College

Tax Credits for Higher Education

Tax credits for higher education, are forms of educational assistance provided to students and or their parents to undertake payment of education expenses.

There are two types of recognized tax credits within the federal tax system overseen by the Internal Revenue Service and the federal government: The American Opportunity Credit and The Lifetime Learning Credit. To get access to this credit facility, one has to pay their post-secondary tuition for themselves, their spouse or their dependent. The credit may be claimed by the student or parent but cannot be claimed by both.

One can choose to claim either credit for each student in a single tax year, not both credits. For instance, one cannot claim The American Opportunity Credit to pay their child’s tuition and then claim the Lifetime Learning Credit for more school expenses. However, if one incurs education expenses on more than one student within the academic year, they can opt to seek either credit individually, with each student/year case taken separately.

The American Opportunity Credit

This is an improved version of Hope Educational Assistance Credit. It was created as a part of the 2009 Stimulus Bill, which was part of the federal government’s intervention process during the economic crisis of this period. Whereas it is improved, it does have a few limitations; one can only claim expenses incurred during the first four years of college. It is also temporary, unless the congress acts upon it, it will expire at the end of 2012.

Credit can be up to $2,500 per eligible student. 40% of the credit is refundable, meaning that; one may be able to receive up t0 $1,000 even if they owe no taxes. Expenses that meet this criterion include tuition, fees, textbooks related to the course and equipment like lab and measurement equipment.

The student must be pursuing an undergraduate course or other recognized educational credential. The student must also be registered as studying for a minimum of half the time of the projected study year. The full credit is generally available to Individuals who make less than $80,000 or $160,000 in the case of married couples wishing to file jointly.

The Lifetime Learning Credit

Like the name suggests, it is fairly flexible and open to any education activity that is taken after secondary level, or any additional job or skills courses taken thereafter.

Credit can be up to $2,000 per eligible student. The credit one has access to be limited to the amount of tax you are required to pay as part of the returns.

As mentioned above, this facility is not limited to degree courses but has a fairly wide educational access qualification basis. The expenses that can be covered by this facility include tuition and fees, textbooks and assorted equipment.

Taxpayers who make earn less than $60,000 or $120,000 for married couples wishing to file a joint return can access the full breadth of this credit as well.

Links:
http://www.irs.gov/newsroom/article/0,,id=218389,00.html
http://news.yahoo.com/tax-credits-higher-education-080023894.html

How to Juggle College Finances

With disposable income becoming a bigger and bigger problem both in the United States and globally and inflation and the economic situation increasingly unpredictable, investment in aspects of our lives like education is becoming harder to manage.

college finances

College education, of course, makes a critical the most important part of one’s education and is traditionally a major source of concern for the majority of families in the United States.

College education represents an expense process that covers many facets, and for a lot of people, the one thing that is focused on is tuition fees. Of course tuition forms a critical part of one’s college education but several other expenses play a role as well, without which the college degree may be encumbered or possibly not even achieved.

Apart from tuition fees, colleges have different fee structures that include registration, and access to different facilities at the university that may not be included in the tuition fees structure.

Daily living expenses are also important, as one needs to take into consideration meals, accommodation, transportation and things of that nature. Study materials, like text books and laptop computers cannot be ignored either.

All these and many more mean the study process for a college student is a difficult and expensive one for a lot of people.

However, there are a number of ways of reducing the cost implications covering the requirements of a college education.

Keeping the college choice within your state of residence or home states cuts back on transportation costs considerably and makes access to scholarships easier especially if you focus on those which are within your locality; people tend, surprisingly, to ignore these.

You can also consider the advantages, cost-wise, of using community college, which have particularly pocket friendly tuition rates and permit one to carry college credit accumulated in high school.

Applying for Free Application for Federal Student Aid doesn’t hurt at all, especially if you have more than one child attending college. You may just fall through the cracks or the criteria can include you because of the obvious implied financial strain.

Once in college, it is important for the student to remain focused on his or her studies and goals. All those extra semesters or papers carried forward imply additional costs that add to your financial load. Some universities also offer programs that help you save or recoup on certain costs like tuition, travel costs for visiting family as well as text books (http://www.usnews.com/education/best-colleges/articles/2011/08/24/colleges-offer-hidden-savings-to-students). It helps to be on the look out for such initiatives.

Being prudent with your money at this point in your life is always going to be a challenge but it forms an integral part of learning financial discipline. Look out for student discounts in college towns, which are usually on offer at restaurants, shops and clubs. Prioritize your technical needs, for instance, do you really need to have a printer in your room? Make the most of what the college does offer you, like meals which make an unnecessary dent in your personal expense account when you eat out.

