The College Cost Reduction and Access Act of 2007 reduces the cost for undergraduates qualifying for federally guaranteed loans. Cost reductions lower the maximum interest rates and fees lenders are permitted to charge. Interest rates are lowered to 3.4% (by 2011) on subsidized Stafford loans issued by banks and credit unions. Stafford loans are guaranteed by a State Government and do not have to be repaid until the student graduates. The loans may be subsidized, based upon financial need. Subsidized loans are interes-free while the student is in schoold. This provides a good incentive for families compared to private loans.
Pell grants to low-income families are increased by the Act. Need is determined by the FAFSA to both undergraduates and some graduate students. The maximum grant is increased to $5400 a year (by 2012.)
Additionally, there are other options for helping pay with college. First are 529 plans. These allow extensive savings for college for youngre children. Ccontributing to a Coverdell Education Savings Account also can help.
College Education Planning is an important part of Estate and Financial Tax Planning. Call Ronald J. Cappuccioi, J.D., LL.M.(Tax) at (856) 665-2121 to discuss this further.I
