Small Business Owners Can Save Thousands On College Costs
For the very first time, there's a loophole in the 2007-2008 Free Application for Federal Student Aid, (FAFSA). As a result, families who own and control a small business and who are only required to complete the FAFSA, have a rare opportunity to capitalize on a financial aid bonanza!
I direct your attention to a provision in the Higher Education Reconciliation Act of 2005 (S. 9132), which was approved by the Senate on Dec. 31, 2005, by the House on Feb. 2, 2006, and signed into law by President Bush on Feb. 8, 2006, that states, "The net value of small businesses with not more than 100 full-time equivalent employees is excluded from the definition of assets."
Accordingly, small business owners (parents, not students), or those who can legally set up a small business under the federal guidelines, will reap huge rewards in the form of untold thousands in financial aid previously unobtainable!
It is highly advisable to set up a C or S Corporation, LLC, or at the very least, obtain an Employer Identification Number (EIN) for a Schedule C business. In that way, the small business will have its own individual tax status. However, I recommend that a tax advisor be consulted before choosing any particular corporate entity.
529 Plan owners can benefit as well
In the financial aid formulas, students have no asset protection allowance, which means that for every dollar a student has, they lose 20 cents per year in financial aid. Parents fare far better and only lose 5.6% per year over their allowance which increases with age. Now that both 529 Pre-paid Tuition and 529 Savings Plans are considered parent assets. I recommend the following:
For 529 Plan owners, it's a bit more complex. Those parents who own one can legally transfer the entire account value into a similar plan owned by their small business entity, but need to be aware of the downside. The transfer could trigger a taxable event, but only on the gains in the 529 Savings Plan. Once the transfer has taken place, if the beneficiary is ever changed, it could also result in a taxable event. Nonetheless, the strategy makes perfectly good sense, as the benefits far outweigh any modest income tax consequences. Go for it!
Related Tags: small business, parents, college, federal, financial aid, tuition, llc, 529, c corp
Reecy Aresty has been a financial advisor since 1977, and is founder and president of College Assistance, Inc., located in Boca Raton, Florida. He is the author of "How To Pay For College Without Going Broke," an invaluable, critically acclaimed, parent/student manual, (updated from its previous edition, "Getting Into College And Paying for It!"). Arguably the most revealing book ever written on college admissions and financial aid, it is also the only book of its kind available in Spanish. For the past 28 years, Reecy has helped thousands of families send their kids to the college of their choice for less than they ever dreamed possible. For more information on admissions & financial aid, and to checkout the best college book on the market today, please visit Paylessforcollege.com
Your Article Search Directory : Find in ArticlesRecent articles in this category:
- Home Equity Lines Of Credit For Starting Your Own Business
Home equity lines of credit can provide you with all the financing and flexibility your new business - Dealing with Financial Aid in Graduate School
Financial aid in graduate school doesn't work quite the same way as financial aid for undergraduate - Using the Private Student Loan
There is a variance between federal student loans and private loans in the sense that federal loans - Full Scholarships For The Students of University of Wyoming
The University of Wyoming has introduced the Trustees Pride Scholarship Program which offers eligibl - Scholars Should Start Investigating Where They Can Apply for Scholarships and Grants
Scholars should start investigating where they can apply for scholarships and grants. It is best to - Tips on Getting A Scholarship
Not all of us is aware of the process you have to follow in order to get a scholarship and in their - College Education Financing - Finding Scholarships, Grants and Loans
There are several sources of financial aid available for college students. Grants and scholarships a - Private Scholarships - The Billion Dollar Rip-off
Towards the end of every school year, most non-profit organizations hold their Awards Banquets where - 529 Savings Plans, Trick or Treat?
College financial aid officers across the county must be in a state of euphoria now that Congress ha - College Goal Sunday - Touchdown or Penalty?
Regarding those countless locations in over 40 states where college financial aid officers and state
Most viewed articles in this category:
- The Basics Of Student Loan Consolidation
Records have shown that there are about 20% of college students who are using student loans to pay f - Don't Pay Your Student Loans, Have them Forgiven
Okay so you went to college, had a good time, went to a few parties, studied hard (hopefully) and gr - Saving Good Money On Your Student Loans
Here are a few important tips on how you can save money on your student loan. Read this article care - College Student Loans - Financing Your Education!
A college student loan has given many people all over the United States a chance to further their ed - Education Loans: Elucidate Your Life With The Education You Dream Of
The growth and development of a nation depends significantly on the quality of the human resource of - Free College Scholarships Ease Financial Burden of College Education
It's no secret that college tuitions have skyrocketed over the last decade. College scholarships hav - Distance Learning Education Loans
What Lenders Require For Distance Learning Education Loans:Lenders require that you supply a number - Using the Private Student Loan
There is a variance between federal student loans and private loans in the sense that federal loans - What To Do When You Need Extra Money for College
Paying for college is one of the biggest headaches that both parents and students are faced with onc - Private Scholarships - The Billion Dollar Rip-off
Towards the end of every school year, most non-profit organizations hold their Awards Banquets where