New member/FA ???s

<p>I came to this site after reading about it in Sunday's Chicago Trib. I looks like a lot of you are aiming a little higher than we're at right now but I'd appreciate some of your opinions.
Right now my daughter has been accepted at University of Illinois, Ohio State, Marquette, Minnesota, and Arizona. The last four have all offered merit based scholarships that make the cost comparable to in-state tuition at Illinois. But beyond the merit based aid the term financial aid is bit of a misnomer. Basically, my daughter is supposed to borrow the max $3500 in an unsubsidized Stafford Loan and were supposed to borrow the rest in a PLUS loan. So how honest a broker how these financial aid departments? I know they have gotten some bad pub on this. Are there better avenues to get the best loan deal? What are the pros and cons of using home equity instead of PLUS?
Also we have stack of U.S. Saving Bonds. (A generous aunt has been sending them regularly for years) that we plan to use for tuition. (We don't plan to use them all at once, we have another daughter.) I know that we have a tax break if we use them for tuition, but I've heard that I can't take it if I use the the Hope credit on my taxes. Anyone know more about this. Any comments would be appreciated.

<p>Some EE bonds are income tax free (after 1992?) if you use them for tuition; I think your name and not the kid's name has to be on them. But when you cash a stack of them in that shows up as income for next year's FAFSA.</p>

<p>Congrats on her acceptances!!</p>

<p>1st - I hope the generous aunt was putting the savings bonds in your names not the kids - you cannot get the tax break on bonds in the kids names (which is incredibly stupid in my opinion but that is the way it is). </p>

<p>The rules for all the education tax breaks are in IRS publication 970 here <a href=""&gt;;/a&gt;&lt;/p>

<p>The bond rules are page 55 and on.</p>

<p>You can't 'double dip' for any of the tax breaks So you can't use the same tuition and fees dollars for the Hope tax credit and for the tax break on the bonds. But I think if the tuition/fees paid exceed the amount useable for the Hope Credit ($2200 - the first $1100 - 100% credit - the 2nd $1100 - 50% credit) then I think the balance can be used for the tax break on the bonds.</p>

Thanks for the link. Very helpful. And yes, the bonds are in my name. My sis is a pretty smart lady.

<p>You're welcome.</p>

<p>I actually do an excel spread sheet to keep track. Between figuring out what portion of my daughter's grants/scholarships are taxable and maximising the amount my son can get from the Hope tax credit and how much we can still withdraw from his 529 account (which has totally different rules for 'qualified expenses') without incurring taxes or penalties it gets quite complicated. I did not do it till tax time for this last year but already have it started for this year. You might want to do the same and run a few scenarios to see which is the best way to maximise your tax credits.</p>