Think Ahead, Inc. welcomes you to: COACH
  
      COllege Aid Calculator(tm) Helper - tutorial

	Copyright c 1996, Think Ahead, Inc.
	PO Box 5G
	Dresden, ME 04342


COACH explains how College Aid Calculator (tm) 96-7 functions. Follow our walk-through, hands-on tour if you wish. Or, just skim through to learn a few of CAC's basic features.

For CAC Installation Instructions--look at the C:\COL_AID\README.TXT file.

Use COACH's Table of Contents and your word processor's search function to find what you need. Search for \\ to find the Table, or \X for Comments about Sample Data Sets. CAC has ten preloaded sets of sample data: seven use CAC's "Detailed" Calculation Method and three use the "FAST" Method--a one-screen, twenty-questions format (search for: #8). One of the ten may be similar to your situation. 

                                       \1
                                     FOREWORD

College Aid Calculator (CAC) is designed to help college-bound students and their families find out early, even years early, if they qualify for college financial aid, how much aid, and how to plan ahead. 

CAC, COACH, and our electronic book, Strategies to Reduce College Costs, work together to explain the financial aid process. In Strategies ... you'll find ideas for reducing how much your family will pay for college. Since Strategies ... is on your hard drive at C:\COL_AID\STRATSxx.RTF, use your word processor to bring it up now--then save it to a new name, like: MYPLAN.XXX. Use Strategies ...  to build your college plan. Read, cut, and paste your way through it. As you read COACH, do the same. Copy and paste what interests you to MYPLAN. As you work with CAC, use the Windows Alt-Tab function to access MYPLAN. Jot down ideas as you think of them: questions to ask your guidance counselor, questions to ask when visiting colleges, ideas to test with CAC's "What IF ?" feature. Organize your topics. Soon you'll have a well-formulated college financial plan.

Where to start? -- Well, with those gnawing questions: "What's college going to cost? Will I qualify for any financial aid? How much? Where does it come from? What do I have to do?" 

Let's start with a few acronyms: EFC (Expected Family Contribution) is the amount your family will be expected to pay before any aid is awarded. There are two methods of determining EFC: FM & IM (see below). Once EFC has been determined, PJ (Professional Judgment) comes into play. EFC formulas are a starting point--they're not the final word. FAAs (Financial Aid Administrators) have the final say--and it is up to you to understand how the system works and to precisely explain your special circumstances. Here is where CAC, COACH and Strategies ... can assist. 

This is not easy. You have work to do. Do your job right and you'll save time, a lot of worrying, and perhaps a significant amount of money--your reward. Now, on to the details:

*    Federal Methodology (FM) is a Congressional formula used to award federal funds at public and private colleges. This the major source of aid available at most public colleges. Look under the column titled: FEDERAL on CAC's worksheet screens.
    
*    Institutional Methodology (IM) is a formula used by schools to award their own private (institutional) funds: INSTNL on CAC.
 
CAC shows side-by-side estimated contributions for FM and IM. There are worksheets and summary pages for: parents, dependent students, and independent students. For FM, CAC uses the federal formulas and for IM, it uses the CSS (College Scholarship Service) PROFILE formulas. 

DISCLAIMER:
Formulas from the CSS/Financial Aid PROFILE-Institutional Methodology 1996-97 Computation Specifications are used in this application with permission of the College Board. (c) 1995 by the College Entrance Examination Board. All rights reserved. The College Board has not reviewed, and assumes no responsibility for the accuracy of either the programming or the results in this application.

Think Ahead, Inc. has made a sincere effort to make the calculations as accurate as possible, but cannot make any warranties. After utilizing CAC, Strategies to Reduce College Costs, and COACH  to develop your plan, we recommend consulting your favorite advisor. See Disclaimer in CAC's "Help" file.

College Aid Calculator 96-7 calculates your 1996-7 Expected Family Contribution (EFC) and your 95 Federal Tax Liability. (By late summer 96, CAC 97-8 is expected to be ready with all the new aid and tax formulas.) The tax calculation feature makes it possible for you to play "What IF ?"  -- so you may Think Ahead. 

