A budget planner is a tool, usually in the form of computer software that permits an individual, family, or business to see what their expenses are, plan for the future and retirement, and manage their budget to reduce unnecessary costs.

Most people have a basic grasp of what their spending habits are but at the end of the month they often wonder where certain money has gone to.  Where most people take into account large expenses like rent, utilities, car payments, and alike they often neglect to include minor daily expenses that add up over time.  They will neglect to include the daily $2 cup of coffee on the way to work and then wonder where the $60 went at the end of the month.

A budget planner will help an individual maintain all their expenses, including minor ones that get lost in the shuffle.  Many good budget planning tools divide budgets into weekly, monthly, and yearly expenses.

When using a budget planning tool the first step is usually to input data from your daily expenses over a period of time.  This will give the budget planner the opportunity to compile information on your basic spending habits.  Over time the budget planner will have a collection of your regular expenses, regular income, cash assets and even your savings goals.

Your budget planner should start with your stable data.  This includes all stable income from your salary and other stable interest bearing assets such as bonds, income from rental property, and other cash inflow that is consistent over the month.  You should then have all data relating to expenses that are stable.  This includes rent, car payments, insurance, phone bill, cable bill and any others that will stay the same over a period of time.  

Once all this information is gathered you will know how much money you should have left over at the end of the month to spend and save on variable expenses.  It is then that you will divide what is left of your monthly income into budgeting sections.  This will include a utilities budget, entertainment budget, food budget, etc.  A good budget planner will also set aside a category for unexpected expenses such as car repairs.

When you are first using your budget planner it is important to include all your expenses on a daily basis.  Although a certain expense may seem trivial, or random, to you; by compiling the data on a daily basis over the course of a couple of months you will be able to find what expenses are trivial and which add up over time.  Before you use your budget planner you may not realize what you’re spending or what you’re spending it on.  A budget planner is a great tool for saving money and can help you eliminate unnecessary expenses that you didn’t even know you had.

A budget worksheet is a tool that is the basic building block of any type of budget planning.  Whether you are an individual, family, or business you will need to budget your money so that you can see where your expenses are going.  The purpose of budgeting is to find out what money your are spending on a daily, weekly, monthly, and yearly basis and eliminate, or reduce, unnecessary expenditures so that you may save for the future.

Where this may all seem like a lot of data and overwhelming to you it can be accomplished by using a budget worksheet.  A budget worksheet will categorize your income, fixed expenses and variable expenses in a way that is easier to manage and find out where exactly your money is going to.

There are many resources for software that will provide you with a budget worksheet.  There are numerous free online budget worksheet resources that you can find on the internet including Quicken Online, Mvelopes, and Yodlee money center.  These resources will allow you to manually input data relating to your income and expenses to help you devise a plan for the future relating to your finances.  

Your budget worksheet should start with your income. This includes all stable income from your salary and other stable interest bearing assets such as bonds, income from rental property, and other cash inflow that is consistent over the month.  When compiling this data in your budget worksheet you should prepare in advance and have all documentation, including tax returns, to help you identify all the money that you have coming in.  If you have income that is dispersed on a yearly basis then you have two options.  You can either divide that number by 12 or use that number in your income calculation or you can remove the income amount from that item completely.  

Once that is done you should start compiling your monthly fixed expenses.  This includes rent, mortgage, car payments, insurance, phone bills, emergency funds, vacation funds, etc.  By subtracting your fixed expenses from your fixed income you will have a number left over that will account for the money you have left at the end of the month for variable expenses and savings.

It is now time to input your variable expenses into the budget worksheet. These can include minor luxuries, like coffee, or necessities such as groceries or gasoline.  The idea behind variable expenses is not to prioritize items but to gather information about expenses that may change from month to month.  Your variable expenses include clothing, entertainment, bills such as utilities and credit card bills that may change from month to month, food, and all incidentals, no matter how minor.

Once you have compiled the list of income, fixed expenses and variable expenses you can begin to realize how much money you are spending on a monthly basis and the impact that removing one of those items will have on your spending.  For example, you may not realize that your cigarette habit is costing you $100 a month until you compile your budget worksheet.  This will give you a good look at what this unnecessary expense is costing you over the span of time and may also give you motivation to quit.

It’s easy to find free budget worksheets but, like with anything, you get what you pay for.  There are many products out on the market that offer advanced budget worksheets and often take data directly from your bank accounts, lending institutions, and other accounts where you may have income generated or expenses building, and input that data directly into the budget worksheet.

