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Students get a break
Recent law changes boost the amount students can borrow at favorable rates and initiate loan forgiveness programs.
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Borrowing terms get better for students

The Hope credit gives families a maximum of $1,800 for the first two years of the student's education and is applicable for every child in the family.

Parents' joint modified adjusted gross income cannot exceed $116,000 to qualify for the Hope credit.

But, if it does, the family can still possibly claim the credit, says Rick Darvis, CPA, Certified College Planning Specialist and co-founder and director of the National Institute of Certified College Planners in Syracuse, N.Y.
 
"They can remove the child from the tax return and now the child can claim that credit. It can offset any tax liability that the child might have, so it's basically not lost to the family," he says.

The Lifetime Learning credit gives families a credit of up to $2,000 every year that the student takes one or more courses to acquire or improve job skills. Expenses for graduate-level work are eligible as well.

"It's calculated by taking 20 percent of the tuition paid," says Darvis. "If the tuition is $8,000, take 20 percent and it comes to a $1,600 Lifetime learning credit -- if it is $20,000, then it will be the full $2,000."

Other ways to shave costs
Both Darvis and Carpenter agree that going to a community college for the first two years of undergraduate education can be a major cost cutter.

As long as the school is accredited and the credits are accepted by the university you wish to transfer to, you'll have the big-name school on your diploma for a fraction of the cost.

"I think that's becoming a big trend. Or students are maybe going to a bigger school or a private college and taking classes at night for cheaper credits," says Darvis.

"You're also going to see a big boom in distance learning or CLEP programs," he says.

College level examination programs, or CLEP, allow students to take tests on basic subjects offered in introductory courses at the college level. Depending on your school's policy on CLEP credits, you could move on to more challenging subjects more quickly and even graduate ahead of time.

"I think one of the big problems students have is that they don't sit down and do the process of figuring out how much they're going to earn and how much they should borrow," says Carpenter. "They just say, 'I'm going to get the money, go to school and make enough money so that I can pay these loans back.' And that's not always the case."

New initiatives from the federal government are a good step toward leveling the college playing field for everyone. Students should not have to mortgage their lives to merely achieve what is expected.

And while going to a more expensive school is a debatable advantage depending on the chosen field, all students should have the option of getting the best education possible.

-- Posted: Aug. 27, 2008
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