Upgrading to the 97-8 version is essential. Use this at the same time you are filling out your aid forms, before you've completed your 96 tax forms (i.e., as close to 1/1/96 as possible). There will be no need for you to delay tiling your aid applications if you use CAC's federal tax estimate to answer the aid form's question regarding federal tax. This way, you may file your aid forms early. With limited aid dollars available, those who file early may accrue benefits not available to those who are just on time. Realize that the accuracy of your tax and EFC estimates are dependent upon your answering CAC's questions correctly. Double check your work.
						
						  \\
                               TABLE OF CONTENTS

To locate a passage referred to by an entry in this table, use your word processor's Find feature to search for the number or letter to the right of the entry. To make your search unique, precede the character with a backslash. For example, to find CAC System Requirements, search for "\1". To learn about CAC's Main Menu, search for "\K".

    Foreword . . . . . . . . . . . . . . . . . . . . . . . . 1

 I. Introduction  . . . . . . . . . . . . . . . . . . . . . .2

    CAC System Requirements . . . . . . . . . . . . . . . . .2
    A Note About Notations. . . . . . . . . . . . . . . . . .3
    Preparing to Use CAC  . . . . . . . . . . . . . . . . . .4
    Starting CAC . . . . . . . . . . . .  . . . . . . . . . .5
    Where to Find More Help . . . . . . . . . . . . . . . . .6

II. Using CAC - A Guided Tour . . . . . . . . . . . . . . . .7
    Meet the Browns . . . . . . . . . . . . . . . . . . . . .8
    A Quick Overview of What We're Going to Do. . . . . . . .9
    Now for Some Brass Tacks. . . . . . . . . . . . . . . . .A
    First Steps . . . . . . . . . . . . . . . . . . . . . . .B
    Entering Tax and College Status . . . . . . . . . . . . .C
    Entering Income Data. . . . . . . . . . . . . . . . . . .D
    Entering Asset Data . . . . . . . . . . . . . . . . . . .E
    Using CAC's "What IF ?" Feature  . . . . . . . . .. . . .F
    Entering Dependent Student Data . . . . . . . . . . . . .G
    Entering Independent Student Data . . . . . . . . . . . .H
    Using the NEED & COST of Attendance Worksheet . . . . . .I

III. Reference Guide to CAC Main Menu, Summary Page, and
     Worksheets . . . . . . . . . . . . . . . . . . . . . . .J

    CAC Main Menu . . . . . . . . . . . . . . . . . . . . . .K
    CAC Main Screen . . . . . . . . . . . . . . . . . . . . .L
    
        The Data Area . . . . . . . . . . . . . . . . . . . .M
            Tax and College Status Window . . . . . . . . . .N
            SELECT Menu. . . . . . . . . . . . . . . . . .  .O
            SUMMARY Page . . . . . . . . . . . . . . .. . . .P
            "What IF ? " Window . . . . . . . . . . . . . . .Q
            Contribution and Taxes Report Lines . . . . . . .R
 
        Information and Command Area. . . . . . . . . . . . .S
            VIEW or CHANGE Mode . . . . . . . . . . . . . . .S
            RECALCULATION Setting . . . . . . . . . . . . . .T
            RECORD Number . . . . . . . . . . . . . . . . . .U
            The Help Line . . . . . . . . . . . . . . . . . .U
            The Menu Bar(s) . . . . . . . . . . . . . . . . .V

    Worksheets  . . . . . . . . . . . . . . . . . . . . . . .W

IV. Comments about Sample Data Sets (Records 1-10 in CAC) . .X
		Record #1   Complex Financial Situation, Joint Tax Filing
		Record #2   Independent Student with Child
		Record #3   Simple Need
		Record #4   Head of Household, Divorced
		Record #5   High Income - Two in College
		Record #6   Independent Individual
		Record #7   Zero EFC 
	
		FAST CALC 

		Record #8   Parental Est.
		Record #9   Parental Est. -- Simplified Need 
		Record #10 Independent Student

 V. Glossary of Terms . . . . . . . . . . . . . . . . . . . .Y

VI. Shareware Permission Granted-Copy CAC 96-7 for a friend .Z

 VII. Why you'll want to upgrade to CAC 97-8 . . . . . . . . ZZ

VIII. College Aid Calculator Order Form . . . . . . . . . . .ZZZ
 
                                \2
                         I. INTRODUCTION

CAC System Requirements
-----------------------
The system requirements for running CAC are: 