Investment services comprises of many different types of financial help provided to all sorts of clients, including individuals, corporations, small businesses, or even government entities.  The main task of investment services is money management.  Investment services organizations include retail banks, investment banks, financial advisors and planners, or any other group of professionals that work with client’s money.  

Most investment services are provided through a banking institution or financial firm.  The following are some investment services provided by banks:

1. Keeping client’s money and valuables safe and secure from physical dangers.

2. Issuing checking or debit accounts to provide access to money secured at the banks location.

3. Providing personal or business loans, usually with the goal of profiting off on interest.

4. Issuing credit, debit, or other forms of personal lending to private customers.

5. Provide investing funds, sources of capital, or markets for businesses both small and large.

6. Investment advice and services for the creation and trading of financial securities and derivatives.  

Banking and investment services can be sought by all different types of clients, however it is important that you select the investment service provider that best fits your needs and budget.

1. You can search for financial services by checking with local bank branches or looking up institutions in bank listings.  

2. Select a bank that serves other clients in similar standing as you or your company.  Many investment services specialize in helping small net worth clients, high net worth clients, or corporate clients.  

3.  Check with others who have used the investment services of a particular bank or professional.  Use their recommendations when seeking investment services, as they can often help you determine if the banking institution will fit your needs.  

Besides standard banking and financial services, investment services can also encompass other areas of business and monetary exchanges.  Some of the following are examples of other investment services that can be sought:

1. Intermediate or advisory services, which act to provide brokerage services for those who seek to purchase or sell publicly traded securities.

2. Private equity firms, which act as the purchasers of majority stakes in private corporations, making the company into a private entity.

3.  Venture capitalist, which provide private equity for individuals or corporations looking to create or expand business, often with a very high level of return if the investment is successful.  Venture capitalist act as a speculative investing group, who invest in high risk assets with the hopes of receiving high rewards.  

4. Angel investors, who provide investment services in the form of equity, similar to venture capitalist, but are very high net worth individuals who can take on extremely high levels of risk with the potential for very high financial rewards.

5. Debt resolution investment services provide clients with large amounts of debt to create a financial situation that spreads out payments over time or restructures debt while avoiding bankruptcy.  

Speculation is a financial term that covers financial action without the promise of safety for any profits or even the security of the initial investment.  Speculation is considered an act of high risk investing in the hopes of receiving a high reward.  Typically, most investors will insure their speculations with safer investments to offset any potential financial loss that may result.  

Speculation often employs the lending of money to high risk groups with the promise of an extremely high rate of return upon success. Below are some examples of investments that are considered speculation:

1. Providing loans or financial support to a start-up or newly restructured business, in the hopes of growing the business into a profitable enterprise.

2. Investing in junk bonds or high yield bonds, which are very low rated financial instruments that will pay high return rates if they do not go into default.

3. Investment in highly volatile commodities, such as precious metals, natural gas and oil, and grains.

4. Investing in stocks with the plan of selling immediately upon a raise in value.  

Speculation and investment are often considered two different forms of profit seeking.  True investors attempt to safely use their financial resources to grow value over a long period of time.  Speculators, on the other hand, typically have the goal of receiving a high reward in a short period of time, at the risk of losing their initial investment.  

Just like investing professionals, many speculation professionals diversify their holdings to hedge against the uncertainty of the area they are in.  Some risks of speculation are as follows:

1. Financial bubbles can be created when speculators inflate the value of a commodity or financial instrument above what the real price should be.  When this occurs, the bubble will often pop, resulting in a drastic loss of value.  

2.  Investment in start-ups or small businesses may result in complete loss of initial investment if the business fails.  

3. Speculation in high-default financial instruments will, by definition, fail to return value than safer financial instruments.  While returns can be high on successful high default bonds, many more bonds will fail and result in loss of initial investment.

As with all investment strategies, you must be aware of the tax consequences of speculation.  While speculation can result in large profits over a short period of time, these profits will be taxed at a higher rate than slower-growing investments.  Any investments that yield a realized return in less than a year will be taxed at the standard income rate.  Longer held speculative financial investments will be taxed at a lower rate, however this will often offset the value of speculation.   

