President Obama withdraws proposal to tax 529 college saving plans

Families who hold 529 college savings plans are much happier today with the announcement by the White House that the plans will not change. Last week President Obama announced a plan to simplify the tax code and help the middle class. One piece of the plan was to change the tax benefits of 529 plans. 529 plans have allowed families to make contribution that grow tax-free and withdraw money from the plans without paying capital gains taxes. After many critics came forward, including families and lawmakers from both parties, the White House said the proposal would not be part of the president’s new budget.

According to a White House official, “Given it has become such a distraction, we’re not going to ask Congress to pass the 529 provision so that they can instead focus on delivering a larger package of education tax relief that has bipartisan support, as well as the president’s broader package of tax relief for child care and working families.” The proposal was believed to be one of the ways President Obama planned to pay for his educational proposals he discussed in the State of the Union address on Jan. 20. However, the White House official said the administration can still achieve the President’s proposals by closing “trust fund loopholes” for wealthier Americans.

The announcement from the White House came one day after Congresswoman Lynn Jenkins (R-KS) and Congressman Ron Kind (D-WI) introduced H.R. 529. The bill would “expand, modernize, and strengthen tax-free 529 college savings plans.” In addition to keeping the tax benefits, the bill would makes three improvements to 529 Saving Plans. The improvements would make computers a qualified expenses, eliminate “unneeded” paperwork, and allows for re-deposit or refunds without taxes or penalties.

The change also came after multiple lawmakers expressed concerns over the proposal. House Speaker John Boehner (R-OH) demanded President Obama to withdraw the proposal from the budget “for the sake of middle-class families.” Leading democratic leaders also had concerns about the proposal, including House Minority Leader Nancy Pelosi (D-CA) and ranking member of the Budget Committee Chris Van Hollen (D-MD).

In a statement, House Speaker John Boehner said, “I’m glad President Obama has decided to listen to American people and withdraw his tax hike on college savings.” He also urged the President to support Rep. Jenkin’s bill to strength 529 college saving plans.

Who is my parent for FAFSA purposes?

Need help figuring out who your parent is for FAFSA purposes? Here is the breakdown. Via Federal Student Aid

Need help figuring out who your parent is for FAFSA purposes? Here is the breakdown.
Via Federal Student Aid

All students who are considered dependent must have their parent or legal guardian provide information on the Free Application for Federal Student Aid (FAFSA). However, some students might have trouble figuring out who should fill out the FAFSA. For example, if parents are divorced or living apart, it may be confusing for the student to determine what parent’s information should be included. Here are some helpful hints to figure out what parent should fill out the FAFSA.

Before going over the circumstances, students must understand who is considered a parent. Parent or parents are defined by the FAFSA as the student’s legal (biological or adoptive) parents or stepparents, or a person who has been determined as the legal parent. Widowed stepparents, grandparents, foster parents, legal guardians, older siblings, and other family members are not considered parents for FAFSA purposes unless they have legally adopted the student.

  • Parents are married. If the student’s parents are married and living together, financial information for both parents should be included on the FAFSA.
  • Parents are unmarried, but living together. Just like married parents, if parents are living together, financial information for both parents should be included on the FAFSA.
  • Parents are married and living apart. If parents are living apart and not considered legally separated by the state, information for both parents should be included on the FAFSA.
  • Parents are unmarried, separated or divorced and living apart. The parent the student lived with the most should be the one who fills out the FAFSA. If that parent is remarried, the financial information for the new spouse should also be included on the FAFSA.
  • Student lives equally with unmarried, separated or divorced parents. If the student lived with each parent equally during the year, the parent who provided the most financial support should fill out the FAFSA. Again, if that parent is remarried, the financial information for the new spouse should also be included on the FAFSA.
  • Student does not live with legal parents. If the student lives with someone other than their legal parent, they must still provide information for their legal parents.
  • Student cannot get financial information for parent. There are some circumstances in which students might not be able to get financial information for their parents. These special circumstances could be that parents are incarcerated, the student left the home due to an abusive family environment, or the student does not know where their parents are and are unable to contact them. If students have any of these circumstances, students can fill out the FAFSA and specify they cannot get parental financial information due to special circumstances. Students will be able to submit the FAFSA without their parent’s information, but must contact the financial aid offices at the colleges they are considering to discuss the special circumstances. The financial aid office will ask for more information and then will make the final decision about the student’s dependency status.
  • Parents will not provide information on the FAFSA. If the student is considered dependent per the FAFSA’s definition, but parents will not provide financial information, there are some options for the student. Student will need to specify that they cannot get financial information for their parent and that they do not have special circumstances (as described above). Unfortunately, the student will not be able to get federal financial aid other than an unsubsidized loan. Student will then need to contact the financial aid offices at the colleges they are considering to discuss the student’s circumstances. If students use this option, an Expected Family Contribution (EFC) will not be calculated. Keep in mind that many state aid programs, as well as institution specific aid requires an EFC. Therefore, students will probably be ineligible for these aid programs.

