according to one report analyzing the survey.
In a companion report on student-aid levels in 2003-04, the College Board found that a steady increase in all the forms of financial assistance for students has helped offset rising sticker prices.
But the relatively slow growth in grant aid has caused students to rely more heavily on loans, the survey found. While grant aid grew by 6% from 2002-03 to 2003-04, the volume of federal education loans increased by 13% after adjusting for inflation. During that period, borrowing from private lenders increased by 43%.
The CollegeSure® CD
(May 24, 2005)
The CollegeSure CD is a certificate of deposit indexed to college costs and
guaranteed to meet future tuition, fees, room and board. CollegeSure CDs are
issued only by the College Savings Bank.
The CollegeSure CD is a college cost prepayment product. It pays an annual percentage yield tied to the rise in college costs each year and it has a floor rate for added protection. Over the one-year period ended July 31, 2004, the college inflation rate was 5.35%.
And, the CollegeSure CD is safe. Principal and interest are FDIC-insured, backed by the full faith and credit of the U.S. Government - up to $100,000 per depositor. The CollegeSure CD has also been awarded Standard & Poor's highest credit rating.
CollegeSure CDs are available in maturities from one to twenty years so you can time your CDs to mature during the years your child will attend college or graduate school.
Each CD deposit of $250 or more is measured in terms of "units". Units are a measure of how much college you've prepaid so that you can keep track of your progress. One unit, at maturity, is equal to one full year's average tuition, fees, room and board at a four-year private college as measured by the Independent College 500 Index (IC 500). The purchase price per unit exceeds the value of the IC 500 at the deposit date. For example, if today's cost for 10% of one year of private college is $2,979, you would deposit $4,595 to purchase 0.10 units of a CollegeSure CD for your three-year old child to guarantee the future cost of college in fifteen years. At maturity you'll receive 10% of one year of whatever private college costs are in fifteen years, no matter how high college costs rise. Over the term to maturity of each CollegeSure CD, the APY is not less than the college inflation rate less 3.00%.
Sibling's Assets (June 11, 2005)
The assets of the student's siblings are not assessed under the Federal Methodology (FM). However, the siblings' assets, including assets in a Qualified Tuition Plan (Section 129 Plan), will be assessed under the Institutional Methodology (IM). These assets are assessed as parental assets at a 5.6% rate.
Planning tip: Parents may want to put some of their assessable assets into QTP under a sibling's name. A student's sibling's QTP is not assessed under the FM Formula.
Planning tip: If parents had assessable assets, such as CDs, they could contribute the CDs to QTPs for the student's siblings. The financial aid result would be moving an assessable asset, CDs, to a non-assessable asset, QTPs.
Introduction to "Tax Capacity" (June 21, 2005)
When planning for college, parents must be aware of the many income strategies available to increase the amount of family funds for future college costs. These income strategies may be incorporated over a short or long term period. While these strategies may not produce a direct college benefit, such as a grant or scholarship, they may produce tax benefits to the family as a whole, and therefore, increase the amount of family funds available to pay for college. To gain the maximum effect of these strategies, the parents must be aware of, and understand the new education tax incentives.
Because some families are not eligible for financial aid, they are not penalized by a loss of financial aid for shifting income and assets to their children. Therefore, they should take full advantage of a child's lower tax bracket. Accordingly, a key strategy is to focus on the benefits of the tax system. This will be driven by taking advantage of opportunities in the child's tax return not available to the parent or grandparent (child's low tax brackets, child's personal exemption, use of lower capital gain rates, access to Coverdell Education Savings Accounts and Hope and Lifetime Learning credits, access to student loan interest deduction, access to the regular and Roth IRAs).
Since college costs are paid with after-tax dollars, strategies to lower income, gift, and estate taxes can significantly reduce the cost of college for a client. In addition, there are loan strategies that can reduce the cost of college for a client.
