Tax benefits change year to year but there are always some deductions for students and their parents. We are not income tax experts, please check with your tax professional before filing. This article is intended as a guideline only.

Some examples of tax benefits available for the 2006 tax year –

Hope Scholarship – This is actually a tax credit, not a scholarship. The credit is subtracted from the amount of tax you actually owe, not your income. You cannot get a refund of this credit, it can only be deducted from the amount you owe. The amount of the credit depends on several factors such as income, cost of tuition and fees, and the amount of certain scholarships received. To receive this credit you need a form 1098-T from the school which is used to fill out IRS form 8863. Your 1098-T form should include contact information for someone at your school who can help you with questions or filling out the form. You can only claim this credit for two years of schooling.

Lifetime Learning Tax Credit – This is also a credit, deducted from the amount of taxes you owe as opposed to a refund. The credit is run pretty much the same as the Hope Scholarship, it uses the same 1098-T and IRS form 8863. The only difference is it is not limited to 2 years.

The Tuition and Fees Tax Deduction – This is an income deduction that you can use even if you do not itemize. You may deduct up to $4000.00 of tuition and fees, no other expenses are eligible. These must be fees you actually paid, no tuition or fees paid by tax-free scholarships, grants or any other assistance are eligible. There was a last minute extension by congress to allow this deduction this year so it is not properly printed on the tax forms. People claiming this deduction are encouraged to e-file because it has been added to the IRS software, otherwise you must follow special instructions to make sure the form is filled out properly. You will need a form 1098-T from your school and a 1040 tax form.

Interest deduction – You can deduct up to $2500.00 of interest paid on student loans, provided it is not deducted somewhere else on your return.

Remember these benefits and amounts change year to year so make sure you have current information when filing your taxes!

About the Author:

Federal Education Services is a company that specializes in federal student loan consolidation, Stafford loan origination, PLUS and Graduate PLUS loan origination and as a resource for students with questions regarding educational financing. For any questions regarding this article please contact Federal Education Services. A friendly loan specialist can be reached at (877) 222-4727 or you can find us on the web at www.feded.net.

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Posted by Shawn Augustson, CollegeRecruiter.com on March 28, 2007 at 8:45 PM | Leave a Comment (0)

Credit agencies use several factors to determine your credit score, here are a couple that are affected by your student loans.

1. Number of open accounts: The number of creditors you have is one of the factors used - the more separate creditors you have the lower your score. Consolidation can increase your score by combining all of your separate lenders and reducing your open accounts to one.

2. Amount of monthly payments: The total amount of your minimum monthly payments is another factor in your score. Consolidating your student loans will lower your minimum monthly payment up to 60%, raising your credit score. For example, say you have three separate student loans all at the current rate of 6.8%.
1. $15000.00 minimum monthly payment $ 172.62
2. $20500.00 “ “ $ 235.91
3. $ 7500.00 “ “ $ 86.31
$43000.00 “ “ $ 494.84
Or:
One Consolidated $43000.00 loan monthly payment $ 300.49
Monthly savings of $ 194.35 or 40%.
Lower payment = less monthly commitment = higher credit score.

3. Debt to credit ratio: The amount of available credit you have on any given credit line will also affect your score. A credit card with a $5000.00 limit that has $5000.00 in charges on it will give you a lower score than a credit card with a $10,000.00 limit that has $5000.00 in charges on it. Student loans are considered maxed out credit lines until you have made some payments so reducing the number of maxed out accounts will raise your credit score.

If you also have private (non-federal) student loans you are probably already aware that they should be consolidated separately but you may not be aware that your federal loans should be consolidated first. Since private loans interest rates are based on your credit rating consolidating your federal loans first and raising your credit score can help you get a better rate on your private loan consolidation. Generally when you take private loans out you are a young student with not much of a credit history and you aren’t always given the best rates. This makes the consolidation process that much more important. With proper timing federal and private student loan consolidations can save you money, raise your credit score, and reduce the amount of time it takes to repay your loans. It’s a winning situation all around!

About the Author:

Federal Education Services is a company that specializes in federal student loan consolidation, Stafford loan origination, PLUS and Graduate PLUS loan origination and as a resource for students with questions regarding educational financing. For any questions regarding this article please contact Federal Education Services. A friendly loan specialist can be reached at (877) 222-4727 or you can find us on the web at www.feded.net.

Source: Submit Articles at ArticlesBase.com

Posted by Shawn Augustson, CollegeRecruiter.com on March 28, 2007 at 8:35 PM | Leave a Comment (0)

Secretary Spellings announced a new tool to help families plan for college. FAFSA4caster provides an early estimate of a student's eligibility for federal financial aid.

