Taxes for students

After a person starts working, he or she must file taxes. Technically, if you make under a certain amount you do not have to file but when I made under that amount, I did file so I could get the money I paid in, back. Taxes for young people are normally easy. So easy in fact that the federal form is call 1040 EZ. You can file using that form or google turbo tax free file and you can file your federal tax online. Some states also have free filing. If you do not have a complicated return do not go pay someone something that you can do in less than an hour.

You need to file your tax return to fill out your FAFSA so try not to wait till April 15, 2010.

FAFSA- Free Application for Federal Student Aid

The FAFSA is the main way for students to get financial aid for college. You can get scholarships if you do not do the FAFSA but grants and federal loans require it. To do the FAFSA the student and the parent (if the student is under 22) need to gather their tax information. The same information a person needs to file their taxes is needed to file your FAFSA. Given that some of the money is first come first serve and some states have very early deadline, it is a good idea to complete your taxes and then your FAFSA as soon as you get all your paperwork from companies you work for or earn interest from.

Now for the tricks.
1. Money belonging to the student is assumed to pay for college where the money belonging to the parent is considered only partially set aside for college. So any money belonging to the student should be used up first or moved to the parents name.
2. Also if the grandparent or other relatives want to help, do not give the student cash until the bill is due. For example a textbook would be better than the same amount in cash. The money the grandparent or relative has is not counted but once it is the students hands it is counted.
3. Income from a job is considered to be used for expenses for college and may keep the student from financial aid. However jobs on campus (work-study) are considered part of the financial aid. You can get a job off campus using work-study if it met certain requirements from the financial aid office.
4. The FAFSA does not count into the formula any debt you have, however it will count any cash, therefore pay off any debt you can before filling out the FAFSA. Pay all your bills that you can before you apply as well.

Wonderful Article

I came across an article that talks about what questions people should ask after they get engaged but before they are married. I am engaged and these questions sound like a great starting point.

This article may not seem appropriate for this blog but this blog is about helping young people start their lives off right, financially and marriage may be a part of that.

http://online.wsj.com/article/SB126609755215845867.html?mod=rss_Today%27s_Most_Popular

Perkins Loans

The Perkins loan is only for undergraduate students with extreme need. However what is extreme need? That is up to the school itself. Often it means that your parents have a low income and more than one student in school. If you are eligible for a pell grant you are more likely to be eligible for a Perkins loan. The Perkins loan is however, the best kind of loan to get for now, it has an interest rate of 5% fixed and lower fees than the stafford loan. However as time passes the interest of the stafford loan will decrease until it is only 3.4% and combined with the pell grant, that may be the better choice. It all depends on how much money you need for your expenses that year and what year it is.

If however you get a pell grant and do not receive the perkins loan and need more aid, go talk to your financial aid office. This is the one loan they have control and flexibility over. Do not, however, talk to the front desk person, make an appointment with someone behind the front desk, who has decision making abilities and you may get more help than you expect.

PLUS loans

Plus loans are either for parents of undergraduates or for graduate/professional students. These loans are different than other federal loans in that they require a check check and minimum score. It is possible to have a co-signer for both types of loans if the parent or student (depending on the type of loan) does not have a good enough score.

The yearly limit on both types of PLUS loans is equal to your cost of attendance minus any other financial aid you receive. The interest rate is dependent on what program your school works with, either 7.9% or 8.5%. There are also fees of up to 4% to get the loan. Graduate/ professional students also must have applied for their annual loan maximum eligibility under the Federal Subsidized and Unsubsidized Stafford Loan Program before applying for a Graduate/Professional PLUS loan. This a good things because the fees and interest rates are better for stafford loan than plus loans.
Just like a stafford loan, to receive a PLUS loan, the student/parent must fill out the FAFSA.