Understanding a Child's Tax Capacity - Birth through Age 13 - Kiddie Tax (July 5, 2005)
During the period from birth through age 13, a child's tax capacity is limited by the kiddie tax [IRC Sec. 1 (g)]. The kiddie tax is applied to the investment income (earned income is not subject to the kiddie tax rules) of a child under age 14 which exceeds $1,600. The investment income is taxed at the parents' top tax rate, rather than the child's lower rate of 10% for ordinary income or 5%/15% for capital gains.
One strategy for avoiding the tax is to invest the child's assets in securities or property that generates tax exempt income, or to defer income recognition until the child reaches age 14. Examples of such investments include municipal bonds, Series I/EE bonds, growth oriented and tax efficient funds, QTP's and CESA's.
Understanding a Child's Tax Capacity - Age 14 through High School Years (July 21, 2005)
When a child reaches age 14, the Kiddie Tax rules no longer apply. Therefore, the financial advisor should be aware of the child's tax capacity. This increased tax capacity should be factored into the college funding plan for the affluent family.
Example: In year 2004, a 17-year-old child has $3,000 in wages and $2,000 in unearned income. The child's standard deduction is $3,250 ($3,000 + $250). The child's taxable income is $1,750 ($5,000 - $3,250).
During this time frame, the student will have a low 10%/15% tax bracket threshold of $28,400 for year 2004. Therefore, the student will have a combined tax capacity of $33,150 for year 2004 ($4,750 + $28,400). This amount of income can be shifted to the child from a parent (or grandparent) and be sheltered from the parents' higher income tax bracket. Wealthier parents, whose income prevents claiming of the new educational credits in the parental tax return, appear to also be precluded from claiming the tax credits in a dependent child's return (i.e., where the student is a dependent because over half of support is provided by parents). This is particularly an issue in the student's senior year in high school and freshman year in college, when over half of the student's support comes from the parents, but their 1040 income prohibits use of the Hope credit for the freshman tuition.
In early 1999, the IRS issued a proposed regulations dealing with the education credits (Prop. Regs. 1.25A-1 through 1.25A-5, REG-103688-98, 1/6/99). The proposed regulations provided an elective opportunity to claim Hope or Lifetime Learning credits in the return of a dependent child. The regulations provide that if the parent is eligible to, but does not, claim the student as a dependent , the student may then claim the education credit for the student's qualified tuition and related expenses [Prop. Reg. 1.25A-1 (g)(1)].
Observation: In most cases with wealthier parents, the child's dependency exemption provides little or no benefit, due to the phase-out which occurs at higher income levels. The phase-out range for joint filers for 2004 is $214,050 of AGI to $336,550, and for single filers from $142,700 to $265,200. Declining to claim a dependent above these AGI phase-out ranges, of course, is of no detriment to the parental return. However, even for lower income parents, the 2004 dependency exemption for a student can only produce at best $1,068 of tax savings (e.g., $3,050 deduction at 35% federal rate = $1,068), whereas an education credit can produce $1,000 to $1,500 of federal tax savings in the student return, assuming the child has sufficient income tax against which to consume the credit. Note also that the parent's election to decline the dependency exemption does not shift the deduction to the child's return (i.e., the child is still ineligible by reason of not providing over 50% of own support).
To find out more about tax capacity strategies, please call me at (573) 334-8474.
Early Admission Policies (August 24, 2005)
Following are several types of early admission policies:
1. Early Action. The student can apply to a college by an early deadline (set by a particular college) to guarantee his admission, without obligating himself to attend that particular college. The student will then usually file for financial aid at the college under the same deadline as a regular student applicant.
2. Early Decision. The student can apply to a college by an early deadline to guarantee his admission, but is obligated to attend that particular college under a binding contract. Early decision applicants file for financial aid early and are offered a financial aid award at an early date. Once the student is committed to the college, he may lose some of his financial aid appeal.
3. Early Notification. The college notifies the student of his admission status as the admission office makes its decision. The student will apply for financial aid in the same manner as would a regular financial aid applicant. By accepting the college's offer of admission, the student may be limiting his appeal options.
