(an open letter to future alumni)

Dear Future Alumni:

As a current student, many of you are probably scrounging and hoarding every last dollar that you have just to make it through college with the shirt on your back. I certainly applaud you for your efforts and I want you to take a couple of minutes to reflect upon these times. This phase of your life is a good character building moment. You are acquiring life lessons and stories in which I am sure you will pass onto your kids and your kids’ kids.

The other reason that I want you to remember this moment is a little more philanthropic in nature.  As you graduate from college and find your successes in the world, I want you to remember all the sacrifices that you made during your college years and think about giving back to others that may be experiencing a similar situation.

I would like to reflect upon a recent donation from Norman Levan to Bakersfield College. He has been a long-time supporter of Bakersfield and just recently contributed a little over 10 million dollars to their financial aid/scholarship program.  Even though we might not all find ourselves in the same financial arena as Dr. Norman, I like his approach on giving. He may be 95 years old, but at that age he still understands the importance of providing our youth with the opportunity of obtaining a quality education.

So, if you are ever in a position to help future students and scholars, I would recommend that you think about utilizing one of the following methods.

• Most cities have some sort of foundation established that helps to serve as a gateway for donors to give back to the communities in which they reside. If you like, you can set up a new scholarship program or donate to an existing one that the foundation manages.
• The next time your alma mater is initiating a capital campaign and reaching out to you for a donation, please consider setting up a scholarship fund with the school. I know that it is probably not as glamorous as securing naming rights on an academic building but you can be assured that after 50-100 years, the scholarship fund will still be in existence. However, if you can afford to do both, I am certain students will enjoy the scholarship fund and the state-of-the-art academic building as well!
• Pull a Bill Gates (Gates Foundation)… If you have enough discretionary capital (cash) you can always establish your own foundation to support deserving college students. This is a great approach for those that like to be more involved with how their funds are helping others.

Even though the examples above may be geared for donors that have a greater capacity to give, every little bit helps. If you can’t provide support in the methods above, maybe you can consider the following:

• Offer to cover book expenses for a college bound student in your family or neighborhood
• If you don’t want the commitment of covering the full textbook costs, purchase some Barnes and Noble or Amazon gift cards for your favorite student
• Do a fundraiser at your church to establish a scholarship program for your parishioners
• Find a needy college student and put them to work in your yard during the Spring and Summer break
• Visit SponsorMyDegree.com and donate money to the most compelling story or situation you find.

No matter how large or small your contribution may be for future scholars, please know that you are supporting a good cause. Your gift of promoting the education of others is an investment that will be repaid ten-fold (in the form of warm-fuzzies and knowing that you are making the world a better place).

Sincerely,

Doug Schantz
CheapScholar.org

I think that most people can agree with “winning the lottery” as being part of the American dream but I am curious as to how many would take their winnings and create a scholarship program. It wasn’t first on my list but thanks to the actions of Rev. Solomon Jackson, I think I may follow suit and dedicate a portion of my lottery earnings to creating a scholarship foundation. Yes, I have to win the lottery first but after I have achieved that easy task, I will force myself to complete the not-so-easy task of droning through the paperwork involved in creating a foundation with my earnings.

Rev. Solomon won the $260 million dollar Powerball jackpot back in 2009. Along with establishing a scholarship foundation, he recently donated $10 million dollars to his alma mater, Morris College.

The Solomon Jackson Jr. Scholarship Foundation will be accepting applications from students this year through April 1st.

The following are the requirements for qualified candidates:

• Must be African American
• Must have attended school in one the following South Carolina counties: Richland, Fairfield, Kershaw, Lee, Jasper, Allendale, Dillon County, District 2; Marion County, District 7; Hampton County, District 2; Florence County, District 4, and Orangeburg County, District 3.
• Must be attending an accredited 2 or 4 year college

The Foundation is being administered by the Trust division of Bank of America.  Paper applications can be found at all of the high school guidance offices located in the above mentioned counties. An electronic application can also be received by emailing Carmen Britt at carmen.britt@baml.com

Kudos to Rev. Solomon and his commitment to education. His actions certainly support the model of leading by example.

Today’s guest post is provided by Ed O’Brien. He is an expert writing in all things pertaining to personal finance, specializing in credit repair. For more of his articles, visit his blog: CreditRepair.org.

A 2009 study by Sallie Mae revealed that the average college senior has $4,100 in credit card debt and 85% of college freshmen carried a credit card balance with only 17% of college students paying their credit card balance in full every month. Credit card debt can be disastrous for college students who typically don’t have the income to pay for a credit card every month on top of living expenses and junk food.

