Louisiana Tech University - Financial Aid - FAQs: Miscellaneous Questions about Financial Aid
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School Code:  002008

 

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Financial Aid Glossary

Glossary

FAQs: Miscellaneous Questions about Financial Aid

 

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What is the Hope Scholarship Tax Credit?
The Hope Scholarship is a tax credit, not a scholarship. Tax credits are subtracted from the tax your family owes, instead of subtracting them from taxable income like a tax deduction. Your family must file a federal tax return and owe taxes to get this credit. You cannot get a refund for the Hope credit if your family doesn't pay taxes. If your family owes less in taxes than the maximum amount of the Hope tax credit for which your family is eligible, you can only take the credit for the amount you owe in taxes.

Your family may claim a tax credit up to $1500 for each eligible dependent for up to two tax years. The Hope credit is available only until the first two years of postsecondary education are complete.

The exact amount of the Hope credit depends on your family's income, the amount of qualified tuition and fees paid, and the amount of certain scholarships and allowances subtracted from tuition. The total credit is also based on how many eligible dependents are in your family, rather than a maximum dollar amount for the family, like the Lifetime Learning tax credit.

Who qualifies?
The Taxpayer: An eligible taxpayer must file a federal tax return and owe to claim the Hope credit. In addition, the taxpayer must claim an eligible student as a dependent on the tax return, unless the credit is for the taxpayer or the taxpayer's spouse. (This means the eligible taxpayer may also be the eligible student.) You cannot claim a Hope credit if your Modified Adjusted Gross Income (MAGI) is $51,000 or more for a single taxpayer, or $103,000 or more for married taxpayers. The credit amount is gradually reduced for families with incomes between $41,000 and $51,000 if single, or $83,000 and $103,000 if married.

The Student: The tax law says an eligible student must be enrolled at least half-time in an eligible program leading to a degree or certificate at an eligible school during the calendar year and must not have completed the first two years of undergraduate study. You may claim the credit yourself if you are not claimed as a dependent by another taxpayer. (Once again, this means that the eligible student may also be the eligible taxpayer.) Also, you must not have been convicted of a federal or state felony drug offense before the end of the tax year in which you are enrolled.

How do you get it?
To apply for the credit, the taxpayer must report the amount of tuition and fees paid as well as the amount of certain scholarships, grants, and untaxed income used to pay the tuition and fees. The law says that schools must send this information in the form of a 1098-T statement to each taxpayer and to the IRS. For tax year 2003, colleges and universities are expected to fill out all sections of IRS Form 1098-T before sending them to students. (Your school will mail this to you by January 31, 2004.) This statement from the school will also include the phone number of a person you can call at the school if you have questions. You will use this information and your own records about tuition and fee amounts you paid to fill out the IRS Form 8863 to claim the tax credit. You may wish to talk to a tax advisor for help in calculating the amount of your credit.

Taxpayers may pay educational expenses in a tax year for an academic period that begins following the tax year (e.g., paying in December 2003 for an academic period beginning in the first three months of 2004).

Your family may claim a Hope credit, a Lifetime Learning credit, and an exclusion from gross income for certain distributions from qualified State tuition programs or education IRAs as long as the same student is not used as the basis for each credit or exclusion AND the family does not exceed the Lifetime Learning maximum per family.

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What is the Lifetime Learning Tax Credit?
The Lifetime Learning credit is a tax credit available to individuals who file a tax return and owe taxes. This means the amount of the credit is subtracted from the taxes your family owes, rather reducing taxable income like a tax deduction does. You cannot get a refund for the Lifetime Learning credit if your family doesn't pay taxes. If your family owes less in taxes than the maximum amount of the Lifetime Learning tax credit for which your family is eligible, you can only take the credit for the amount you owe in taxes. Tax year 2003 is the most recent information currently available.

Your family may claim a tax credit of up to $2,000 per tax year (as of January 1, 2004) for the taxpayer, taxpayer's spouse, or any eligible dependents for an unlimited number of tax years. Beginning in tax year 2003, the amount of qualified education expenses you can take into account when figuring your Lifetime Learning credit increased from $5,000 to $10,000. The maximum credit equals 20% of these qualified expenses, making the maximum credit $2,000. The Lifetime Learning credit is available for all years of postsecondary education and for courses to acquire or improve job skills. Unlike the Hope credit (which is only available for two years) the Lifetime credit is available for an unlimited number of years.

The actual amount of the credit depends on your family's income, the amount of qualified tuition and fees paid, and the amount of certain scholarships and allowances subtracted from tuition. This credit is family-based (up to $2,000 per tax return) rather than based on the number of dependents in your family as with the Hope credit.

