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FOR IMMEDIATE RELEASE College FINANCIAL AID Alert: Time is Running Out for Small Business Owners To Save Thousands on College Costs! Time is running out for millions of college and college-bound families to take advantage of a unique opportunity to save thousands or tens of thousands of dollars on college costs for school year 2007-2008, and hopefully beyond. Due to a loophole in the 2007-2008 Free Application for Federal Student Aid (FAFSA), families who own and control a small business and who are only required to complete the FAFSA, have a rare opportunity to capitalize on a financial aid bonanza, but they must act quickly. Your attention is directed to a provision in the Higher Education Reconciliation Act of 2005 (S. 9132), which was signed into law by President Bush on Feb. 8, 2006, that states, “The net value of small businesses with not more than 100 full-time equivalent employees is excluded from the definition of ‘assets’.” Accordingly, small business owners (parents, not students), or those who set up a small business under the federal guidelines, will reap huge rewards in the form of untold thousands in financial aid previously unobtainable. It is highly advisable to set up a C or S Corporation, or an LLC prior to Dec. 31, 2006, or at the very least, obtain an Employer Identification Number (EIN) for a Schedule C business. In that way, the small business will have its own individual tax status. It is also recommended to file the FAFSA in early January, but only after the small business has been set up and to consult a tax advisor before choosing any particular corporate entity. Families with students already in college can also benefit. They will now be able to exclude those assets that were included in the calculations in prior years and will automatically qualify for additional financial aid. The rewards can be enormous, but only if they become aware of this new and vital information - and take action! 529 Plan owners benefit as well In the financial aid formulas, students have no asset protection allowance, which means that for every dollar students have, they lose 20 cents per year in financial aid. Parents fare far better and only lose 5.6% per year over their allowance which increases with age. Now that both 529 Pre-paid Tuition and 529 Savings Plans are considered parent assets, the following is highly recommended: If you’re planning on establishing either type of 529 Plan, simply have the business listed as owner, but for 529 Plans already in effect, it’s a bit more complex. Parents who already own one can legally transfer the entire account value into a similar plan owned by their small business, but they still need to be aware of the downside. The transfer could trigger a taxable event, but only on the gains in a 529 Savings Plan, and if the beneficiary is ever changed, that could also result in a taxable event. Nonetheless, the strategy makes perfectly good sense, as the benefits far outweigh any modest income tax consequences. Go for it! Reecy Aresty has been a financial advisor since 1977 and is founder and president of College Assistance, Inc. in Boca Raton, Florida. He is the author of How to Pay for College Without Going Broke, an invaluable parent/student manual (updated from its previous edition, Getting Into College And Paying for It!) that is arguably the most revealing book ever written on admissions and financial aid. It is also the only book of its kind available in Spanish. For the past 25 years, Reecy has helped thousands of families send their kids to the college of their choice for less than they ever dreamed possible. Most recently, in an effort to give hope to many who believe that college could never be an option, he released an informative report, College and the Autistic Student, available in its entirety at www.frinkfest.com For additional information or to schedule an interview, please contact Reecy Aresty at 561.477.9639,
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