A high yield money market is a type of savings account that promises its holder a high rate of return, when compared to other savings investments. High Yield Money Markets are investment vehicles, offered by commercial banks and credit unions to lure investors and account holders. These accounts are designed to balance the desire for conservative investment with the ability to generate an increased rate of return. Although the name suggests a significant rate of return, high yield money market accounts typically do not provide interest payments higher than 5.5%.

A High yield money market fund is an open-ended mutual fund which invests primarily in short-term debt securities such as commercial paper and US Treasury bills. High Yield money market funds will utilize a more aggressive investment approach—these funds will invest in short-term debt securities who exhibit higher rates of return. 

A money market account is a form of savings offered by commercial banks and credit unions. They operate as regular savings accounts. The primary difference between a regular savings account and a high yield money market is that they typically offer higher interest payments and have higher minimum balance requirements. Moreover, a high yield money market will typically limit a holder to six withdrawals per month. Finally, another fundamental difference between the savings vehicles is that, similar to a checking account, a high yield money market account will allow its holder to write up to three checks per month against the account. 

Similar to bank accounts, the funds stored in a High Yield Money Market are insured by the Federal Deposit Insurance Corporation. If the bank or credit union goes insolvent, the money will remain intact. The Federal Deposit Insurance Corporation is an independent agency of the United States Federal Government that was formed in 1933 in response to the great depression and the thousands of bank failures that resulted. Since the formation of the FDIC, not one person has lost funds in a credit union or bank that was insured by the agency. The funds stored in a High Yield Money Market offered by a credit union will be protected by the national Credit Union Administration—also a federal agency. 

Each bank and credit union will offer different yields on their money market accounts. These rates of return will also fluctuate based on the amounts held in the account; in general, the more money held in the account the higher the rate of return.

• For investments of Under $2,500 the attached interest rate will be approximately 2.5%

• For investments between $2,500 and $9,999 the attached interest rate will be approximately 4.5%

• For investments between $10,000 and $24,999 the attached interest rate will be approximately 5%

• For investments between $25,000 and $49,999 the attached interest rate will be approximately be 5.5%

A Stafford loan is a type of student loan, offered to eligible students enrolled in American colleges, universities or other accredited institutions of higher education to help finance the education endeavor. The loan’s terms are outlined in Title IV of the Higher Education act of 1965, which pledges repayment to the lender if the student defaults on his/her payments or promise to pursuit an academic degree. 

Stafford loans are delivered and regulated by the William D. Ford Federal Direct Loan Program. The United States government provides these low-interest loans to eligible students in order to cover the costs associated with enrolling in a four-year university, college, community college, trade, technical or career school. Those students deemed eligible for the Stafford loan program will borrow directly from the United States Department of Education at participating universities or institutions of higher education.

Because Stafford loans are guaranteed by the faith of the United States Government, the financing is provided at lower interest rates when compared to loans offered by private institutions. These lower interest rates; however, are met with more stringent eligibility requirements and borrowing limits placed on Stafford loans.  

Direct Subsidized Loans: This type of Stafford loan is provided to students with financial needs. A student’s school will review the results of their Free Application for Federal Student Aid and evaluate the amount the individual can borrow. The student will not be charged interest during deferment and grace periods. 

Direct Unsubsidized Loans: This type of Stafford loan does not require the student to demonstrate a financial need. Similar to subsidized loans, the student’s school will evaluate the amount the student can borrow. With a direct unsubsidized loan, interest will accumulate from the time it is first paid out. The student may pay the interest while in school and during grace, deferment or forbearance periods or the student may allow interest to accrue and be capitalized. If the student chooses to not pay interest as it accumulates, the total amount owed will increase because the student will be charged interest on the higher principal amount. 

To secure a Stafford loan you must complete the Free Application for Federal Student Aid. The majority of students file the Free Application for Federal Student Aid via the Internet to submit their application. Schools will use the information from your application to determine how much aid you are eligible to receive. Stafford loans are typically included as part of the award package, which will contain other types of aid to help fulfill the costs of enrolling in college or career school.

When you are first awarded a Stafford loan, you must complete a Master Promissory Note–a legal document where you will promise to fulfill the repayment obligations of the loan and any accrued interest or fees attached to the loan. Moreover, the Master Promissory Note will explain the terms and conditions of the loan. In the bulk of instances, a Master Promissory Note can be used for loans that a student receives over several years of study. If a student previously signed a Master Promissory Note to receive a program loan, they will need to file and sign a new Master Promissory Note for a direct loan. 

