Special Bulletin: Now Ask Your Senators to Preserve Your College Tax Benefits!

The U.S. House of Representatives recently passed its tax bill. This bill would repeal many of the higher education tax benefits on which millions of college students and parents rely. But it isn’t law yet.

The U.S. Senate will soon act on a similar bill. But as currently written, the Senate’s bill IMG_0078would keep the House-targeted college tax benefits in place and unchanged. These benefits include:

  • College Savings Bonds: The House would start taxing students on money they use from such bonds to pay college expenses.
  • Coverdell Education Saving Accounts: The House would prohibit new deposits into these accounts.
  • Death and Disability Debt Discharge: The House would tax student loan debts forgiven for borrowers who die or suffer total and permanent disabilities.
  • Employer-Provided Educational Assistance: The House would subject what your employer spends on your tuition, fees, books, and supplies to taxation The Senate would leave current law as is — so only employer spending above $5,250 would be taxed.
  • Graduate Tuition Reduction Exclusion: The House would make all tuition reductions awarded to graduate research and teaching assistants taxable income.
  • Interest Deduction on Student Loans: The House would end this $2,500 per year deduction.
  • Lifetime Learning and American Opportunity Tax Credits: The House would repeal the Lifetime Learning credit that applies to what you pay on a course helping you get a degree or a job skill. Instead, it would expand the American Opportunity credit from 4 to 5 years. But the American Opportunity credit applies only to degree-related courses. The Senate would leave both credits unchanged.
  • Tuition and Fee Deduction: The House would kill this $4,000 per year deduction for what you pay in tuition and fees for yourself, your spouse, and your dependents.

All these changes would take affect in 2018 unless the Senate causes them to be dropped.

The Senate will amend, debate, and vote on its bill soon after Thanksgiving, so there’s little time to contact your Senators (their contact information is here). Urge IMG_0081them to use the Senate bill to preserve the tax benefits described above.

The House and Senate must negotiate to finalize all differences in the bills they pass, and such negotiations often lead to one or the other bill’s differences being dropped. So the last, best hope for preserving these tax benefits is a Senate tax bill that opposes the House’s plan to kill them.

Contact College Affordability Solutions at (512) 366-5354 or collegeafford@gmail.com if you have questions.

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Before College: College “Sticker Prices” Aren’t Necessarily Their Final Prices

This summer is the time for rising high school seniors to begin researching colleges they may want to attend. There’s much check out, including each school’s costs.

To get an idea of what it’ll cost to attend different colleges and universities, go to their websites and search for “Cost of Attendance 2018-19.” You might also want to use College Navigator from the National Center for Education Statistics, opening its IMG_6849“Tuition, Fees, and Estimated Student Expenses” page to track cost increases over the last four years.

Here’s an important point — 2018-19 college prices you see on websites and College Navigator are “sticker prices” and not necessarily final. Schools generally engage in “discounting” their tuition and fees and, sometimes, other student expenses.

Colleges offer discounts differently than auto dealers, although the end result is the same. Rather than reducing a student’s tuition and fees, they give him grants and especially scholarships to pay these charges. For recruiting purposes, prestigious institutional scholarship offers often impress families and help bring in students.

Public and private colleges both discount. A new study by the National Association of College and University Business Officers found that private non-profit colleges and universities provided institutional grants and scholarships to 87.9% of new freshmen and 78.5% of all undergraduates in 2016-17. Collectively, these awards discounted tuition and fees by 49.1% for freshmen and 44.2% for all undergraduates.

Why discount? One reason is increased price sensitivity by families still recovering from the recession. It’s also related to decreased numbers of traditional college-age students and increased competition from other institutions for, like all businesses, colleges must bring in customers to survive.

IMG_6850Not every student should expect grants and scholarships equal to the discounting percentages noted above. Financial need plays a role. So do the characteristics of students an institution seeks to enroll; some want higher SAT scores, or certain types of musicians, or students likely to succeed in various academic programs. Your student won’t know his actual discount rates until winter or early spring, when he receives official financial aid offers from the colleges to which he’s applied.

The important thing is this — don’t let a institution’s “sticker price” discourage your student from putting it on the list of colleges to which he’ll apply. If that price gets discounted, it may be much more affordable than he thinks.

Before College: May 1 is Right Around the Corner!

May 1 is just 34 days away. That’s the deadline for paying a nonrefundable enrollment deposit to hold a spot at the 4-year college your student decides to attend this fall. When it comes to affordability, there’s much to do.

(1) Award Letter: Be sure your student has his financial aid offer from each school he’s considering. If a school’s award letter hasn’t arrived yet, make sure you’ve completed verification (if the school required it), then contact the financial aid office to request one IMG_5726ASAP.

(2) Outside Aid: If you know about scholarships your student’s getting from parties outside the school, report them to the aid office right away. Not doing so will freeze financial aid once the school learns of these awards, because it’s required to determine that the aid it awarded isn’t affected by outside scholarships. Should reductions be required, schools usually cut loans, then work-study and, last, grants or scholarships.

(3) Appeal: File a financial aid appeal ASAP if it might lower your student’s Expected Family Contribution and qualify her for more need-based aid. The aid office can tell you how.

(4) Affordability Analysis: Evaluate the affordability of each school under consideration.

