Planning Beginner: Education Planning

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1.
The chief factor in determining financial need is _______.
Choose wisely. There is only one correct answer.
The cost of education for all family members. Need is the biggest factor.
2.
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.
3.
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.
4.
With hundreds of millions of dollars in unclaimed scholarships, it is usually worthwhile to pay a fee to find scholarships that match your profile.
Choose wisely. There is only one correct answer.
False. It rarely is ever worth the cost in time, effort, and dollars to pursue these; furthermore, the information is available free.
5.
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.
6.
When filling out a financial aid form, an independent student _______ questions about parental income.
Choose wisely. There is only one correct answer.
May ignore. These questions are not relevant for independent students.
7.
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.
Choose wisely. There is only one correct answer.
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.
8.
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.
9.
A 529 plan may be transferred to the beneficiary's _______.
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Any of the above. Amounts in a 529 plan may be transferred tax-free to the 529 plan of another beneficiary who is a parent, sibling, or other relative specified in the code.
10.
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.
11.
With regard to filling out the FAFSA, parental assets include which of the following?
Choose wisely. There is only one correct answer.
All of the above. All of these are counted on the FAFSA.