A Stafford Loan has limits; the maximum amounts you are eligible to receive are capped for each academic year and in total. These caps will be elucidated below. The actual loan amount you can borrow per year will depend on your year in school, whether you are classified as a dependent or independent student and other factors. These factors may diminish the loan amount below the maximum amounts listed below.

You may be eligible—depending on your financial need– to receive a subsidized loan package for an amount up to the annual borrowing limit for your particular level of study. If you come across education expenses that are not fulfilled by subsidized loans and other forms of aid, you may receive an unsubsidized loan so long as you do not exceed the combined subsidized and unsubsidized annual limits. 

• $5,500 for dependent undergraduate students

• $9,500 for Independent Undergraduate students

• $20,500 for Graduate and Professional Degree students

• $6,500 for dependent undergraduate students

• $10,500 for Independent Undergraduate students

• $20,500 for Graduate and Professional Degree students

• $31,300 (No more than $23,000 of this total may be found in the form of subsidized loans) for dependent undergraduate students

• $57,500 for Independent Undergraduate students

• $138,500 for Graduate and Professional Degree students

Note: the limits listed above are the maximum annual amounts you can borrow in both unsubsidized and subsidized forms. You may secure one type of loan or a combination of the two. Because you are not allowed to borrow more than the cost of admittance minus any other financial aid you will receive, you may receive less than these amounts. 

If you are deemed eligible by the United States government to receive a Stafford loan, you will be paid by your school, in at least two installments. An installment may not exceed one-half your total loan amount. Your academic institution will use the loan money to fulfill tuition costs and other fees (such as room and board). If any funds remain, you will be awarded the monies by check or other means. For first-year undergraduate students and first-time borrowers, your academic institution will not disburse your first payment until 30 days after the first day of your enrollment date. 

Undergraduate Students: If your first disbursement of a subsidized loan is delivered between July 1, 2011 and June 30, 2012 the attached interest rate will be fixed at 3.4%. This rate is fixed at 6.8% for the same dates for Graduate and professional degree students. 

Direct Unsubsidized Loans: The attached interest rate is fixed at 6.8% for every borrowers (both undergraduates and graduate students). 

For an employee to qualify for the tax benefits available, a plan must contain language that meets the IRS’s requirements and operate in accordance with the plan’s particular provisions. The following is an overview of qualification rules; it is not intended to be an all-inclusive list of regulations. For a complete list of plan qualification rules, observe Publication 560 of the Internal Revenue Service found at www.irs.gov.

Plan Assets Must Not Be Diverted: The 401(K) must make it impossible for the underlying assets to be used for or diverted to any purpose other than the benefit of the holder (the employee) and their direct beneficiaries. 401(k) rules—in the most general sense—state that the underlying assets cannot be diverted to the employer. 

Benefits and Contributions must not Discriminate: Under the 401(k) plan, the contributions or benefits may not discriminate in favor of highly compensated workers. In most instances, an employee who makes over $110,000 per year or more are deemed as “highly compensated” employees for 2011 (this figure will increase to $115,000 in 2012). In order to meet this requirement—with regard to deferrals and employee matching contributions—a 401(k) plan may provide minimum employer contributions or meet the Actual Contribution Percentage or Actual Deferral Percentage tests. 

Allocations and Contributions are Limited: A contribution to 401(k) plans are not allowed to exceed certain limits described in tax code. The limits are attached to employer contributions and the amount of employee elective deferrals. 

Elective Deferrals are Limited: 401(k) rules state that employee elective deferrals are capped to the amount in effect under section 402(g) under the IRC for that particular year. The elective deferral limit for 2011 is $16,500; this figure will increase to $17,000 in 2012. These caps are subject to cost-of-living adjustments; however, 401(k) plans may allow participants over or at the age of 50 to provide catch-up contributions of $5,000 in addition to these amounts. 

Minimum Vesting Standards Must be Met: 401(k) plans must satisfy requirements concerning when benefits vest. To “vest” simply means to acquire ownership. Therefore, the vested percentage refers to the holder’s percentage of ownership in his or her 401(k) account. A participant must be 100% vested in their 401(k) elective deferrals. Moreover, a traditional plan may require the holder to complete a number of years of vested interest in matching or employer discretionary contributions. 

• The individual must be at least 21 years of age

• The individual has at least 1 year of service; however, a traditional 401(k) plan may require 2 years of service for eligibility to obtain employer contributions if the plan provides that after no more than 2 years of service the participant is 100% vested in the account. 