If students still have questions about who’s information should be included on the FAFSA, they should visit the Federal Student Aid website for more information.

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Scholarship Saturday – Jan. 24, 2015

The deadlines for the scholarships that were on this list have passed. To see scholarships that are still accepting applications, visit more recent Scholarship Saturday posts.

15 Calif. community colleges receive initial approval to offer four-year degrees

Santa Monica College—SMC by Mrgates licensed by CC BY-SA 3.0 Santa Monica College was among one of the 15 Calif. community colleges that receive initial approval to provide a bachelor's degree program.

Santa Monica College—SMC by Mrgates licensed by CC BY-SA 3.0

Santa Monica College was among one of the 15 Calif. community colleges that receive initial approval to provide a bachelor’s degree program.

The California Community Colleges Board of Governors met today in Sacramento to discuss a number of items, including offering baccalaureate degree programs. Chancellor Brice W. Harris provided a list of 15 bachelor’s degree programs he recommended to the board for approval. This change will make California the 22nd state to offer bachelor’s degree programs at community colleges. Under legislation authored by State Senator Marty Block, only degree programs that are not currently offered by the University of California or California State University campuses are eligible to be offered at community colleges.

Vice Chancellor of Academic Affairs Pamela D. Walker explained the process of how the list of 15 recommended programs were selected from the 34 applications received by the deadline. In just 30 days, colleges were required to create a proposal for the degree program and provide extensive information to the chancellor’s office. The colleges were required to articulate a description of the program, evaluate student interest and community support, research labor market and labor demand, have conversations with CSU and UC campuses to demonstrate collaboration, and research and avoid duplications with UC and CSU majors. The colleges were also required to illustrate upper division course work and identify resources to demonstrate college capacities.

Over 250 individuals were approached to be readers of the bachelor’s degree program proposals. Overall, as least 200 hours went into reviewing each proposal, much of which happened during the holiday break. Readers scored each application on a number of criteria including geographic distribution, diversity of the programs, and the potential of duplication with CSU and UC campuses.

The programs recommended to the board for initial approval were diverse. Foothill College in Los Altos Hill and West Los Angeles College in Culver City both proposed Dental Hygiene. Modesto Junior College proposed Respiratory Care and Skyline College in San Bruno proposed Respiratory Therapy. Health related recommendations included Health Information Management at San Diego Mesa College and Shasta College in Redding, Emergency Services & Allied Health Systems at Crafton Hills College in Yucaipa, and Occupational Studies at Santa Ana College. Technology related programs included Airframe Manufacturing Technology at Antelope Valley College in Lancaster, Industrial Automation at Bakersfield College, Biomanufacturing at MiraCosta College in Oceanside, and Automotive Technology at Rio Hondo College in Whittier. The rest of the recommended programs were Mortuary Science at Cypress College, Equine Industry at Feather River College in Quincy, and Interaction Design at Santa Monica College.

The Board of Governors provided their initial approval with nine votes in favor and two abstentions. They will now meet individually with each of the successful college to complete the review and consultation process. The 15 programs will then be brought back to the board in March for final approval. Once final approval is given, colleges will be required to start the programs by the 2017-2018 academic year.

Scholarship Saturday – Jan. 17, 2015

The deadlines for the scholarships that were on this list have passed. To see scholarships that are still accepting applications, visit more recent Scholarship Saturday posts.