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Archive | November, 2011

When Does a College Student Need to File a Tax Return?

When Does a College Student Need to File a Tax Return?

Got a college student? Your life can be complex. Add to that the confusion over whether your student needs to file a tax return and you might need help. Today my guest blogger is a CPA, Carol Topp of

When does a college student need to file a tax return? Here are some typical situations of when a student should file a tax return and may owe taxes:

  • Your student received a W-2 and federal income tax was withheld. Look at the W-2 Box 2 Federal income tax withheld. He or she may be due a refund of that money.
  • Your child received several W-2s, but did not have federal income tax withheld on all the W-2s (look at Box 2). They may not have had enough tax withheld and may owe income tax.
  • Your student received a form 1099MISC and Box 7 Nonemployee compensation has an amount in it. Your son or daughter has been classified as an independent contractor and needs to file a tax return to pay self-employment tax and may owe income tax as well.
  • Your son or daughter received investment income from interest and dividends. A child’s investment income may be taxed at the parent’s tax rate if the investment income is more than $1,900 and the child was a full-time student, under age 24 at the end of the tax year.
  • Your student started a business and made a profit. He or she may need to pay income tax and self-employment tax. Visit if your child has questions about starting or running a business.
  • Your student started a business and lost money on it. He or she may wish to file a tax return to reduce their taxes in this year or future years.
  • Your college student received a form 1099B from a broker, bank or mutual fund company because he or she sold stock or a mutual fund and had a gain on the sale. Your child should file a tax return and include the stock sale on Schedule D.
  • Your student sold stock or a mutual fund and had a loss on the sale. He or she may wish to file a tax return to reduce their taxes in this year or future years. Capital losses are limited to $3,000 a year and can be carried forward.
  • Your son or daughter had earned income from a job or a business and wishes to open a Roth IRA. File a tax return to establish that your child had earned income even if tax is not owed.
  • Your student received a scholarship that included room and board. This portion may be taxable. See the IRS website for details and examples of taxable scholarships:

If any of these situations happen to you, read more about taxes for your college student at Then consult a local CPA to help your son or daughter file a tax return.

Carol’s site, has some helpful articles. She also offers an ebook and an audio to help clear the confusion about taxes for teenagers and college students.

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Credit Unions – Help With College Costs (video)

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Get a Sneak Peek at the 2012-2013 FAFSA Form

Get a Sneak Peek at the 2012-2013 FAFSA Form

Parents and students have to wait until January 1st before they can officially submit their FAFSA for the upcoming academic year (2012-2013). Very few actually submit the FAFSA on January 1st but I am guessing that there are always over achievers amongst us that make the process part of their New Year’s Eve tradition. A financial aid director friend of mine once shared his opinion on how the festivities probably take place for those that are on top of their FAFSA game: “Oh look the ball has dropped in Times Square. We should probably smooch because that is what everybody does. Ok, now lets go submit our FAFSA form!”.

You may not be like the families mentioned above, but for those that want to get a jump start on what to expect when filing the FAFSA, I am pleased to clue you in to the fact that a draft of the paper FAFSA for 2012-2013 is now available. You can access the PDF version here.

My hope is that none of you actually utilize the paper FAFSA to submit your information to the Department of Education. The paper version mentioned above is more for information purposes and provides some insight on what will be asked of you. I always recommend that you make use of the latest and greatest technology available at to electronically submit your FAFSA. The Department of Education utilizes skip-logic technology to make sure you don’t answer redundant questions and they also provide a feature that allows you to import your tax information directly from the IRS (seems a little scary at first but definitely saves on time and limits mistakes).

I hope you find this information helpful. Remember, the FAFSA is the key to all things good when it comes to accessing financial aid to help pay for college. Make sure you designate time this coming year to get your FAFSA application completed. Your checkbook will thank you!

If you need additional help and/or guidance through the financial aid process,  please feel free to check out CheapScholar’s College Resource Page for more great information.

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Textbooks Hurt Your Wallet (video)

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7 Predictions – The Gradual Deflation of the Student Loan Bubble

7 Predictions – The Gradual Deflation of the Student Loan Bubble

The following is a guest article submitted by Carl Letamendi. He is a PhD student of Conflict Analysis and Resolution with a concentration in Crisis Management at Nova Southeastern University and also holds an MBA in Finance.

I made a prediction about a year ago that things were going to change in the student loan and education industry; based on being a student myself, having recently worked in financial aid and institutional collections, and also in enrollment service. I knew that there were many people out there, taking advantage of current loan programs, who only went to school for the refund generated to them each term as a means of earning an extra income, and some academic institutions were behind them encouraging enrollment based on the amount of refund money from student loans they were going to get. I knew that this would soon come to an end and that congress would catch on; and they did.

There is big news brewing behind the scene that seems to be getting swept under the rug. Effective July 2012, graduate students will no longer be able to get the much coveted Federal Subsidized Loan, which accrues no interest for the student until they are no longer enrolled in school. Although this is of no immediate impact to undergraduate students, those who are in Medical School, Law School, Graduate Business Programs, and any other graduate programs, should be very aware of what is going to happen in the next few years to come.

Being a current PhD student in Conflict Analysis and Resolution and a Finance MBA-grad, whose research interests are in financial and economic anthropology and the dynamics of how people conflict and behave during a financial crisis, I boldly unravel my seven predictions for the near future for the “business” of education and the student loan industry when the student loan bubble starts to slowly deflate, after July 2012:

1) For profit, minimally endowed, and tuition-driven schools will start to close their doors. Over the past few years, we have seen people with mortgages that caved in on themselves that put people under water as well as insurance and financial institutions failing. My prediction is that schools are up next. The notion of the “survival of the fittest” doesn’t just apply to animals and banks as we have recently seen, but we will also soon see it happen with academic institutions. Schools with strong finances, that have made wise investments in the past, and that have a strong network of alumni contributing to their university’s endowment, will survive the gradual deflation of our next bubble (notice I didn’t say “burst”). With schools closing, this also means losses of jobs for those who were working in these for-profit and minimally endowed schools.