401(k) plans may not exclude an employee because the individual has reached a specified age. 

• The plan ends and not defined contribution plans are established or continued

• The employee becomes disables or passes away

• The employee reaches the age of 59 ½ years of age or suffers a financial hardship

• The plan year in which the holder reaches the earlier age of 65 or the retirement age as specified in the plan.

• The year in which the participant destroys service with the employer.

A 529 College Savings Plan, as codified in the United States Tax Code, are college savings plans that parents of potential college students may invest in order to save money for their child’s college tuition.  529 College Savings Plans permit parents to deduct the money invested in 529 College Savings Plans to qualify for State tax deduction, effectively lowering their taxable income.

There are two types of 529 College Savings Plans:  prepaid and savings.  Prepaid 529 College Savings Plans allow parents to purchase tuition credits at present day rates.  This essentially means that a parent who will have a child in college in 20 years may place money in a Prepaid 529 College Savings Plan, at the current rate of tuition, to be used 20 years from that date, even if tuition is higher in the future.  For example, if the current per credit tuition is $2,000 and the parent purchases 5 credits through the Prepaid 529 College Savings Plan then it will guarantee those 5 credits even if the per credit tuition rate is $4,000 by the time the child goes to college.

The other type of 529 College Savings Plan is different in that the growth of the Savings 529 College Savings Plan is based on market performance of the investment form, which is usually in the form of mutual funds.  In this way you may benefit greatly over a Preferred 529 College Savings Plan in that the market could outperform the rate of tuition increase.  However, in the alternative, the Savings 529 College Savings Plan may have stagnant, or negative growth, over time that would not equal or exceed the Prepaid 529 College Savings Plan.

A 529 College Savings Plan may be used for tuition, books, fees, equipment and supplies for any accredited college or university, public or private, in the United States as well as vocational schools and some universities from outside the United States.  529 College Savings Plans may also be used for room and board.  However, if the student lives off campus the student may only use the 529 College Savings Plan for expenses that would be equivalent to the cost of on campus room and board.  For example, if the cost of room and board on campus is $6,000 and the student lives in off campus housing costing $8,000 then the 529 College Savings Plan will only cover $6,000 of that.

One of the great advantages of a 529 College Savings Plan is that it affords tax exemption from state taxes.  This means that all the money that is contributed into the 529 College Savings Plan will be treated as if the money was never considered part of your income.  For example, if your income for the year is $100,000 and you contribute $10,000 to your 529 College Savings Plan in that year then, for tax purposes, you will be treated as if your income for the year was $90,000.  529 College Savings Plans are considered to be a great way to avoid estate taxes in that they are not considered part of you estate, but part of the estate of your child, however, they are not irrevocable.  This means that any unused portion of the 529 College Savings Plan may be taken out of the 529 College Savings plan and reinvested by the parent.  Even though it is perfectly legal to do this the parent will be required to pay income tax on the benefit incurred as well as a 10% early withdrawal penalty.

The exception to the early withdrawal penalties are:  the designated beneficiary dies; the designated beneficiary becomes disabled; or the designated beneficiary receives a scholarship, veterans assistance, or employer provided education assistance.  If one of these things occurs then the penalties will not apply.  Even if none of these exceptions apply no penalty will be incurred by the 529 College Savings Plan holder if, for some reason, the entire allotment of savings is not used on the named beneficiary and the amount remaining is rolled over to another beneficiary.  If the leftover amount of the 529 College Savings Plan is rolled over to another qualified recipient within 60 days then the there will be no penalty associated with early withdrawal.

Financial aide consists of government assistance to citizens of the United States to help pay for post-secondary education including bachelors degrees, graduate and professional degrees and for other forms of continuing education. Financial aide in the United States can take many forms including grants, scholarships, loans, tax credits and deductions, and work study programs.

In the United States, every year there are upwards of $160 billion allocated by the federal and state governments for financial aide to deserving students. This includes $110 billion from the federal government in the form of grants and loans; $10.2 billion from State based financial aide; and $6.8 in federal tax credits and deductions.

In order to get money from the federal government you will need to apply for financial aide by filling out a FAFSA form. This form serves the purpose of putting the federal government on notice of your need for financial aide; what forms of financial aide you may need; and what financial aide you will qualify for.