Credit Cards vs. Student Loans
Unlike student loans — where your payments don’t typically start until six months after you graduate — your credit card bills will be due within weeks of spending. While you’re out looking for a job, you still have to make your credit card payment, which could be as much as $100 on a balance of $4,000.

Protect Your Credit and Stay Out of Debt
The first few years after college graduation are some of the toughest years of your life. While you’re trying to get established in the real world, the last thing you need holding you back is extra credit card debt and a bad credit score. So it’s important for you, as a college student, to protect your credit and stay out of debt.

The biggest thing you can do to avoid credit card debt is avoid charging a balance you can’t afford to pay off at the end of the month. Contrary to what you’ve probably grown up believing, credit cards aren’t for purchasing things you don’t have the money for. If you charge something you can’t afford to pay for, you then risk missing your credit card payments and dealing with a slew of negative consequences.

When you miss a credit card payment, the credit card issuer charges you a late fee that’s equal to your missed payment or $25, whichever is less. Late fees can’t exceed $25 (or $35 if you’ve been late previously within the past six months), but when you’re a college student with limited funds, $25 is a lot of money to send to a credit card issuer on top of your regular minimum payment.

If you miss your payment by a couple of days, make it as soon as possible. When your payment gets more than 30 days late, the late notice goes on your credit report and can impact your credit score. Your credit report is a document that includes all your credit payments habits and your credit score is a numeric evaluation of your credit report. Businesses like creditors, lenders, insurance companies, utility companies, and apartment landlords use your score to make decisions about you. When you miss credit card payments, your credit score drops and these businesses are more likely to turn you down.

Your credit score is based on five factors — your payment history, amount of debt you’re carrying, age of credit history, types of credit you have, and applications for credit. The two biggest things you can do to protect your credit while you’re in college is pay your credit card bills on time every month and keep your balances low — less than 10% of your credit limit is best.

Today’s guest post comes from Philip Laube. He is a CPA in Ohio and the Assistant Vice President for Business & Finance at Muskingum University. He presents and writes about personal finance issues for college students. He can be followed at twitter and on his website

A lot has been written about education benefits. Too many times we hear one piece of advice and latch onto that option as the best way to treat something for taxes.

As with anything related to taxes it is INCREDIBLY confusing and has a lot of qualifiers to determine what is best. That is why almost no one tries this on paper and pencil forms anymore and so many more tax preparers get paid for this. But ultimately they are your taxes and you need to ask the right questions before signing the final form. Here are some thoughts on what to do with education expenses.

I was recently asked about the best place to claim education expenses for an MBA. The question made me think of all the different options – and there are several. The ‘latch on’ solution for education expense seems to be the education tax credits and they are worthwhile for many. But they have their limitations for others. So here are some thoughts to keep in mind:

1st question – did I get paid for school?

Many of us are paid to go to school – it’s called scholarships. It’s important to keep in mind that scholarships must be deducted from your education expenses (more on what those are below) before you consider any deduction or credit. The general rule: you can only use the expense in one place. Scholarships are not taxable to the extent that they were used for tuition and required fees. If they were greater than the tuition and fees or were specifically for living expenses, then they are income to the recipient. This alone can get confusing when looking at that 1098-T.

But what if you being paid by work to go to school. Getting paid for going to school creates a couple of issues: is the payment ‘income’ and where to deduct the expense. How one answers the first influences options on the second. The first question is whether one’s job description requires that you get additional education. This is the criteria to determine if a payment from your employer was taxable income. The employer makes this determination. If it is required, then the income is not included on Form W-2. This is important, because if they paid and it is NOT on the W-2 as income, then you cannot take any deduction or credit for the amount that they paid (because, in effect, you didn’t pay for it – they did). This is more rare, though. Assuming you are not required to add to your education and the payment WAS included on the W-2, then you have several options for deducting it. Just remember that you can only select one of these options.

Options for claiming the deduction

Education Tax Credits. These are the things you’ve heard about and I won’t go into great detail. Credits directly reduce your tax as opposed to reducing your taxable income. The disadvantage is that the credits are limited by one’s income. The American Opportunity credit allows some deductions for books. The lifetime learning credit is limited to tuition and required fees.

The tuition and fees deduction is another option. This is a ‘page 1′ reduction which reduces your AGI (adjusted gross income). The benefit here over itemized deductions is that AGI is used for other calculations in your return, so ‘page 1′ deductions are typically the best deductions. This also has income limitations and is limited to tuition and required fees, but many times this is a better option than the credits.