4. Early Read. The college will compute the student's EFC early and estimate the student's financial aid award. Since this computation usually takes place early in the fall of the year, the student must submit estimated financial information to the college.
The student should avoid allowing the college to perform an early read on his financial information. Since the student's financial advisor could perform the EFC computation, it is of no benefit to the student to allow the college to have preview of his financial information. If the student and his parents implement some financial strategies to lower the EFC, the college may questions these strategies if they have already seen the family's financial information.
Grandparents - Funding a Grandchild's College Education (September 19, 2005)
Employing the Grandchild
One of the best methods of helping fund a grandchild's college education is to employ the grandchild in the grandparent's business. The child must be a legitimate employee of the grandparents or the grandparent's business. By employing the grandchild, income and assets of the grandparents will be shifted to the grandchild. In addition, the grandchild will learn the value of work.
Advantages are: (1) the earned income of the grandchild is not subject to the kiddie tax rules, (2) the grandchild can utilize his/her full standard deduction on his/her tax return, (3) the wages paid to the grandchild can be deducted by the grandparent's business, and (4) the earned income makes the grandchild eligible for a regular IRA or Roth IRA.
Disadvantages are: (1) negative affect on financial aid (any income over $2,440 will be assessed at 50%), and (2) payroll taxes will have to be paid on the grandchild's wages.
Loans to the Grandchild
Loans to the grandchild (or parent) may be a useful short-term method of funding a grandchild's college education. If a grandparent wants to provide a grandchild with more funds than the annual $11,000 gift tax exclusion, a loan could be made to the grandchild. The grandparent could then forgive the loan after college years.
Advantages are: (1) control of the asset is not lost, (2) the loan proceeds do not affect financial aid, (3) the loan balance can be forgiven after college years, and (4) subject to certain limitations, the loan can be interest-free or below-market rates.
Disadvantages are: (1) the loan will not reduce the grandparent's estate, (2) the loan will generally not reduce the grandparent's income tax liability.
Visiting the Financial Aid Office (October 28, 2005)
The following are some questions the parents may want to ask the financial aid officer:
1. Will applying for financial aid have any impact on admission decisions?
2. What costs does the college budget cover? Are transportation and personal expenses included?
3. How is financial aid awarded?
4. What happens after the freshman year?
5. When do students learn about their financial aid package? Are there any extensions?
6. What are the financial aid application procedures and deadlines?
You should prepare a list of questions before the visit. It is a good idea to make notes of your visit to refresh your memory later on and to jot down any lingering questions.
Public Colleges Tame Cost of Tuition (November 17, 2005)
Below is an excerpt from The Chronicle of Higher Education, Vol. II, Number 10:
Public four-year colleges have managed to rein in the run-away cost of tuition at their institutions, according to the College Board's annual tuition survey, released last week.
But thanks to colleges' increasing use of merit-based aid instead of need-based aid, and the stagnating value of Pell Grants, low-income students have found it more difficult to finance their higher education.
The survey, which the College Board presented in three reports, found that tuition at public four-year colleges rose by 7 percent in 2005-06, the smallest growth in four years, and a significantly lower rate than last year's 10 percent surge.
At private four-year colleges, however, tuition rose 6 percent, identical to last year, and more than the 5 percent increase in 2003-04.
College Costs Beyond Tuition (December 31, 2005)
Parents usually plan for the expense of college but forget about the discretionary cost during the nine-month period when their child is away. When calculating college costs, parents also need to take into consideration incidental costs. These costs include such expenses as transportation and travel, personal expenses, medical and dental expenses, and miscellaneous expenses. Student Monitor, a marketing firm that tracks the spending habits of college students, figures that students spend nearly $7,000 over nine months. Their breakdown includes -- $61 per month for food outside the meal plan, $67 for clothes, $44 for entertainment – but it also includes $162 per month in auto-related expenses, which wouldn’t apply if the student doesn’t have a car, and $163 in discretionary expenses on top of everything else.