U.S. Secretary of Education Margaret Spellings today unveiled a new online tool to help students and families financially prepare and plan for college before a student's senior year of high school. Called the FAFSA4caster, it provides students with an early estimate of their eligibility for federal financial aid, which could include a Pell grant of up to $4,310.

"Improving college access and affordability are key to giving more Americans a chance at higher education and keeping America competitive," said Secretary Spellings. "Families need more information—sooner—about students' federal aid eligibility so that they can plan ahead for college. The FAFSA4caster gives families an important tool they can use to make decisions about the future."

The FAFSA4caster will

Instantly calculate a student's eligibility for federal student aid, including grants,
Reduce the time it will take to complete the Free Application for Federal Student Aid (FAFSA) and Simplify the financial aid process for students and families.

Last September, Secretary Spellings announced her plans to improve the U.S. higher education system, based on the recommendations in the final report of her Commission on the Future of Higher Education. Today's announcement puts in place one of the Secretary's action steps—to notify students of their aid eligibility earlier than spring of their senior year.

In addition to helping families make informed decisions as they plan for college, the FAFSA4caster will also reduce the application time when students file their FAFSA in their senior year in high school. The FAFSA4caster pre-populates 51 of the 102 questions on the FAFSA, significantly reducing the time it takes for the student to complete the FAFSA in their senior year of high school.

The FAFSA4caster will be available on April 1 at www.federalstudentaid.ed.gov. It will be available in Spanish on April 29. In September, the Department will release the next version of the FAFSA4caster, which will estimate a student's federal entire aid package, including eligibility for federal student loans.

Need-based aid is one of the topics that will be discussed during Secretary Spellings' Higher Education Summit, "A Test of Leadership—Committing to Advance Post-Secondary Education for all Americans," on Thursday, March 22 in Washington, D.C. The summit will focus on action items around five recommendations from the Commission's report that will make an impact on improving college access, affordability and accountability in America's higher education system, including aligning K-12 and higher education expectations; increasing need-based aid for access and success; using accreditation to support and emphasize student learning outcomes; serving adults and other non-traditional students; and enhancing affordability, decreasing costs, and promoting productivity.

Additional information about the FAFSA4caster is available now at www.federalstudentaid.ed.gov. For more information on the Secretary's Commission on the Future of Higher Education, please visit http://www.ed.gov/about/bdscomm/list/hiedfuture/plan/index.html.

Posted by Shawn Augustson, CollegeRecruiter.com on March 22, 2007 at 2:30 PM | Leave a Comment (0)

With student loan debt at an all-time high, many college students and their parents are looking for solutions to repaying their student loans and lowering their monthly payments. This especially is crucial for recent graduates who have wrapped up their college education and are looking to land their first job. Many new grads find their college debt staggering and their monthly payments overwhelming.

The Federal Student Loan Consolidation Program was created for just this purpose: to help students repay their student loan debt under reasonable terms. According to NextStudent, the Phoenix-based premier education funding company, there is a little-known added benefit to federal student loan consolidation, or combining multiple student loans into one easy-to-manage package. Once original outstanding student loans are paid in full, oftentimes a borrower’s credit score improves.

This happens since the borrower’s record shows that several student loans were taken out and then paid off. When students make the wise decision to consolidate student loans their credit score improves as a direct result, this enables them to qualify for lower rates on their first home or even a new car.

Multiple Student Loan Consolidation Options

Another little-known fact is that after the final distribution of a Federal PLUS Loan, parents can consolidate PLUS loans anytime, even while their child still is in college. Borrowers may consolidate their student loans within the six-month grace period following graduation, during repayment, or even when the student loans are in deferment or forbearance. With up to 30 years to repay and at a fixed rate of 8.25 percent or lower, many borrowers find that their payments are reduced by up to 60 percent, which may allow them to financially get on their feet.

Easy, Hassle-Free Qualifying

NextStudent makes it easy to qualify for a federal student loan consolidation. Borrowers are required to have student loans totaling $10,500 or more and must include at least two federal student loans like the Stafford Loan or PLUS Loan. No credit check or co-signer is required, and most applicants qualify over the phone in as little as five minutes. Optionally, borrowers may use NextStudent’s easy online e-application. When contacting NextStudent, all borrowers receive individual attention and get their student loan consolidation questions answered through their personally assigned Education Finance Advisor.

Since the federal government changes the mandated student loan consolidation rates for lenders each year in July, the only difference among lenders is the individual incentive packages that each one offers. Therefore, it is important that students and their parents carefully scrutinize not only the character and reputation of the company, but also the specific incentives, such as reduced rates and discounts.