The FAFSA form, or Free Application for Federal Student Aide may be downloaded and printed from the United States Department of Education website by going to www.fafsa.ed.gov. The FAFSA form is a free application provided by the United States Department of Education that allows the federal government to assess whether or not an applicant for student aid, either in the form of grants or loans, is eligible to recieve funding from the United States government for their education. The FAFSA form is used for all forms of funding for post-secondary education including: bachelors degrees, masters degrees, juris doctors, among others.

The FAFSA form will require you to input information including your income,and if you are a dependent, your families income; the cost of attendance of the educational institution; your status as a full time or part time student; and whether you will be attending post-secondary education for the whole year or on a semester basis.

By filling out the FAFSA form, the department of education will properly be able to assess your need based on your, and your families, income. The eligibility under FAFSA will also analyze your expected family contribution which is calculated based on your household income, number of students from the household in college, and your families net assets (not including 401ks).

Your FAFSA form will allow you to apply for numerous kinds of loans and grants that are funded by the federal government. These include Pell Grants, Federal Supplemental Educational Opportunity Grants, Perkins Loans, Stafford Loans, PLUS loans, and Federal Work Study programs.

A Pell Grant is a form of financial aide furnished by the United States Department of Education that helps students who could not normally afford the luxury of a secondary education, the opportunity to attend college or, in some cases, post-bachelors degree education. The federal Pell Grant helps 5.4 million individuals pay for college every year through the United States Department of education, which allots $17 billion a year towards the funding of Pell Grants. Grants, unlike loans, never have to be repaid to the federal government.

Prior to the 2011 amendments, Pell Grants would issue a maximum of $5,550 dollars per student in financial aide. As of the 2011 amendments a student who meets the hardship requirements and is given Pell Grants may receive $4,705 in financial aide. The amendment stripped funding from the department of education by $5.7 billion and due to that there has been a decrease in per student funding of $845 per student, with some students losing their status altogether.

If the funding from a Pell Grant is not enough to meet your financial aide requirements you may also use your FAFSA form to apply for Stafford loans.

Stafford loans are forms of financial aide that are sponsored by the federal government through lending institutions. The way they work is that you apply for a loan, through FAFSA, and upon your approval you will be allotted a certain amount of financial aide for you education. The benefit of taking Stafford loans is that they are guaranteed by the federal government . In that way the lending institution is going to allow you a lower interest rate because you are backed by the United States government, which is as close to a guarantee of repayment as anything.

There are two main types of Stafford loans. The first are subsidized and the second are not. The subsidized loans are the first type you will want to get from the federal government’s department of education, through Sallie Mae. The amount that will be allotted per student through subsidized loans is low, but usually allows around $12,000 per year. The benefit of these loans is that they do not garner interest until the completion of your education. Federal Stafford Loans are subsidized in that the interest that accumulates while you are pursuing your education is payed for by the federal government. or example, if you borrow $36,000 over 3 years for your college education starting in 2011 you will not be charged interest for the school years ending in 2012, 2013, and 2014., but upon your graduation in 2014, or if you leave your educational institution before graduation, then your interest will start accumulating immediately.

In contrast, unsubsidized Stafford oans through the federal governments department of education will begin accumulating interest upon the time that your loans are dispersed to you. Because of this reason it is always beneficial for students to avoid unsubsidized loans through either the federal government department of education or through a private lending institution.

The interest rates that are associated with stafford loans are relatively low. Due to the guarantee of repayment by the federal government a lending institution will charge a lower interest rate and the loan is almost guaranteed to be granted if you meet the requirements. Under c.urrent regulations the annual percentage rate of interest for a federal subsidized stafford loan is 6.6% annual interest for those students who are enrolled in higher education for at least half time. This is going to change under the 2011 amendments under the Budget Control Act of 2011. Under the Budget Control Act new, starting in July 2012, interest rates for both federally subsidized and unsubsidized stafford loans will be fixed at 6.8% annual interest. In addition, under the Budget Control Act, individuals who are seeking graduate or professional degrees will be ineligible for subsidized loans as of July 1, 2012.

