Deck 1: Education Planning

Question 1

What is the second step in determining a client's goals for education?

A)Determine education goals
B)Create strategies to fund education goals
C)Analyze the current financial situation and education funding plan
D)Educate the client on implementing education funding plans

Answer 1

Analyze the current financial situation and education funding plan

Question 2

If a client has a child, what should you assume about the child's education?

A)The child will go to a four-year college or university
B)The child will not attend college or a trade school
C)The child will receive a scholarship or otherwise fund his or her own education
D)Assume nothing

Answer 2

Assume nothing

Question 3

When planning for education financing, what should you NOT do?

A)Consider student loans
B)Consider scholarships
C)Under-prioritize educational goals
D)Over-prioritize educational goals

Answer 3

Over-prioritize educational goals

Question 4

Of the following, what should you never use as a strategy for educational goals?

A)Work-study programs
B)Savings vehicles
C)Grants
D)None of the above

Question 5

What formula should you use to determine the future cost of a year of college?

A)Present cost of attendance X # of years of attendance
B)FV = PV (1+G)^N
C)PVGA = (PMT/(I-G))*(1-((1+G)/(1+I))^N)
D)FVA = (PMT/I)*((1+I)^N-1)

Question 6

Which of the following is a savings strategy for future education?

A)Student loans
B)925 College Savings Plan
C)Scholarship
D)Variable Universal Life Insurance

Question 7

What is an advantage of a 529 College Savings Plan?

A)Earnings withdrawn from a 529 College Savings Plan are never taxed
B)Though earnings withdrawn from a 529 College Savings Plan are always taxed, you can deduct contributions while saving
C)Earnings withdrawn from a 529 College Savings Plan are not taxed, as long as they are used for qualified education expenses
D)Only half the earnings withdrawn from a 529 College Savings Plan are taxed

Question 8

What is the amount of additional tax on traditional or Roth IRA withdrawals, made before age 59 ½, that are NOT used for qualified higher education expenses (or another qualified expense)?

A)3%
B)5%
C)10%
D)15%

Question 9

Which of the following is true regarding a Coverdell Education Savings Account?

A)The beneficiary must be the taxpayer
B)The beneficiary must be under the age of 21
C)The total balance in the account must be withdrawn before the beneficiary's 30th birthday
D)You cannot contribute more than $2,000 each tax year

Question 10

What is a disadvantage of a Crummey Trust?

A)Distributions used for education are considered as income to the student's parent
B)Distributions used for education are considered as income to the student
C)The trust can have multiple beneficiaries
D)The trust allows the parent or another person who sets it up to have some control over distributions

Question 11

How do most full-time undergraduate students pay for a college education?

A)Financial aid
B)Gifts from parents
C)Scholarships
D)Education savings vehicles

Question 12

How do you find the amount of financial aid a student may be eligible to receive?

A)By filing a form with the student's income tax return
B)Free Application for Federal Student Aid
C)Expected Family Contribution Aid Request
D)Free Application for State Financial Aid

Question 13

Which of the following is NOT considered when using the regular formula to figure the Expected Family Contribution?

A)Dependency status
B)Number of children in college
C)Household size
D)Family business

Question 14

What percentage of a student's net worth is considered to be available to pay education expenses?

A)0%
B)12%
C)35%
D)50%

Question 15

Who prepares the financial aid package available to the student?

A)U)S. Department of Education
B)The state in which the student lives
C)The parent
D)The school

Question 16

What is the amount a parent or grandparent can pay to the child's educational provider before owing a gift tax in 2017?

A)$0
B)$14,000
C)$28,000
D)Unlimited

Question 17

What is the maximum American Opportunity Tax Credit amount?

A)$2,000
B)$2,500
C)$5,000
D)$10,000

Question 18

Besides the Federal government, what type of organization may offer loans to pay for education?

A)The college
B)Non-profit organizations
C)Private organizations
D)All of the above

Question 19

How do loans differ from grants?

A)Grants must generally be paid back
B)Grants are generally based on financial need, but loans are typically not based on need
C)Grants are awarded to the parent, where loans are awarded to the student
D)Grants are awarded to the student, where loans are typically only awarded to the parent

Question 20

On which type of loan does the Federal government pay interest while the student is attending school?

A)Subsidized Stafford loan
B)Unsubsidized Stafford loan
C)Federal Perkins loan
D)All of the above

Question 21

Which type of student loan has an interest rate of 5%?

A)Federal Perkins loan
B)Parent PLUS loan
C)Graduate PLUS loan
D)Private loans

Question 22

Which of the following can be a consequence of not paying a student loan debt?

A)Federal and state taxes can be offset to pay a portion of the debt
B)The student can lose eligibility for further Federal student aid
C)The student's wages can be garnished
D)All of the above