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Paying for college?

Explore all of your options

March 23, 2013
By KIM LOCCISANO - Staff Writer ( , Times Leader

The first real signs of the coming of spring have begun arriving at household mailboxes across America as summer vacation fliers take a back seat for a time to the oversized financial aid package envelopes postal carriers annually wrestle into the always too small spaces allotted to the household mailbox.

Congratulations, your child has officially been accepted as a potential member of a future college graduating class.

This is just the beginning of a highly detailed and precise process meant to bring together those we consider among our nation's best and brightest in the hope of increasing their potential for overall success in and following a college career.

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When a financial aid package arrives it will come with its own set of requirements and deadlines, but industry experts in education and the financial communities recommend taking a good look at all the possibilities offered.

Key to the potential success of anyone's dreams of obtaining a college education: finding solid ways to pay for that privilege without completely bankrupting a family savings structure, damaging hard fought credit ratings of parents or harming newly forming credit ratings tied directly to the college financing process that are tied to a student's ability to pay it back.

Continuing to pay attention to small details can make a big difference in how smoothly the process of getting funding resources tied down goes for your student and household as May 1, the Annual National Candidate Reply Date, comes and goes.

Virtually nothing in the process of accessing college financial aid resources moves at all until your household's successful filing of your taxes and a Free Application for Federal Student Aid (FAFSA) is made and confirmed as in the hands of the federal government.

Electronic filing of your taxes and submitting information from that data to the FAFSA through a newly available retrieval process is hoped to help streamline the cumbersome track applicants often find themselves bogged down in now despite their best effort.

When it comes around to FAFSA filing season for the 2014-15 academic year, parents are invited to keep an eye to the news for events staged regionally by colleges as they make resources of financial aid departments available en masse through community-based workshops which can often provide one to one filing assistance.

Deadlines are key regardless where you are in the process of paying for a college education.

Filing your FAFSA is always pivotal to accessing any potential funding for your college student through state and or federal financial aid resources earmarked for need-based aid programs.

Key to these determinations are such things as a household's income, assets, family size, number in college, age of parents and taxes paid. The information generates an official status used by colleges in determining the need based funding options they can offer a household access to.

Each household's Expected Family Contribution (ECF) is unique. It represents the combined anticipated financial commitment to the individual student's upcoming educational opportunity not from one person, but from within your family.

"The ECF is best understood as a relative measure of a family's resources to finance college over a period of time. It is a national standard useful for comparing household financial pictures and determines eligibility for federal and state aid programs," according to U.S. Department of Education officials.

When a financial aid package arrives it will come with its own set of requirements and deadlines, but industry experts in education and the financial communities recommend taking a good look at all the possibilities offered.

Make sure to understand the repayment commitments each offer brings with it.

If you have questions about whether it is better for a loan to be secured under a student's name for post graduate repayment obligations, or would your household's financial health be better served through other options legally tied to them as the primarily responsible party to pay that part of the college tab.

Don't hesitate to place a call to your child's financial aid advisor at the college they now plan to attend. They will be happy to help confirm details of various loan programs that have been offered to your household.

Loans bring the obligation of repayment.

Grants and scholarships are not required to be repaid.

Some loans will not require being paid back until after a student graduates or leaves college.

Some loans will be immediately seen as a major financial debt held by a parent, which can prevent access to other personal funding for non-education related situations that come up in everyday life which can be important to be able to access as well.

When preparing your annual taxes remember to look into details of the inner workings of two tax credit programs as they can help offset costs such as tuition, fees, books, supplies, and various types of equipment or even college or career school fees by reducing a person's income tax.

The American Opportunity Credit allows claiming up to $2,500 for each student "for the first four years of school as the student works toward a degree or similar credential."

The Lifetime Learning Credit allows claiming up to $2,000 per student per year for any college or career school tuition and fees. It also covers fees associated with books, supplies and equipment required to take a course and that has to be purchased from the school itself.

The savings account structure called a Coverdell Education savings Account allows up to $2,000 per year be put aside for a student's education expenses from elementary school through college.

Students can be eligible for a tax deduction based on the interest to be paid on their student loans taken out themselves, by a spouse or dependent.

The maximum annual deduction is $2,500.

This tax deduction benefit applies to all loans to help pay for the cost of higher education, and is not exclusive to federal student loan obligations.

Some investors who have established IRAs can look to those resources to help pay for higher education expenses by withdrawing money from it to pay for higher education expenses incurred for themselves, spouse, child or grandchild.

Federal income tax still must be paid on withdrawals from an IRA, but there is no early withdrawal penalty to address.

Prepaying for college expenses can be done through the popular state-based 529 plans.

Their formal name: Qualified Tuition Programs or State 529 Plans.

Be aware not every college accepts this type of financial aid tool, but verification should be no more difficult than a quick check of an admissions or financial aid webpage, or quick personal call.

If you are interested in seeing a laundry list of all available possible programs through the government visit, and find IRS Publication #970 - Tax Benefits for Education.

This is a place to find the complete picture of how taxpayers can actually get back a part of the funds spent on tuition or interest on loans in an effort to make the most of your college savings efforts.

If you are finding it necessary to register deposits at more than one college, paying attention to the quick arrival of May 1 - and staying ahead of it - will give you access to that funding be returned to you from schools you do not choose to attend this coming year.

Officially request the deposit return before May 1 and it should be handled without issue.

But lose track of the timing to submit any return request to non-selected schools and you give up legal claim to those funds.

Ask your college financial counselor for details to review as a family including the Parent Plus Loan Program, which is in the parent's name, but comes with a 10 year repayment plan.

Many college loans will require payment of a processing fee, which is earmarked for return to the U.S. Department of Education.

Ask your college financial experts for details of currently available interest free payment programs that might be able to be accessed for your household's college debt responsibilities.

An often previously overlooked resource: your local community foundation and its loan and grant resources. These are often confined to a state residence requirement, but can mount up quickly for those willing to pursue them.

These can be accessed simply by details such as where a student lives, attends high school, goes to church, where family members attended school or work, and even such as where their family tree roots reach.

The unpredictability of the national economy has and will have an impact on college funding decisions at local colleges and among individual households this year and into the next.

Local families dealing with job loss through industry displacement or similarly unexpected situations can ask a college to consider reviewing their individual financial circumstances now and for the year to come with the help of applying under what is often called "a special circumstances application."

While it takes some work and research, doing what you can to secure appropriate financial resources for your college-bound child can lead get them off to a good start on their career path.



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