    * An IBM PC or compatible, 386 (486 or better strongly recommended)
    * A 3.5", 1.44MB disk drive to install from
    * 6MB of disk space (9MB during installation)
    * 4MB of RAM if operating under DOS
    * 8MB of RAM is recommended under Windows 3.1 or later

You will also need to have a basic understanding of how to operate your computer while running under MS-DOS or Windows. For specifics see CAC's README.TXT and your computer's user guide. CAC, and all of the programs you run, just like a car, will run best if your engine is "tuned."   If CAC will not boot--or comes up and then disappears from your screen, you will have experienced a computer memory conflict. Reboot your computer, load CAC 1st, then your word processor, etc. If this does not help, check the README.TXT file in the COL_AID directory to be sure AUTOEXEC.BAT & CONFIG.SYS,  etc. have been configured as directed.

                                       \3
A Note About Notations
----------------------
In all sections of COACH  that deal with keyboard operations, we've used the following convention: To indicate the use of a particular key to be pressed, we've enclosed the character in square brackets, [ ]. So, for "the E key," we've used [E] (to Edit), and for "the Enter key," we've substituted [Enter]. Where two keys are to be pressed together, the two key names are enclosed in the same set of brackets, separated by a dash, as in [Alt-C] (to recalculate).

                                       \4
Preparing to Use CAC
--------------------
Before sitting down to enter data on worksheets, collect your information. Have your current (or last year's) tax return and/or current income figures ready (including untaxed income), and a list of values of your assets (cash, investments, real estate, home--you may also need car and retirement account values). If you know what your IM college considers an asset, keep the information handy, as it will enable CAC to give you a more specific answer. You will be able to save your data and summary pages. If you want an immediate paper copy, press [PrintScreen] or [Shift-PrintScreen]. For the SUMMARY Page and Dependent Student page, use CAC's Print function at the bottom of the screen. A neat formatted printout is provided.

CAC worksheets will have some lines that refer to your tax return, but EFC formulas require additional information, such as untaxed income and asset values. Also, CAC worksheets are somewhat different from the aid application forms. Data is needed to calculate your federal income taxes so that you can play "What IF ?" with your planning scenarios. To help you understand the process of filling out the forms, we offer a guided tour and provide plenty of explanatory pop-ups in the program itself. You will find that the effort will be worthwhile. You will be able to find out where you stand, so that you may plan ahead and be prepared when the time comes to apply for financial aid and to fill out the actual forms.

                                       \5
Starting CAC
------------
Load CAC into your computer as explained in the README.TXT file. When the Main Menu comes up, choose "Sample Data." This will take you to the SUMMARY Page for a hypothetical family. Every category (parent, independent student, and dependent student) will have a separate SUMMARY Page with an estimate of expected contribution at FM and at IM colleges. Each parent and independent student SUMMARY Page will show: worksheet totals for each category of income and assets, dollar totals for IRS 1040 Taxable Income, and College Income and College Assets (the figures that the formulas will look at when deciding how much you must pay before aid is given). The Dependent Student Page will show totals for Available Income and Available Assets. See the Glossary at the end of this document for an explanation of these and other terms.

Notice that there is a seven-choice menu bar at the bottom of the screen. Just above the seven choices, the screen identifies this as "VIEW" Mode. You are "viewing" the screen and may choose from the seven menu items. When you choose "Edit," you will be in "CHANGE" Mode, which has three choices on the menu bar at the bottom of the screen. For detailed information about CAC's Menus, use your computer's Find function and search for \S--or read on and learn as you go.

Familiarize yourself with CAC's menu  structure by making the first of the 7 choices from VIEW Mode. Choose [E] to Edit. This takes you to the first data entry field where you will later enter a STUDENT name. You are now in CHANGE Mode where you will later be making entries and changes on records. The word "CHANGE" is visible in the lower left of the screen. From the list on the bottom line of your CHANGE Mode screen, choose [F10] to SAVE. Then the SELECT Menu will appear. CAC's  SELECT Menu makes it easy to navigate. It is accessible from almost anywhere in CAC: It appears every time you press [F10] to save a worksheet; it is offered as one of the menu bar choices at the bottom of the screen in VIEW Mode; otherwise, it pops up as needed. At the SELECT Menu, press [G] to Goto SUMMARY Menu. The seven-choice VIEW menu bar will reappear. 