2) Fewer graduate students will be able to afford going to school. One of the motivating factors for a student deciding which school they will be attending is the amount of aid they are going to be receiving. If a student has to pay for tuition, or if they are going to be receiving a less favorable financial aid award package, they are less likely to attend that school. Students don’t usually cough up thousands of dollars out of pocket for tuition per term; they rely on scholarships and loans. If there is no money for school, students will probably not be able to afford it; especially if these students are unemployed, and optimistic about graduate school making them more competitive in the job market.

3) Students will reconsider the value of their graduate education. There are a lot of television programs and articles in magazines questioning the value of higher education all together; and showing the incomes of very wealthy non-degree holders. One thing that I advise people who speak parallel to the objective of these articles and shows is that we are in a different time now than at the time when these millionaires became rich. They were innovative, they had ideas, they found niches in the market and societal needs, and met those needs by introducing something new to the world. You can still be innovative while getting an education, but the weight of a high-school diploma in the 60s and 70s is much different than the weight of a high-school diploma in our day and age.

4) Admission decisions will be greatly affected. Universities usually boast on having a diversified pool of students from various states. With universities offering reduced rates to in-state students, and in some states also offering students state grants ,why would a student attend a much more expensive university outside of their state of residence, and end up paying more money and incurring more expenses? The dynamic will change, and universities need to figure out how to invest in external talent if they want to continue to get out-of-state students.

5) Higher interest rates. Graduate students who do elect to continue to pull loans after July 2012 will only be able to pull the unsubsidized loan. There will still be a good number of students who are unable to repay their student loans, and interest will still be accruing. This means an increase in student loan defaults. The way to ensure that at least some of the money is recovered is regrettably, by increasing rates to other borrowers, a practice that is not estranged to us who know the credit and lending world.

6) Educational grants will be reduced for subsequent students. I predict that graduate students who will be entirely affected by this, those of the 2014-2016 class, will be less likely to contribute to their university’s endowment – a pool of funds usually used to issue scholarship and institutional grants to students.

7) Reduction of the subsidized loan for undergrads may be out in the horizon. I believe that this change will undoubtedly filter out students who are only in school for the extra refund money generated as a result of their loan disbursements. The success of this change, may also impact undergraduate students in the years to come.

If you would like to chat more with Carl Letamendi, please feel free to drop him an email at:

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Sign A Petition – Help Student Aid – It Really Is That Easy

Sign A Petition – Help Student Aid – It Really Is That Easy

The Joint Select Committee on Deficit Reduction (aka The Super Committee) has until November 23 to come up with a plan to reduce the federal deficit. Certainly not an easy task… Unfortunately, federal student aid could be at the top of their list when it comes to cuts.

In an effort to help the Super Committee understand the importance of federal student aid and the role that it plays in college accessibility for our nation’s students, the Student Aid Alliance has started a petition in support of maintaining federal funding for student aid programs.

If you would like to help support this cause (which I hope you will), you can visit the online petition here. It only takes about 20 seconds to add your name to the list and as of the time of this blog post, it looks like you will be joining 92,940 people in a great cause.

Here is the actual wording of the petition:

Our nation sorely needs to power up its economic engine. Work force projections show that by 2018, there will be jobs for as many as 22 million new workers with college degrees, but on our current trajectory, we won’t make that goal—in fact we’ll miss it by 3 million workers.

Recent budget deals have already cut $30 billion from the student aid programs, sacrificing some students’ benefits to pay for others. States across the country are cutting higher education from their own budgets.

That’s why it’s more important than ever to preserve, protect and provide adequate funding for the core federal student aid programs—such as Pell Grants and student loan benefits. Together, these programs offer students an opportunity to acquire the knowledge and skills our nation demands for a strong recovery.

Tough budget decisions in DC have put pressure on all federal spending, but cutting student aid, a long-term investment in our nation’s future, doesn’t make sense.

I support protecting federal student aid. Keep college within reach for our nation’s students and families.

Click Here To Show Your Support Today!

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Want to Study Abroad? Here Is A Million Dollars To Help

Want to Study Abroad? Here Is A Million Dollars To Help

If you ever wanted to have a study abroad experience during your college years but financial constraints were holding you back, you may want to bookmark this page for future reference.

CIEE (Council on International Educational Exchange) has long since been known in the college sector as a leading provider of study abroad opportunities for students. They have been sending students abroad since 1947 and boast having over 140 programs established in 42 countries. Based upon this, it is only natural for people to use study abroad and CIEE together in the same sentence when they are looking at educational opportunities overseas.

CIEE is so committed to their study abroad programs that they are offering a million dollars of scholarship aid for students in financial need. It is being referred to as the GAIN program (Global Access Initiative) and it will provide grants and scholarships to students regardless of whether they are taking study abroad programs for a full year, a single semester, or during the summer. At this time, the GAIN program is committing an additional million dollars to this program each and every year. So, if you are not planning on studying abroad for a couple of years, this still could be a great option for you to help fund that educational experience.

You can visit CIEE’s scholarship page for additional information as it becomes available or you can always email them at

Studying abroad during your college years is a great learning experience. Being exposed to different cultures really helps you to develop a big picture approach to life. I hope these additional resources provided by CIEE help to make your dreams of studying abroad a reality.


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Financial Literacy – 7 Credit Card Myths (video)

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