Following is a list of “discretionary” expenses:
Transportation & Travel: The amount spent traveling home depends on how often the student comes home and the method of transportation – train, bus, plane, or carpool.
Personal Expenses: These expenses include phone, laundry, entertainment, clothing, toiletries, etc.
Health Insurance: Many universities will automatically charge the student for health insurance. If the parents are keeping the student on their policy, they should be sure to complete a waiver before classes begin.
Additional Fees & Dues: Some students will be charged fees based on the classes they choose, such as lab fees for science classes.
Books & Supplies: The amount the student needs for books depends on whether the student buys new or used books. The student may need to purchase additional supplies for certain classes, like supplies for a science or an art class. While many financial aid offices provide the average cost for books and supplies, their figures tend to be on the low side.
Room & Board: The amount needed to cover the room expense depends on whether the student lives on campus or off campus. Dorm costs may vary depending on whether the student lives in a single, double, triple, or quad room. If the student lives off campus, don’t forget to add the costs of groceries, and electric and other utilities to the monthly rent.
Computer: Many schools require each student to have a PC. The student will need to check the school’s admissions requirements to determine whether he/she needs a basic PC or a more expensive laptop. And don’t forget additional expenses, such as software and hooking up to the school network if the student lives off campus.
Property insurance: Most homeowners policies fully cover personal possessions in dorm rooms, although some will have a limit of 10 percent of the value of the policy. If the student lives off campus, the parents may have to take out a renters policy.
Credit Cards & ATM Cards: College students are of age and can get a credit card – or six – without parental permission. College is rife with temptations to overspend – a cool new cell phone, MP3 player or video game system, or that fun trip planned for spring break. Then there is the cost of late-night pizzas, phone bills or gas for the car. A study by Manning called “Credit Cards on Campus” states, (1) three out of five students with credit cards maxed them out during their freshman year, (2) three out of five freshmen with multiple credit cards used bank cards to pay for other revolving credit accounts and (3) nearly three-fourths of students use their student loans to pay credit card bills. It is very easy to charge on plastic and run up large bills. ATMs have sprouted up on college campuses and make it very easy to extract money, 24 hours a day.
Those Stressful Standardized Tests (February 2, 2006)
Two tests that strike fear in the hearts of most college-bound students are the SAT and ACT. However, there are a variety of resources that can prepare the student for these tests.
What is the SAT? The SAT is a 3-hour test that measures verbal and mathematical reasoning skills that a student has developed. Many colleges and universities use the SAT to assess high school students' general educational development and their ability to complete college-level work. Many times an SAT score is used as a basis for awarding merit-based financial aid.
The SAT changed in March 2005. Some of the changes include: a student-written essay; analogies were eliminated; shorter reading passages were added; quantitative comparisons were eliminated; and, new content from 3rd-year college preparatory math was added.
The student can get deadlines, test dates, sample tests and other information about the SAT by visiting www.collegeboard.com . This site also includes quick links that the student can use to get ready for the SAT. It provides the student with sample math questions, writing practice questions and a critical reading section. This site also includes a review of the SAT essay.
The ACT measures the student's skills and knowledge in English, math, science and reading. A good time to take it is the spring semester of the student's junior year. By taking it then the student will have plenty of time to retake the test before applying to college if he/she feels his/her scores do not accurately reflect his/her ability.
In February 2005, ACT offered the optional Writing Test for the first time. Some colleges require the Writing Test; others do not. Students should decide whether to take the Writing Test based on the requirements of the institutions to which they are applying.
For more information about the ACT test, students should visit www.actstudent.org. This site provides information about the components of the ACT, as well as test-taking tips, strategies, practice writing skills, and sample essays. This site also lists tests dates and deadlines for the 2006-2007 school year.
Alternative Ways to Help Pay for College (April 4, 2006)
Let’s face it; the news on college costs is mighty grim. Many colleges and universities have been forced to raise their tuition prices and cut back on financial aid programs due to dwindling state and federal aid, lower endowments and drops in fund raising. There are, however, plenty of creative ways for students to keep their college dream on track.
