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Planning Beginner: Education Planning

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1.
If you are a dependent student when filling out the FAFSA, your student aid index depends solely upon your family income.
Choose wisely. There is only one correct answer.
False. The index depends on other factors as well, such as assets.
2.
You should not apply for financial aid for college if your family income is more than _______.
Choose wisely. There is only one correct answer.
None of the above. Since need-based aid considers other factors besides family income, you may apply if you think you need it, regardless of your income.
3.
The maximum amount that each donor can contribute to a Coverdell education savings account is always $2000 per year.
Choose wisely. There is only one correct answer.
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.
4.
Why are scholarship search firms so frequently full of empty promises?
Choose wisely. There is only one correct answer.
All of the above. These are all reasons why going to a scholarship search firm is often fruitless.
5.
With regard to financial aid, the "income protection allowance" is for the basic living expenses of a family.
Choose wisely. There is only one correct answer.
True. The income protection allowance keeps a certain amount of money out of the financial aid calculation for this very purpose.
6.
The best time to start planning for your child's college education is when they enter secondary school.
Choose wisely. There is only one correct answer.
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.
7.
To qualify for financial aid, a family must pass a needs test, which would consider _______.
Choose wisely. There is only one correct answer.
All of the above. A needs test would look at all of these elements.
8.
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.
9.
There are situations in which a student is allowed to not pay back his or her student loans.
Choose wisely. There is only one correct answer.
True. Taking certain jobs after graduation, such as in community service, can result in your student loans being forgiven.
10.
Competition among colleges lowers the cost of tuition.
Choose wisely. There is only one correct answer.
False. Competition actually raises the cost of tuition because colleges must spend money to woo prospective students.
11.
A veteran of the US armed forces qualifies as an independent student.
Choose wisely. There is only one correct answer.
True. Veterans are treated as independent for financial aid purposes.