First, use the “Tuition, Fees, and Estimated Student Expenses” on the National Center for Education Statistics College Navigator website to calculate annual growth in the average cost of attending a school over the last four year. Multiply the school’s 2017-18 costs by this average for each of the next four years to project your student’s 4-year cost.

Now project the financial aid to be received over four years. Some institutional grants and scholarships are for one year only, so be sure to differentiate between them and 4-year IMG_5659awards. And watch out for schools that practice bait and switch. Assume federal and state grant amounts will remain constant each year. Keep your borrowing assumptions within annual federal loan limits.

Subtract your 4-year financial aid projection from your 4-year cost projection. Now the big question — can you and your student cover the remaining gap? If so, keep that school on the list for consideration. If not, it may have to be dropped.

(5) Fit: Fit is absolutely critical. If a college or major doesn’t work for your student, chances are he’ll transfer, which’ll increase the cost of his degree. So consider fit carefully.

Need help analyzing the affordability of the colleges your student is considering? Contact College Affordability Solutions by email at collegeafford@gmail.com or by phone at (512) 366-5354.

Before College: Why Begin At A Community College?

What’s your student’s higher education goal? If it’s to get a certificate or associate’s degree that’ll get him started in a trade or technical field, than he should be looking to attend a community college or public technical institute. But even it’s to earn a bachelor’s degree, your local community college may still be the place for him to start.

Why a community college or public technical institute? Because although there are many excellent private vocational schools, these schools are subject to little oversight and regulation. The result is that way too many of them are operated by con artists — people who rip students off by charging big bucks for degrees and certificates that don’t prepare them for gainful employment. Furthermore, private vocational schools often charge high rates of tuition.

Why begin at a community college if your student’s goal is a bachelor’s degree? Simple — it, too, is a much less expensive way to earn credits that’ll count toward that degree.IMG_5561

This year, the average total cost of attending a U.S. community college is $17,000 — just 69% of the $24,610 average total cost of attending a public 4-year college or university.

If your student lives at home with you while taking community college classes, he will (on average) lop another $8,060 in room and board off his costs. So now a year at community college averages just 36% the average cost of attendance at a public 4-year public institution.

Small wonder many high school counselors and state officials urge low-income and middle-class students to begin higher education at community colleges, then transfer the credits they earn there to 4-year colleges and universities. Many low and middle-income students can pay for their time at community colleges without borrowing a penny.IMG_5566

So community colleges can be one of the most cost-effective paths to a bachelor’s degree. But in considering this option, think carefully about the pitfalls that can come with attending a community college. If none of those are a problem for your student, than enrollment in local community college can be a wonderful money-saver.

NOTE:
WE’LL BE TAKING SPRING BREAK NEXT WEEK, SO OUR NEXT POST WILL BE ON MARCH 22.

College Affordability Solutions can help you conduct an affordability analysis on various paths your student may take to earn a bachelor’s degree. Contact us at (512) 366-5354 or collegeafford@gmail.com if you need such assistance.

Before College: Check Out Those Hidden Fees

When checking out the cost of colleges your student may attend, you’ll find their tuition and fee charges on their websites. But understand that these charges only include fees required of all undergraduates.

Students are also subject to other fees — sometimes labeled “discretionary” or img_5527“optional” — that can cost hundreds if not thousands of dollars. These are “hidden” fees because schools typically don’t include them in their published cost of attendance.

Some hidden fees aren’t really optional. For example, most schools charge for summer orientation sessions to help incoming students get familiar with campus, it’s organizations, and it’s services. But orientation is often when students get their initial academic advising and schedule their first semester classes, too, do missing it may not be advisable.

Similarly, some courses required by your student’s major may have computer fees, course fees, course materials fees, or lab fees.

Still, it’s easy to avoid other optional fees. If your student isn’t interested in intercollegiate athletics, don’t pay athletics or sports ticket fees. If your student doesn’t absolutely need a car on campus, keep it at home — you’ll be surprised how many hundred dollars in parking fees (and how much gas, maintenance, and body damage) this can save each semester.

img_5529So research hidden fees. Search the school’s website for terms such as those listed at the end of this article. Call the admissions or business office and request lists of optional fees. Inquire with others attending the school about fees that surprised them.

Maybe you can’t avoid all hidden fees. But the more you know the better you can include them when analyzing college affordability, and the better you can budget for and plan strategies to minimize them.

College Affordability Solutions can help you analyze the affordability of colleges your student is considering. Contact (512) 366-5354 or collegeafford@gmail.com.

Sometimes Hidden College Fees

  • Academic excellence fees
  • Activities fees
  • Add or drop fees
  • Application processing fees
  • Athletic or sport ticket fees
  • Building use fees
  • Change of schedule fees
  • Chapel fees (private, church-affiliated colleges)
  • Commencement or graduation fees
  • Computer or digital media fees
  • Course fees
  • Course materials fees
  • Convenience or credit card fees
  • Digital media fees
  • Diploma fees
  • General student fees
  • Health center of health service fees
  • Health  insurance premiums
  • ID card replacement fees
  • Lab fees
  • Late registration fees
  • Late payment fees
  • Library fees
  • Legal services fees
  • Library fees
  • Intercollegiate athletics fees
  • Internet or telecommunication fees
  • Matriculation fees
  • Orientation fees
  • Parking fees
  • Recreation center fees
  • Shuttle bus fees
  • Student success fees
  • Student government fees
  • Student services fees
  • Study abroad fees
  • Transportation fees
  • Yearbook fees