Education

The National Collegiate Athletic Association (NCAA) was founded in 1906. It is currently (year 2001)made up of 964 schools classified in three divisions. Division I has 310 schools (divided into two subdivisions; 1-A and I-AA). Division II has 267 schools. Division III has 387 schools. The NCAA sponsors 81 championships in 22 sports. Almost 24,500 men and women student-athletes annually compete for NCAA titles.

Colleges prepare a budget, known as their Cost of Attendance, (COA), to help students plan their educational expenses and apply for financial aid. Generally, the budget includes tuition, fees, books and supplies, room and board, travel, personal and miscellaneous expenses.

The expected family contribution is a key factor that determines whether your child can receive college financial aid based on your expected family contribution. Your expected family contribution is calculated according to a formula set by Congress. It takes into account the family's income, savings and other factors. Generally parents are expected to contribute about 6 % of their savings to pay for their child's education. The child presumably has fewer overall expenses. About 35 % of their savings will be expected to be used to meet college costs. Your expected family contribution will then be compared to the cost of attending the college your child has selected to determine whether they are eligible for financial aid. Some parents feel this calculation is not realistic and is an inflated amount.

Need-based financial aid is college aid that is awarded to students based on the income and size of their family and based on the student's income. Need-based aid is given in loans and outright grants. Merit based financial aid is awarded to students for their academic, artistic, or athletic skills. Eligibility is based on their special skills and talents, combined with their test scores, grades and after-school activities. This criteria sets merit- based aid apart from need-based aid, which is awarded based on the income level and similar factors.

The Reserve Officers' Training Corps. (ROTC) provides students with money for college. Generally, the arrangement is, in exchange for the college education, the student must make a commitment to join the armed services after graduation. After graduation, students become commissioned officers in the Marine Corps, Army, Navy or Air Force. ROTC scholarships pay for tuition, fees and books for all four years of college. Lesser programs are available for students who want to make lesser commitments.

The American Opportunity Tax Credit modifies the existing Hope Credit for tax years 2009 and 2010 under ARRA. The credit was extended to apply for tax years 2011 and 2012 by the Tax Relief and Job Creation Act of 2010. The new credit makes the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. Many of those eligible will qualify for the maximum annual credit of $2,500 per student. The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits.

Taxpayers who have student loans are allowed to deduct up to $2,500 in annual interest payments on the loan directly from their gross income, subject to phase-out rules.
Your lender will send you a Form 1098-E. The amount of interest you paid on your student loans for the year will be reported on Form 1098-E, box 1.
The $2,500 maximum deduction for interest paid on student loans begins to phase out for a married taxpayers filing a joint returns at $125,000 and phases out completely at $155,000,
For single taxpayers, the phase out ranges are.($75,000-90,000).
Qualifying loans include any debt incurred to pay for higher education expenses for yourself, spouse or a dependent at the time the debt was incurred.
The student must have been enrolled on at least a half-time basis when the loan was made in order for the interest to be deductible. The student will receive a form verifying his or her half-time basis eligibility.
The deduction for student loan interest will continue to be available to every person who is legally obligated to repay a student loan through the year 2013.

A useful way of funding college costs is to set up an IRS Section 2503(b) trust. This trust works well with large sums of money. Parents can contribute up to $13,000 per year per child to this kind of trust and still qualify for the annual gift tax exclusion. Funds within the trust can be accumulated and principal payments delayed until college. A 2503b)trust requires that all income be paid annually or more frequently to the beneficiaries. Principal payments can be delayed until age 21. Income distributions can be planned by various investment strategies. Principal can often be left in trust for periods of time exceeding the child's 21st birthday. Speak to your local CPA about this college funding tax strategy.

The four branches of the US military operate their own service academies. They are all four-year institutions. Competition to get into these schools is highly competitive. Students become commissioned officers immediately upon graduation. Those who are accepted get full scholarships and a small monthly allowance. For more information, speak to your HS guidance counselor or contact: The Coast Guard Academy in Connecticut at 800-883-8372, The U.S. Military Academy at West Point, N.Y. at 800-822-8762, The Naval Academy in Maryland at 800-638-9156, The Air Force Academy in Colorado at 800-443-9266.