Many Benefits with Incentive Packages

There are three packages offered by NextStudent, including the popular “Standard Locked” package. This option includes a LOCKED RATE reduction of 1 percent after 36 on-time payments, as well as a .25 percent discount when a borrower chooses repayment via Auto-Debit. In addition, borrowers may select either the “2%” package or the “Google” package. The “Google” package offers a .375 percent discount after only six months of on-time payments (not locked), a 1 percent discount after 36 on-time payments (not locked), as well as the standard .25 percent discount for Auto-Debit repayment. The “2%” package offers the same .25 percent Auto-Debit payment discount, in addition to a 2 percent rate reduction discount after 36 consecutive on-time payments (not locked).

Regardless of the package selected, borrowers can know that their college financial planning strategy is a sound one when selecting NextStudent. Not only will borrowers be able to more easily manage their student loans with a federal student loan consolidation , but such a student loan consolidation through NextStudent may put them on sound financial footing for their future.

NextStudent believes that getting an education is the best investment you can make, and it is dedicated to helping you pursue your education dreams by making college funding simple. Learn more about student loans and student loan consolidation at NextStudent.com.

About the Author
Jeff Mictabor is an enthusiast on the topic of student loan issues in the news. He has been writing for the past 10 years for a variety of education publications. He now offers his writing services on a freelance basis.

Source: http://www.articlecodex.com

Posted by Shawn Augustson, CollegeRecruiter.com on March 22, 2007 at 10:56 AM | Leave a Comment (0)

Should I consolidate my college loans or not?

1. Still in school, yes! Rates are low, but they're scheduled to go up. Your college loan payments will then remain as manageable as possible when you leave school. If you have graduated, or will be graduating this May or June, yes! Graduates can lock in historical low rates, and reduce their monthly payments more than half. You can lock in a rate even while still in school, and even if you have been out of school for a couple of years can get a good deal, too.

2. The newest twist in the consolidation puzzle is the "in school consolidation", affecting students who are currently enrolled and will be enrolled past the July 1 consolidation. You can consolidate your existing college loans now to secure the low rates for at least part of their student loan portfolio.

3. Consolidating could save thousands of dollars in interest payments on college loans. There are impending student loan rate changes and new interpretation of regulations by the Department of Education, also, Congress is considering ending the fixed-rate program. Experts are urging students to consolidate to relieve themselves of a higher debt load.

4. Many students and families are looking for a simple, clear answer about whether to consolidate college loans or not. The simple answer is to take some of the bite out of the debt by loan consolidation. You could live like a miser and save as much money as possible or consolidate your federal student loans now.

5. For students still in school, you have an opportunity to choose consolidation. Consolidating would put a college loan borrower into repayment status, but the student can defer payments until after graduation by making a deferment request. Consolidating today can have payments put off until graduation.

6. The federal loan program allows consolidation, which is when a borrower pools his student debts together so that only one monthly payment is necessary, rather than several. It's not just the convenience of one payment that is making consolidation so compelling. The most significant aspect of the program is that it allows a person to permanently lock in a lower interest rate on loans. These loans are backed by, or granted directly by, the federal government.

7. Rates for federal Stafford loans, the most prevalent type of student loan, as well as some other types of federal student loans are set annually based on the rate of 91-day U.S. Treasury bills at the end of May. The exact rate won't be known until the end of the month, but experts say it will be about 2 percentage points higher. (Private loans and federal loans cannot be consolidated together.)

8. For the first time, the U.S. Department of Education will allow students still in school to consolidate federally backed loans. Federal PLUS loans can also be consolidated. PLUS loans are used to help pay the cost higher education.

9. Students, regardless of enrollment, should absolutely consolidate their college loans, arranged through the student's lender. There are no fees, no credit checks, and interest rates are expected to move higher. Those are good reasons to consolidate.

10. Act quickly to put lock on current federal-aid interest rates. Graduates should act now to insulate themselves from a drastic rate change. Apply early. Do not wait until the last minute to file paperwork. Those who have already graduated or left school should not wait to investigate consolidation. In the first six months after graduation, you are in a grace period. Within that six-month window, you can lock in a low rate on Stafford loans and spread the repayment over as long as 30 years.

If you're going to consolidate, now is the best time to do it.

About the Author

Georgio Heberto is dedicated to offering news, articles, and instruction on financing college education. You have a definite choice in how you finance your education and beyond. Visit http://www.atopeducation.com for more information.

Source: http://www.article-wiz.com

Posted by Shawn Augustson, CollegeRecruiter.com on March 20, 2007 at 8:31 AM | Leave a Comment (0)