Who qualifies?
The Taxpayer: An eligible taxpayer must file a tax return and owe taxes to claim the credit. The taxpayer must also claim the eligible student as a dependent unless the credit is for the taxpayer or the taxpayer's spouse. (This means the eligible taxpayer may also be the eligible student.) You cannot claim a Lifetime Learning credit if your MAGI is $51,000 or more (if single), or $103,000 or more (if married). The credit amount is gradually reduced for families with incomes between $41,000 and $51,000 if single or between $83,000 and $103,000 if married. See the most recent IRS Form 8863 for the revised MAGI limits.

The Student: An eligible student may be enrolled in an eligible program leading to an undergraduate or graduate degree at an eligible school during the calendar year OR may be enrolled level in any course of instruction at an eligible school to acquire/improve the student's job skills during the calendar year. You may claim the credit yourself if you are not claimed as a dependent by another taxpayer. (Once again, this means that the eligible student may also be the eligible taxpayer.)

How do you get it?
To apply for the credit, the taxpayer must report the amount of tuition and fees paid as well as the amount of certain scholarships, grants, and untaxed income used to pay the tuition and fees. The law specifies that schools will send you this information in the form of a 1098-T statement to individual taxpayers and to the IRS. For tax year 2003, colleges and universities are expected to fill out all sections of IRS Form 1098-T before sending them to students. (Your school will mail this to you by January 31, 2004.) This statement from the school will also include the phone number of a person you can call at the school if you have questions. You will use this information and your own records about tuition and fee amounts you paid to fill out the IRS Form 8863 to claim the tax credit. You may wish to talk to a tax advisor for help in calculating the amount of your credit.

Taxpayers may pay educational expenses in a tax year for an academic period that begins following the tax year (e.g., paying in December 2003 for an academic period beginning in the first three months of 2004).

Your family may claim a Lifetime Learning credit, a Hope credit, and an exclusion from gross income for certain distributions from qualified state tuition programs or education IRAs as long as the same student isn't used as the basis for each credit or exclusion AND the family doesn't exceed the Lifetime Learning maximum per family.

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What is the Tuition and Fees Tax Deduction?
The Tuition and Fees Tax Deduction can reduce the amount of your taxable income by as much as $3,000 per year for tax year 2003. Starting in 2004 the maximum deduction increases to $4,000. This deduction is subtracted from your income, which means you can claim this deduction even if you do not itemize your deductions on Schedule A of Form 1040. This deduction may benefit you if you do not qualify for either the Hope or Lifetime Learning Education Tax Credits.

For tax year 2003, you may deduct up to $3,000 in tuition and fees required for enrollment or attendance at an eligible postsecondary institution. You may not deduct expenses for personal, living, or family expenses, including room and board, insurance, medical expenses, or transportation. (The maximum deduction increases to $4,000 starting in tax year 2004.)

The exact amount of the Tuition and Fees Tax Deduction depends on the qualified tuition and related expenses that you pay for yourself, your spouse, or a dependent for whom you are entitled to claim an exemption on your tax return.

Who qualifies?
The Taxpayer: An eligible taxpayer must file a federal tax return to claim the Tuition and Fees Tax Deduction. In addition, the taxpayer must claim an eligible student (one who is enrolled in one or more courses at an eligible educational institution) as a dependent on the tax return, unless the deduction is for the taxpayer or the taxpayer's spouse. For tax year 2003, you could not claim a Tuition and Fees Tax Deduction if your Modified Adjusted Gross Income (MAGI) is more than $65,000 for a single taxpayer, or more than $130,000 for married taxpayers.

The Student: An eligible student must be enrolled in one or more courses at an eligible educational institution. An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. According to the IRS, "it includes virtually all accredited, public, nonprofit, and proprietary postsecondary institutions." The college you attend can help you figure out whether they meet this requirement. You may claim the deduction yourself if you are not claimed as a dependent by another taxpayer.

How do you get it?
To receive the deduction, the taxpayer must enter the qualified tuition and fee amount on Form 1040, line 26, or Form 1040A, line 19. An eligible institution that received payment for tuition and fees in the 2003 tax year generally must have issued IRS Form 1098-T (the Tuition Payments Statement) to each student by January 31, 2004. The information on that form will help you determine whether you can claim a deduction for 2003.

Generally, the deduction is allowed for qualified tuition and expenses paid in 2003 in connection with enrollment at an institution of higher education during 2003 or for an academic period beginning in 2003 or in the first three months of 2004. For instance, if you paid $1,500 in December 2003 for qualified tuition for a spring 2004 semester that begins in January 2004, you can use that $1,500 in figuring your 2003 deduction.

