Financial Planning for Education Quiz

A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs.

FAFSA stands for the Free Application for Federal Student Aid, which is the form that must be completed annually by current and prospective college students in the United States to determine their eligibility for federal student financial aid.

A financial aid advisor helps students and their families understand the financial aid process and assists them in completing the necessary forms, such as the FAFSA, to apply for aid.

A custodial account is a savings account set up for a minor child that is managed by an adult custodian until the child reaches adulthood, at which point the account is transferred to the child.

EFC stands for Estimated Family Contribution, which is the amount of money that a student's family is expected to contribute to the cost of attending college for one year.

Credit card fees are not typically considered a college expense, as they are related to personal financial management rather than educational costs.

The main difference between subsidized and unsubsidized federal student loans is that the government pays the interest on subsidized loans while the student is in school, while interest on unsubsidized loans accrues and is added to the total loan amount.

A 529 prepaid tuition plan allows families to prepay for a student's future tuition costs at today's rates, potentially saving money on future tuition increases.

A Coverdell ESA is a tax-advantaged savings account that is used to pay for qualified education expenses for the designated beneficiary, such as tuition, fees, books, and supplies.

The lifetime learning credit is a tax credit that helps offset the cost of higher education by reducing the amount of tax owed for qualified education expenses.

A student loan grace period is a set period of time after a student graduates, leaves school, or drops below half-time enrollment during which they are not required to make loan payments.

The Expected Family Contribution (EFC) is a measure of a family's financial strength and is used to determine a student's eligibility for federal student aid, including grants, loans, and work-study programs.