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Planning Beginner: Education Planning

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1.
Which of the following two plans has higher contribution limits?
Choose wisely. There is only one correct answer.
529 plan. As a rule, 529 plans offer much higher contribution limits.
2.
As a rule, the cost of college tuition is rising faster than inflation.
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True. Currently, tuition costs are rising more than twice as fast as inflation.
3.
The best time to start planning for your child's college education is when they enter secondary school.
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False. The best time to start planning for your child's college education is when you learn you're going to be a parent. The second best time is today.
4.
When calculating the parental contribution to education costs, all of the parents' income is considered available.
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False. Various allowances are deducted from income to reach the amount that is considered available for spending on education.
5.
There are situations in which a student is allowed to not pay back his or her student loans.
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True. Taking certain jobs after graduation, such as in community service, can result in your student loans being forgiven.
6.
The biggest source of unclaimed scholarship money is actually _______.
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Unused employee tuition benefits. This is the primary source of all that money.
7.
Generally, which type of student may omit questions on the FAFSA that refer to parents' income?
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Independent students. Independent students will not need to provide that information.
8.
Educational expenses used as the basis for a tax-free withdrawal from a Coverdell education savings account cannot be used toward other education deductions or credits on the 1040 tax form.
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True. One generally cannot take a deduction or credit for any educational expenses used as the basis for a tax-free withdrawal from a Coverdell account.
9.
A veteran of the US armed forces qualifies as an independent student.
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True. Veterans are treated as independent for financial aid purposes.
10.
If you can't fill out your tax form before April, when most grants and scholarships are taken, you are out of luck for applying for financial aid.
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False. You can use estimated tax information when filling out a financial aid form, and then amend it later on.
11.
To qualify for financial aid, a family must pass _______.
Choose wisely. There is only one correct answer.
A needs test. A needs test considers not only family income and assets but also the total cost of education for all family members.