The Tuition and Fees Tax Deduction for qualified educational expenses will be available through tax year 2005.

Your family may claim this deduction along with a Hope credit, a Lifetime Learning credit, and an exclusion from gross income for certain distributions from qualified State tuition programs or education IRAs, as long as the same student is not used as the basis for each deduction, credit, or exclusion and the family does not exceed the Lifetime Learning maximum per family.

You cannot take the Tuition and Fees Tax Deduction if you deduct tuition and fees expenses under any other provision of the law, for example, as a business expense.

You also may not claim the deduction if the tuition and fees were paid with a tax-free scholarship, grant, or other educational assistance. "Grants" may include Pell Grants. "Other assistance" may include employer-provided educational assistance, and other non-taxable benefits received to pay for educational expenses.

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How do I obtain Transcripts of Tax Returns, Copies of Tax Returns, or 1722 Letters from the IRS?
Call 1-800-829-1040 and request a transcript by the automated system. Please follow the options listed below.

When calling between the hours of 7:00 AM and 10:00 PM, please select the following options:

  • Option 2 (Personal Tax Account)
  • Enter your Taxpayer ID Number (SSN, ITIN, EIN).
  • Option 1 (Transcripts)
  • Enter the Numbers in your street address.
  • Enter the year of the Return you are requesting.
If you are calling at any other time, please select the following options:

  • Option 2
  • Enter your Taxpayer ID Number (SSN, ITIN, EIN).
  • Option 1
  • Enter the Numbers in your street address.
  • Enter the year of the Return you are requesting.
Your transcript(s) will be mailed within 10 to 15 days

or

You may complete Form 4506, REQUEST FOR COPY OR TRANSCRIPT OF TAX FORM, and mail it to the address indicated on the form. You should receive your transcript within 10 to 15 days. (Form 4506 is available at http://www.irs.gov/pub/irs-pdf/f4506.pdf.)

*Note: 1722 letters document information on an individual's tax return.

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What is the difference in budgeted costs for financial aid purposes and actual costs charged by the University?
Budgeted costs are generous averages and estimates of the cost of attending Tech. This figure is the basis for awarding federal financial aid. The items include University direct costs and estimated additional expenses.

Actual charges may vary by individual based on choices made for living arrangements, number of hours in which enrolled, specific books and supplies, lab fees for individual courses and life style options.

University will charge for actual tuition and fees, room, meal plan and several surcharges such as Technology fee, Energy Surcharge and College fees based on major program. These fees must be paid before enrollment is complete. Unpaid fees will result in cancellation or "purge" of registered classes.

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How long do I have to wait before completing an exit interview if I am graduating?
We require that students complete an exit interview for Stafford Loans during the quarter of graduation.

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What options regarding repayment of loans are available?
After you leave school or drop below half-time enrollment, your lender will send you information about repayment and you’ll be notified of the date repayment begins. You’ll repay your FFEL Stafford Loan to a private lender or loan servicer. Aspects of the repayment plans will vary by lender because individual lenders can tailor the repayment plans. Check with your lender for complete information.

  • Standard Repayment Plan – requires you to pay a fixed amount each month - at least $50.
  • Graduated Repayment Plan – your payments will be lower at first and then increase over time.
  • Income Sensitive Repayment Plan – bases your monthly payment on your yearly income and your loan amount.
  • Extended Repayment Plan – is available to new FFEL borrowers who received their first loan on or after October 7, 1998, and who have FFELs totaling more than $30,000.

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What is a consolidation loan?
A consolidation loan allows you (or your parents if they have a PLUS loan) to several types of federal student loans with various repayment schedules into one loan with one monthly repayment. Your monthly payments might be significantly lower than they would be under the 10-year Standard Repayment Plan. You might receive a lower interest rate than you're currently paying on one or more of your loans. See the Consolidation Loan FAQ regarding in-school consolidation. It may be possible to obtain lower interest rates by consolidating while still in school.

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I do not yet have a job; can I get a delay on starting repayment of my loans?
Under certain conditions, you can receive a "deferment" or "forbearance" on your loan, as long as the loan isn’t in default. A deferment allows you to temporarily postpone payments on your loan. If you’re temporarily unable to meet your repayment schedule, but you’re not eligible for a deferment, your lender might grant you forbearance for a limited and specified period. During forbearance, your payments are postponed or reduced, or your repayment period might be extended. Deferment and forbearance are not automatic. If you have a FFEL Stafford Loan, you must contact your lender or agency that holds the loan.

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