The one most forgotten is the work deduction. This is claimed on Schedule A as a work related expense (also requiring Form 2106 or 2106-EZ). One advantage to the work deduction is that there is no income limitation as with others. Another advantage is that you can include other expenses over just tuition and fees (the amount from 1098-T). The disadvantage is that it goes under misc. expenses on Schedule A and is subject to a ‘floor’ or reduction of 2% of your AGI. “Work related” is something you and maybe your employer determine. If your employer pays for it, they likely want you to have it. You can also read the links below or the 2106 instructions for more information.

Which one should you take? It depends. I don’t know of anyone not using a paid preparer or tax program, which makes it easy to try all 3 to see which is best for you. Always read the instructions to be sure you are including the right amounts. Remember that any deduction is limited to what YOU pay. As discussed above, if a scholarship or employer pays for it (and it is not on the W-2), then you didn’t pay. Also remember that paying with a student loan IS paid by you. And the interest you pay will be deductible on page 1 as well – but that’s more qualifications!

Additional Resources:
How to Use College Tuition as a Tax Deduction
Tax Incentives for Higher Education
Tax Topics – Topic 513 Educational Expenses

Do you attend a college/university that has an emphasis on dairy? Are you pursuing a degree in business, communications, economics, marketing or journalism and see yourself contributing to the dairy farming community prior to and after graduation? If your answer is yes, then this may be the scholarship program for you.

American dairy farmers, utilizing the National Dairy Promotion and Research Board, provide scholarship opportunities for 20 students (sophomore-senior) every year. The scholarships range in award amount of $1500 to $2500. This program does make it possible for a student to be awarded a scholarship for multiple years.

Here is the scholarship criteria in which the top candidates will be judged:

1. Academic performance.
2. Taking courses related to dairy is a plus.
3. Apparent commitment to a career in dairy.
4. Involvement in extra-curricular activities, especially those relating to dairy.
5. Evidence of leadership ability, initiative, character and integrity.

The application deadline is April 15th. Recipients will be notified by July 30th and they will receive a plaque and check for the award amount.

You can download a copy of the application here. Once you have it completed, you can submit a copy of your college transcript and any letters of reference to the following address:

Dairy Management Inc
Attn: NDPRB
10255 W. Higgins Road
Suite 900
Rosemont, IL 60018-5615

With the current level of education costs, many families tend to be more apt to think about leveraging some sort of guarantee to insure that their investment for the semester is not a complete loss if by chance their student suffers a serious illness or accident and has to leave the university. A number of insurance companies have recognized this growing demand and are providing the option of tuition refund plans for families/students. Basically, the insurance plan will make the family “whole” on any out-of-pocket education expense that is not refunded by the school.

Sample Scenarios
If a student has to medically withdraw from a college during the second week and the school provides an 80% refund of charges, the tuition refund plan (T.R.P.) would kick in the remaining 20%.
-or-
Let’s say the student withdraws (for medical reasons) in the 10th week and the University provides no refund of charges, the tuition refund plan (insurance policy) would reimburse the family for their full expense.

The following is a chart that helps to depict other scenarios:

What’s The Cost?
Based upon my research, the premium for this type of insurance policy can gravitate around the 1% mark.  So, if your college tuition, room, and board fees are $40,000 for the year, you can expect to pay about $400 to insure your investment.

What’s The Catch?
There is really no catch that I can see. All of the tuition insurance policies that I researched do not have a pre-existing illness clause. So, if your student suffers from some ailment prior to going off to college, you would probably be a good candidate for the tuition insurance plan.

In a conversation with Dana Tufts, president of A.W.G. Dewar (one of the nation’s leading tuition insurance providers), I inquired about the “make-up” of their participants. He stated that their families represent a pretty broad cross-segment of all situations and scenarios but that they do experience a high propensity of students reflecting some sort of chronic medical or mental illness in their past and that is the market in which their tuition insurance policy is the most beneficial in regard to payout.

Where Can I Get It?
You will first want to drop a call to your college’s Bursar’s Office (also known as Office of Student Accounts in some circles) and see if they have a pre-existing relationship with a tuition insurance provider.  If they don’t have a program established, you can go out on your own and secure your own policy. However, at this time, I only know of one organization that provides this benefit independently (not through the college). They are known as GradGuard and you can check out their website here.

Is It Worth It?
I am not usually one to buy the extended protection services offered with my appliance and electronic purchases, so I would tend to lean toward not investing in this plan. However, my tv or dishwasher doesn’t cost $20K-$40k a year. So, if my child had some sort of pre-existing condition that may interrupt their education mid-stream, I would probably think a little harder about enrolling in the tuition refund insurance plan.

Hope you found this information helpful. If you know of someone else that many benefit from this article, please don’t hesitate to pass it along using the “share tab” below.