When looking to cut costs or save, it’s more often than not, the little things that actually count and the same applies to college-related expenses.

Give the Gift to Save

Christmas is literally right around the corner and I know that many of us will be doing some last minute shopping!  When I pick out gifts for my college friends, I try to pick things that I know will be beneficial in ways that go beyond just making them happy.  Give these gifts ideas a good look over, you might just want to add them to your wish list.

1. Gift cards

Well, as if that one wasn’t obvious enough.  My favorite gift card to receive? Food or gas cards.  They are probably two of the things I spend most of my money on and I jump at any chance at spending some else’s money on them!

2. Hulu Plus or Netflix subscription

Buy them a year or couple month’s subscription to either Hulu Plus or Netflix! I am obsessed with watching and re-watching Drop Dead Diva on Netflix.  You’ll save them the money they would be wasting buying the seasons of their favorite show on DVD…or you could just buy them their favorite show and favorite season on DVD!  The choice is up to you. (cough, cough, Netflix!)

3. Coffee Machine

Does your friend need a serious Starbucks fix in the morning? It’s okay, no judgment. We all need our caffeine. We just don’t need to pay 5 dollars for a small…or whatever the heck that Italian word is.  Buy your friend a coffee machine and the first cup of the semester is on her! Enough said.

Now it is your turn.  Tell me what you think would be a great gift to give or receive that would save you money! Send all answers to megan@investinged.com and the best answer will be spot lighted in the next article.  So don’t be shy, share the savings!

 

Budgeting College Style

Every college student knows that money does not exactly grow on trees. Sometimes you have to make choices about what you do or buy based on how much money you have. This is called budgeting and it is an important skill to have, especially in today’s economy.

college saving

The summer is an especially hard time to budget because of all the fun stuff to do and the free time to do it, but the more you save now the more you will have come the fall, and the start of the school year.

A few tips to help budget and save money are:

1. Limit how many times you go out to eat, each time you go out you are typically paying for food at a higher price than you need to. For lunch it is easy to buy cold cuts and make sandwiches instead of going to a deli to buy them. Not only will it be cheaper, but cold cuts can last for several meals making the cost even less.

2. Try to find free or cheaper things to go to. Look around your area for free activities such as concerts, fairs or even just going to the park or the beach. It is easy to find fun things to do that are free or inexpensive if you just spend sometime looking for them.

3. Keep track of your spending. If you keep a record of what you spend your money on, you not only will see how much you money you have and how much you are spending, but you can also see what you do not need to buy, and places where you can save a little extra money.

Happy Halloween!

At the time of year when witches, ghosts, and spooky stories are on everyone’s mind, it seems only appropriate to bring up some scary financial decisions that many Americans make. When words like mortgage, investment, vacation, and retirement come to mind, people understandably begin to panic. For me, the spookiest financial decision I have ever made was to go to an expensive private university. With college prices increasing annually at rates exponentially faster than other commodities, it is sure to be on the forefront of many people’s minds.

Happy Halloween!

Although there are undeniable benefits to a college education, does an education from an expensive, private university get you much further than education from a more affordable state school? Am I guaranteed a starting salary equivalent to the yearly cost of my education? Am I willing to pay off loans for the next 25 years of my life?

These questions prove overwhelming to think about in the long run. For me, the decision to attend an expensive university was a calculated choice. However, in hindsight, I felt like I did not have all of the facts. For instance, where you go for an undergrad degree does not really matter if you don’t know exactly what you want to do. I, for one, am content to study everything from anthropology to Spanish, either of which I could study at any decent state university. Other financial factors include geographical location; if you choose a far away school, you must consider air fare. If you are lucky enough to receive financial aid, know that it may vary greatly year to year since you must submit a yearly application. Text books at any university cost hundreds of dollars per semester, something that people forget to consider as an included cost when they choose the expensive university. Scholarships, if you are lucky enough to get them, may have very strict retention clauses, and may be awarded only for a limited number of terms.

That being said, investing in education is an investment in your future. I have made an effort to use as many resources offered by my fancy private university as possible to ensure a stable future, especially given the historical state of the job market into which I will shortly be entering. The hundreds of thousands of dollars in interest and principal I will be paying off for several decades only give me a greater incentive to create a stable and lucrative future for myself.

College is a terrifying monetary commitment, one which couples begin saving for before they are even parents. Fortunately or unfortunately, a bachelor’s degree is becoming a prerequisite for innumerable careers. The question should not be should you go to college, but rather, are you willing to cope with the consequences of paying off 4 years of education for the next 25 years of your life? Now that is something only you can answer.