Following is a list of tactics to help whittle-down college costs:
1. Accelerated Degree Programs. An accelerated degree program is a great option for a student with a definite career goal. The classes, while intense, can really help to move up the student’s graduation date and he can receive a degree at a much lower price. Many colleges offer bachelor's degree programs in three years instead of four.
2. Military Service. Students who want to serve their country by joining the military can earn big tuition credits. Those who want to serve at home can join Americorps (www.americorps.org).
Students spend one year working on projects like tutoring inner-city kids or helping with hurricane relief. They get an annual stipend (usually $10,000) to cover basic living expenses. After they finish, they receive a $4,725 grant toward tuition if they enroll in college within seven years.
The Peace Corps, AmeriCorps' international cousin, has more than 7,000 volunteers working around the world in fields such as business development, health, agriculture and education. In return for a two-year commitment, you can defer your federal student loans. Perkins loan borrowers may have 15% of their loans forgiven for each year of service.
3. Pinch Pennies. Families willing to make some serious lifestyle sacrifices -no more cable TV, restaurant meals, fancy lattes, vacations, and the like can typically generate several thousand dollars a year in savings.
4. Attend a Community College. Community colleges continue to be an education bargain, with tuition up 5.4 percent. A commuter student who lives at home would pay less than $3,000 for tuition and books, just $143 more than last year. The student, however, needs to plan carefully to ensure all his courses transfer to a four-year school.
5. Skip a Class or Two. Many colleges give credit for passing tests such as the College Level Examination Program (CLEP) or Dantes Subject Standardized Tests (DSSTs). For less than a $100 testing fee, a student can get credit for a college course without having to take it, thus saving tuition.
CLEP tests (www.collegeboard.com/clep) which are produced by the College Board, can replace 35 courses ranging from Calculus to Spanish. The tests cost $55 to $80 each, depending on location, and are accepted by 2,900 accredited colleges. The College Board sends the results to one school of the student's choice for free, but charges $20 for each extra report sent out. DSSTs (www.getcollegecredit.com) are accepted at 1,900 schools and cost $60. That amount includes the cost of sending the score to one school; additional copies are $20 each. There are 37 different DSSTs, many of which cover introductory college courses. But some DSSTs can replace career-oriented courses.
6. Tuition-Reciprocity Agreements. Students from Minnesota, for instance, can attend schools in Wisconsin, South Dakota, or North Dakota for basically the in-state price. Other states have similar deals for specific disciplines. Some states partner with one another to provide tuition discounts to students who want to pursue a major not available in their home state. To find out more about the tuition-reciprocity agreements, check out www.collegeboard.org.
7. Work Off Debt With Community Service. Recent college grads can cancel part or all of their federal-education debt by working in public-service jobs (lower-paying professional jobs that serve low-income communities) or by volunteering.
Loan-forgiveness programs are available to everyone from teachers to nurses to young doctors and lawyers. Teachers who work in low-income elementary or secondary schools may be able to cancel as much as $5,000 of their federal Stafford loan debt.
The National Health Service Corps offers loan-forgiveness programs to physicians, nurse practitioners, physician assistants, midwives, dentists, dental hygienists, psychologists and therapists who work for two years in communities in great need of health professionals.
Similar programs are available to attorneys who pursue public interest careers. About 50 law schools offer loan forgiveness or loan-repayment assistance programs. The National Association of Public Interest Law has a list of the schools on its Web site. The site also lists state and employer loan-repayment-assistance programs.
Several volunteer organizations also provide assistance with student loan debt.
8. Family & Friends. It may be one of the hardest things to do, but the student could ask relatives and friends for help with those dreaded student loans. For example, in lieu of Christmas and birthday presents, the student could ask for money to help make those student loan payments.
Glaus & Associates, C.P.A., L.L.C.
2855 Independence
Cape Girardeau, MO 63703
(573) 334-8474 (573) 334-8713 FAX
normanglaus@glauscpa.com