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Education Planning - Coggle Diagram
Education Planning
Student Loans
Parent PLUS Loans
Parents are eligible for subsidized, fixed-rate federal student loans to help pay for their children's education.
These are distributed through both private lenders and from the federal government's direct lending program.
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Perkins Loans
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These loans are need-based and highly limited, and they are based on income reported on the FAFSA form.
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Private Loans
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Monthly payments vary throughout the repayment period, making it difficult to gauge exactly what your payments are going to be upon graduation.
529 Plans
Types
Prepaid tuition programs
Offered by the state of an eligible educational institution. They allow for the advance purchase of credits for the designated beneficiary.
College Savings Plans
allow contributions to be made to the account on behalf of the designated beneficiary. They allow the account owner to invest in a selection of mutual funds.
Distributions
Taxes
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Earnings accumulate on a tax-free basis and distributions that are used for qualified education expenses are tax and penalty free.
Qualified Expenses
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Books, Supplies, & Equipment
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Contributions
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Maximum amount that may be contributed on behalf of each designated beneficiary varies among states.
Contributions of up to $15,000 can be made for each designated beneficiary without incurring federal gift tax.
An individual may be able to contribute a lump sum that covers five years, giving a total of $75,000.
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Education Tax Credits
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Lifetime Learning Credit
Credit up to $2,000 for qualified college educational expenses paid for each student eligible. Doubled to $4,000 for students attending eligible schools in a Midwestern disaster area.