FPQP Education Planning 2

Question 1

When calculating Expected Family Contribution (EFC) under the federal methodology, which of the following is treated most favorably (lowest impact on aid eligibility)?

Accepted Answer

Assets in a 529 plan owned by the parent

Answer

Parent's savings account

Answer

Student's savings account

Answer

Student's checking account

Question 2

The Section 529 plan contribution limit is based on:

Accepted Answer

Individual state limits, often based on projected education costs

Answer

The annual gift tax exclusion only

Answer

Estimated cost of education at a 5-year rate

Answer

A federal cap set at $150,000 per beneficiary

Question 3

A student loan interest deduction allows taxpayers to deduct up to how much in qualified student loan interest per year?

Accepted Answer

$2,500

Answer

$1,500

Answer

$2,000

Answer

$3,000

Question 4

Which of the following best describes a Uniform Transfers to Minors Act (UTMA) account used for education funding?

Accepted Answer

The minor gains full control of assets at the age of majority

Answer

Funds revert to the donor when the minor turns 18

Answer

Withdrawals for non-education expenses are tax-free

Answer

Contributions are tax-deductible at the federal level

Question 5

Which of the following is an advantage of a prepaid tuition plan over a standard 529 savings plan?

Accepted Answer

Protection against tuition inflation at participating schools

Answer

Greater investment flexibility

Answer

Higher contribution limits

Answer

Tax-free withdrawals for K-12 expenses

Question 6

The education savings bond program allows taxpayers to exclude U.S. savings bond interest from income when used for education expenses. Which bonds qualify?

Accepted Answer

Series EE and Series I bonds issued after 1989

Answer

Series HH bonds only

Answer

Any U.S. government bond issued after 2000

Answer

Treasury Inflation-Protected Securities (TIPS)

Question 7

When projecting college costs for education planning, a financial planner should primarily use which rate?

Accepted Answer

College inflation rate (HEPI)

Answer

Consumer Price Index (CPI)

Answer

Risk-free rate of return

Answer

10-year Treasury yield