A little over 1% so only $35 for a new $3,500 subsidized loan each year.
Hi @kelsmom. Can you use 529 funds to repay student loans (say, for tuition and room and board)? Thanks.
Iām not @kelsmomā¦.but what year were the loans taken?
@BelknapPoint likely knows the answer to this also.
Thanks for responding, @thumper1. Right now, I am just thinking ahead (I have a D22). Also, would it make a difference if the loan came from a UK government scheme?
I am not familiar with 529 requirements. Sorry.
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@LostInTheShuffle a 2019 law allows use of 529 for student loans, according to
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For 529 purposes, Qualified Higher Education Expenses includes:
No more than $10,000 paid as principal or interest on qualified student loans of the designated beneficiary or the designated beneficiaryās sibling. A sibling includes a brother, sister, stepbrother, or stepsister. For purposes of the $10,000 limitation, amounts treated as a qualified higher education expense for the loans of a sibling are taken into account for the sibling and not for the designated beneficiary. You canāt deduct as interest on a student loan any amount paid from a distribution of earnings from a QTP after 2018 to the extent the earnings are treated as tax free because they were used to pay student loan interest.
See Chapter 7 of IRS Publication 970. 2021 Publication 970 (irs.gov)
I donāt know about loans coming from a āUK government scheme.ā
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Thanks so much, @Hippobirdy @BelknapPoint (and @kelsmom). This is exactly what I was looking for.
FYI - the UK government scheme allows students who normally live in the UK to borrow tuition and, depending on household income, living costs for university from the UK government, the repayment of which is dependent on income post-graduation.
Does non-taxed disability income factor in for the CSS? (all of my D23ās schools she is applying to require it)
I was forced to retire early due to an on the job injury. Fortunately I was eligible to collect a good pension as I started working there so young. I applied for disability retirement which, if granted, would make the first 50% of my income tax free. I was told getting the disability retirements isnāt a given - but if denied I could litigate but with substantial expense. We are trying to plan out what we will do. Will the non-taxed disability income help us at all with need based aid? Iām being told with our current income bracket we will qualify for little, if any, need based aid.
Private disability income is not excluded on FAFSA, so I donāt believe it would be excluded on CSS. Any income that isnāt taxed is required to be reported under untaxed income. Only Social Security Disability Income is not reported (although I donāt know whether or not CSS requires that it be reported).
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Okay, @kelsmom, need help decoding:
āAs long as you do not exceed the total cost of attendance, any private scholarships you received would be stacked on top of your current financial aid package. Adjustments would only be made to your financial aid and scholarships if the amount of funding you received exceeded your total cost of attendance.ā
Our son applied to nine, was admitted to eight, and his first choice is (naturally) the most expensive. This is a CSS school; he was offered $16k/financial aid, along with $15k/merit, along with the standard $5,500 first-year student loan. I tried a financial aid appeal (heās received merit awards of up to $38k at other non-CSS schools) and was denied. Out of pocket, we are looking at about $42k per year.
We can afford to send him here ā but barely. With that said, he reached out to FA to inquire about how scholarships would be treated, and received this reply. I interpret this as follows: if (hypothetically) he won a $5,000 scholarship, that would come off the $42k. Am I wrong?
Thanks in advance 
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Based on the information you posted, the $5,000 scholarship would be stacked on top of the schoolās aid. Some schools replace their aid with outside scholarships, but this school does not.
Hi and thanks for any help you can give me! Iām looking at the USC Affordability Initiative, which states, āStudents from U.S. families with an annual income of $80,000 or less with typical assets will attend USC tuition free.ā Iām trying to determine what ātypical assetsā might look like. We are a family of 6 with an annual income of 75K and one already in college (attends Fresno State), so the one applying to USC would be the second. Other than owning our home, the only other assets we have are 529s for each childā¦the total of all the 529s combined is 25K. Do you know if we might qualify for this initiative? Thanks so much.
USC is no longer using home equity, so with assets of 25k (most of which are in 529s for your other kids), I am very sure you will qualify under their initiative.
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Butā¦do either of the parents own their own business? If so, be aware that many typical deductions that businesses are allowed under the tax code may be added back in for purposes of financial aid and that might affect your income level. If your business has a loss, that loss is added back in as income, although sometimes that is appealable based on the type of loss it is.
Also, contributions to 401k accounts are also added back in to income.
That being said, even if you end up a little above the threshold, it just means you will pay a small amount of tuition. Itās a graduated scale, not an all or nothing one.
I canāt find information regarding what USC considers typical assets, but it doesnāt sound like your assets are atypical. I also donāt know whether income for self employment may be problematic - but if neither parent is self employed, it wonāt be an issue. You can always contact the financial aid office & ask your questions. They are there to help.
Keep in mind that the promise covers tuition only. Youāll still need to cover room & board + other costs. Thatās important to consider.
Thank you so much @MMRose and @kelsmom, that helps. My husband and I both have jobs with schools and a non-profit but are also writers with a tiny amount of writing-related income. We let her apply because of that initiative but looking at the numbers, it may still be out of reach for us without scholarships. Crossing our fingers that the UCs sheās interested in come through!
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HI, I hope Iām posting here in the correct way.
I wonder if anyone knows how I should fill out CSS Profile in the case where my husband has a mandatory state government pension contribution.
For instance, the Box 1 on the W2 might say $80,000 and then in Box 14 it shows code Y: $10,000. On the back of the W2, they say that the code Y is ādeferral under a 409A nonqualified deferred compensation planā.
In the past, according to old CC posts, it seems you were supposed to ignore the code Y and just report what is in Box 1. I think Iāve called colleges over the years to ask but I got different answers. The instructions do not mention code Y.
The instructions for the item " Tax deferred pension and retirement savings plans" are:
Pension and Retirement Contributions - Include withholdings from earnings (paycheck deductions) and direct payments.
Include amounts reported on 2020 W-2 Forms in boxes 12a through 12d, codes D, E, F, G, H, and S.
Include untaxed payments to 401(k) and 403(b) plans. Do not include amounts reported as codes AA, BB, CC, DD, or EE.
Do not include contributions reported elsewhere on this application such as IRA , SEP, and SIMPLE deductions."
Do you know if is still correct to leave off the mandatory govt pension contribution? Thanks!
I am not an expert on CSS Profile form, since I worked at FAFSA-only schools. I did find something online from Brandeis that mentions box 14: https://www.brandeis.edu/student-financial-services/financial-aid/estimating-financial-aid-eligibility---npc-and-myintuition-tips.pdf. They say to subtract box 1 from box 5 & include that as untaxed income. But I donāt find any other mentions online. Profile schools collect all of the tax documents, so they will adjust that on their end if you donāt report it but should. Maybe someone reading this has been through this & has a for-sure answer.
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