Ways to Pay for College

Posted By: Asim Mohammed

Even though parents save up for their kids future college tuition, many parents still are in shock that they didn’t save enough after all the years.

For example the Matheny’s saved up $50,000 in college savings for both of their children. However, both of them are attending private schools this year and they Matheny’s are looking at $100,000 bill for the upcoming school year.

There are some options available to start helping to pay for colleges this year. Starting with the new economic stimulus plan President Barack Obama signed today creates yet another new tax break for college. The American Opportunity Education Tax credit increases maximum credit from $1,800 to $2,500 per year per student allowing more families to qualify. Claiming one of these tax breaks reduces your federal tax bill dollar-for-dollar, for a potential $2,500 savings. That makes it worth more than a $4,000 deduction, saving families at most $1,400 in federal tax.

Other ways a family can save and help pay for college is to fill out the FAFSA aid helping to get subsidized loans. Also many colleges have payment plans, allowing families to stretch the payment plans for a semester or even the year. Other options include, to max out the federal aid, generally the Stafford loan. Using the home-equity lines of credit, especially since they are averaging 6.1%, this may seem as an appealing option.

Even though the economy looks bleak into the future, and families are worrying over paying for college, there are options out there for families to look into, especially with a new government and stimulus plans being sent out.

http://money.cnn.com/2008/04/23/pf/college/college_cost.moneymag/index.htm?postversion=2008042404

http://www.forbes.com/2009/02/17/college-hope-credit-personal-finance-taxes_0217_college_stimulus.html

http://money.cnn.com/2008/12/10/pf/college/work_college.moneymag/index.htm?postversion=2008121110

Write Off Textbooks

posted by Shu Zheng

(College Finance 101) Approximately $300 billion of Obama’s $789 billion stimulus bill will consist of tax cuts, and a large portion of that $300B will benefit college students. Enjoy writing off your textbooks, among other things!

Education Credit - HOPE now called “The American Opportunity Tax Credit“
The HOPE scholarship credit has changed a bit. Instead of being able to take the credit for the first two years of college, you can now take the credit for your first four years of college. Instead of being able to take a credit of $1,800, you will be able to take a credit of $2,500, and this amount includes course materials (instead of just qualified tuition expenses). You can now write off your textbooks, dollar for dollar. The bill renames the HOPE credit the “American Opportunity Tax Credit”, and Obama made 40% of it refundable.

A refundable credit means you will get money back even if you don’t owe any tax.

Non-Refundable credit: You owe $500 and get a credit of $600, you now owe zero dollars.

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