Upon the completion of your education you will be required to repay your stafford loans. Upon graduation, or dropping below half-time, you will be allotted an initial deferment of 6 months. This is called the grace period. During the grace period you will not be required to begin repaying your loans, however, the interest upon your loans, even those that are subsidized will begin to take effect. Once your 6 month grace period is over you will be required to start paying monthly installments to satisfy your loans. The default standard is repayment over a 10 year period. This may be altered upon request and many times you will be permitted to stretch your repayment period up to 30 years. Granted, you will end up paying more in the long run but it is beneficial for those individuals right out of college who are not making a high salary. Once the grace period is over you must begin repaying your stafford loan. Failure to do so will put you in default and prevent you from receiving future government loans and severely damage your credit. If you are in a situation where it is impossible for you to make payment then you may apply to the federal government for a deferment based on hardship.

A Perkins Loan operates in much the same way as a Federally subsidized stafford loan in that it is a subsidized loan guaranteed by the federal government. The difference is that where a stafford loan operates by going through a private lending institution to gather funding for the loan, a Perkins Loan takes its funding directly from your educational institution. So the federal government is borrowing money from your university and guaranteeing repayment upon graduation, or the dropping of the student from at least half time status. Federal Perkins loans have an interest rate of 5% per year that begins to accumulate at the time of graduation, or dropping below half time registration. A Perkins Loan, through completion and approval of a FAFSA form, will guarantee an undergraduate student as much as $5,500 per year with a lifetime allowance of $27,500; and post-graduate, and professional, students up to $8,000 per year with a lifetime allowance of $60,000.

Federal PLUS loans are unsubsidized federal financial aide which cover the cost of education. Federal PLUS loans can be used for undergraduate, graduate, and professional educations; with different Federal PLUS loan applications for each one. A federal PLUS loan can cover the entire cost of your education and, theoretically, you can borrow unlimited financial aide through Federal PLUS loans. A federal PLUS loan has a fixed interest rate of 7.9% and a 4% origination fee. The origination fee acts as an activation fee for the loan. This means that if you take a loan for $100,000 you will be charged $4,000 initially and will only receive $96,000 but still be liable to repay the full $100,000 with capitalized interest.

In addition to loans and grants a student may apply for federal work study programs. Federal work study is a form of financial aide that allows a student to work in the community or in their field of study part time in conjunction with their education to help pay for their education. A student who meets the financial needs requirements may be placed in a federal work study program in which the federal government will pay up to 75% of the salary that the student garners through their work study program.

The federal government is not the only source of financial aide that a student can apply for. State based financial aide accounts for $10 billion dollars in annual financial aide. Every state has different rules involving the qualifications and types of financial aid that they offer. Most states offer reciprocity with other states based on financial aide. This means that if you qualify for a specific amount of financial aide while residing in one state and then subsequently move to another state, even if under the new states rules you would not qualify for financial aide, the new state would allow you to qualify for financial aide based on reciprocity with the other state. Every state is different and you should go to www.fafsa.com/student-financial-aid to find out more about your specific states financial aide opportunities.

Direct payments from the federal and state governments are not the only benefits that you can receive through financial aide. You can also be eligible for certain tax deductions and credits through your income tax return. Financial aide in the form of tax deductions and credits account for $6.8 billion in financial aide yearly. There are a number of different types of tax credits and deductions that you may be eligible for, including The Lifetime Learning Tax Credit; The Tuition and Fees Deduction; and Student Loan Interest Deduction.

The Lifetime Learning Tax Credit is a form of financial aide that takes the form of up to $2,000 in yearly tax credits. In order to qualify you do not need to pursue a degree. The Lifetime Learning Tax Credit allows, even individuals taking one class, to qualify for the credit. In addition you must be a United States citizen and your modified adjustment gross income must be below $60,000 or $120,000 if you are married and file a joint income tax return. The credit is non-refundable, in that the credit only applies to the tax you owe. In other words, even if you qualify for $2,000, if you have $1,000 that you owe to the federal government you can only get a credit of $1,000 and may not carry over the difference to the following tax year.

You can also qualify for the Tuition and Fees Deduction allows for up to $4,000 in annual tax deduction on your federal income tax return. In order to qualify you must have a modified adjustment gross income of less than $80,000 or $160,000 if you are married and filing a joint tax return. You may not use the Tuition and Fees Deduction if you are also using the Education Tax Credit; if you are married and filing separately; or you have deducted expenses for tuition and fees through some other form of legal tax deduction.

Another form of financial aide through the use of tax returns is the Student Loan Deduction. The Student Loan Deduction will allow you to deduct your student loan payments from your federal income tax. In order to qualify your modified adjustment gross income must be lower than $75,000 or $150,000 if you are married and filing jointly. If you are married and filing separate tax returns you will not qualify.