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Planning Beginner: Education Planning

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1.
Which of the following two plans has higher contribution limits?
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529 plan. As a rule, 529 plans offer much higher contribution limits.
2.
All of the following need to be considered when planning for your child's education except _______.
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None of the above are exceptions. Education planning should be part of your overall financial planning strategy.
3.
With regard to the FAFSA, the student aid index (SAI) is used to _______.
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Determine federal student aid. The SAI is an eligibility index used for that purpose.
4.
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.
5.
Why are scholarship search firms so frequently full of empty promises?
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All of the above. These are all reasons why going to a scholarship search firm is often fruitless.
6.
Need-based financial aid is a loan that must be repaid.
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False. While most need-based financial aid is in the form of loans, there are scholarships and work-study programs as well.
7.
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.
8.
What is the cutoff age for independent student status?
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24. This is the cutoff age.
9.
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.
10.
To qualify for financial aid, a family must pass a needs test, which would consider _______.
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All of the above. A needs test would look at all of these elements.
11.
The maximum amount that each donor can contribute to a Coverdell education savings account is always $2000 per year.
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False. The amount that can be contributed depends upon several factors, including adjusted gross income of the donor and the amount others have already contributed toward the beneficiary's $2000 limit for the year.