New Tax Credit for Tuition Costs
Part of the federal economic stimulus bill provides for a federal tax credit, called the American Opportunity Tax Credit (AOTC), to help pay for college expenses. This credit modifies the existing Hope Credit, making it available to more families.
The AOTC is a tax credit of up to $2,500 of the cost of qualified tuition and related expenses. This credit can be claimed for the first four years of postsecondary education.
This tax credit is a dollar-for-dollar reduction in your federal tax bill equal to 100 percent of the first $2,000 of qualified expenses plus 25 percent of the next $2,000.
Forty percent of the AOTC is refundable; the maximum amount of the refundable credit is $1,000, which is good news for families with lower income. Even if you have little or no tax liability, you will be able to receive the refundable credit.
Please consult your tax professional for further details and guidance.
Choosing Smart Electives
Preparing for college is more than deciding which college to attend, choosing a major and determining how to pay for it. Your college- bound student can take charge of their education in high school by choosing smart elective courses. Most schools offer a variety of electives. Generally, the higher the students grade level the more electives from which they may choose.
Writing plays a critical role in every subject area. If students want to succeed in college, they should take advantage of elective writing classes. Students should also have a thorough background in six specific subject areas:
- The Arts—Music, theater and studio art enrich our appreciation and understanding of the world. Research also indicates that students who take courses in the visual and performing arts do better in school and on standardized tests. Students should take at least two semesters of classes in the arts.
- Foreign Languages—Knowledge of a second language is an important gateway to understanding people and cultures other than our own. Most colleges require two years of the same foreign language. Others prefer three or four.
- Literature—Literature gives eloquence and expression to the major problems in life. Students should gain a broad knowledge of literary genres with four years of literature classes.
- History—Students can understand local and world events by studying the culture and history that has shaped them. Students should take at least two semesters of U.S. history, one semester of U.S. government and one semester of world history.
- Natural Sciences—Students should also be familiar with the basic natural sciences: earth science, biology, chemistry and physics. Most colleges recommend that students take three science courses with related laboratory work.
- Mathematics—Students need algebra and geometry to succeed on college entrance exams and college math classes. Students should take as many advanced classes, such as trigonometry, statistics and calculus, as their ability and school curriculum permit.
Students should make sure they take elective courses that not not only follow their interests, but also provide diversity on their high school transcript. Admission officers at college like to see well-rounded applicants who have pursued a challenging high school curriculum. You can work with your student and their high school counselor to chart a challenging core curriculum and a choice of electives that will engage your student and diversify their education.
How to Select a College
Your college-bound student should consider many factors when they're researching the colleges they may be interested in attending.
The first thing your student should identify is the "environment" that best matches their personality. Are they an urban dweller thirsting to wake up in a city that never sleeps or is your student someone looking for a quiet place to enjoy life at a slower pace?
Identifying their college major could be the biggest factor in determining their college choice, especially if their major is offered at a limited number of colleges.
Students should also determine if they're interested in attending a large college or university or if they're more interested in attending a small college. Small colleges offer smaller classes, hands-on learning opportunities, individually-designed majors and more personal attention. Large colleges, by contrast, offer a large variety of majors and courses, a wide range of academic and social opportunities and well-stocked libraries.
Other factors your college-bound student should consider include:
- affiliation (public, private, independent or private, church- affiliated)
- location, student body (coed, minority representation, etc.)
- academic environment (majors offered, student to faculty ratio, facilities, etc.)
- financial aid, student services, activities and athletics
Your college-bound student can search for the school of their dreams in the Undergraduate School Search located in the "Selecting" module of EducationPlanner.org. The undergraduate school search database contains information on nearly 4,000 accredited two-year and four-year colleges and universities across the U.S. and Canada. Check it out today!
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