Note: You can make changes to the sample data, but you may not want to do this until you study each case. The various sets of sample data point out interesting aid situations--once you change them, they will be permanently changed. (Of course you could re-install CAC to bring them back.) Use your word processor's FIND function and go to  \X  to read our comments on these sample data records. If you wish to change data, it's easy:  Just press the space bar to delete an entry. Then, type in your new data and/or press [Enter] to advance to the next field.  

You can practice making a change to the sample data as follows: Above the seven-choice menu in VIEW Mode, you should see "Record: 1". If not, press [UpArrow] or [DownArrow] until the number "1" appears. Press [E] to Edit. Then press [Enter] until you are at the "State Name" field. Change the state name to Alaska (AK) or your state, and then press [Enter]. Notice that your two-letter state code is at the right side of the screen--and the full previous state name remains at the left. Press [Enter] several times to advance through the next few fields until you are at the "Family Size Is" field. Make a note of the REVISED CONTRIBUTION at the lower right of the screen. Then, Press [Alt-C] to recalculate. Does it make any difference where one lives? Also notice that your full state name is now displayed up top. Continue pressing [Enter ] until you arrive at the pop-up where you may choose: "Data is Correct" or "Edit Above Data Entries." Choose the latter and replace the old state name--
MA, so that the sample data explanation below, which contains information relating to MA, will not appear to be wrong. 

Remember that when you are in VIEW Mode, pressing [UpArrow] and [DownArrow] will bring up different records.

The guided tour presented below at  \7  will take you step-by-step through a demonstration of what CAC does and how to use the program. As a minimum, you may want to just skim through to pick up a few navigational tips--and other tidbits pertinent to your situation.

Take your time entering data. Each time you press [Enter], wait for the cursor to appear in the next field. If you press [Enter] too quickly, you may skip over a pop-up message. If this happens, use the [UpArrow] to back up to the missed message. If you want to move backward further, press [Enter] and [UpArrow]. When a new worksheet is chosen from the SELECT Menu (especially if you have a slow computer), the previous worksheet may appear for a few seconds. Be patient, and wait until the new worksheet appears--don't try to make a selection from the menu bar that appears momentarily.

If your computer seems to be running slowly, the automatic recalculation setting may be turned ON. Check the lower left corner of the screen. If you do not see the word Manual, press [F2], then [T] to turn OFF automatic recalculation. This should dramatically speed up data entry.

This version of College Aid Calculator uses the 1996-7 school year aid formulas and 1995 tax tables. (1995 is the base year for 1996-7 financial aid.) CAC will be updated to the 1997-8 school year version by late summer, 1996. This is important, because the aid rules, the tax rules and your financial numbers all change every year. Upgrading to CAC 97-8 is essential for keeping your plan current, for testing your "What IF ?" scenarios, and for tracking your personal changes in aid eligibility. In addition to all of the above, many enhancements are added to CAC each year, making it even more helpful to those who count on it. Your comments are welcome--please complete the questionnaire--accessible from CAC's Main Menu. See the ordering information at the end of COACH--Ask your word processor to "Find"   \ZZZ.

                                       \6
Where to Find More Help
-----------------------
If you have a question about using CAC that COACH  has not answered, try looking at the information available by selecting the Help choice on the CAC Main Menu and/or reviewing the README.TXT file to find out more about operational / installation matters. If these resources do not answer your question and you have an Internet connection, you may e-mail installation questions to us at collegeaid@maine.com. If you have a World Wide Web browser, visit the CAC technical support page at  http://www.maine.com/collegeaid  to see whether there is an answer there--or write us at Think Ahead, Inc., PO Box 5E, Dresden, ME 04342--we will do our best to help you.
                     
                                       \7
                       II. USING CAC - A GUIDED TOUR

In this section, you will use CAC just as if you were working on your own college financial aid situation. However, instead of using your data, we're going to step you through the process as it might be done by an imaginary family. 

                                       \8
Meet the Browns - An Average Family
------------------------------------ 
There are two parents in the Brown family (Phil, 45 and Nancy, 42) and two children (Jennie and Cathy). Both parents work. Combined income is about $40,000 per year. They file joint tax returns. The Browns live in Illinois. Cathy will be ready to enter college as a freshman in September, 1996. She will attend school for nine months during the regular academic year. 

                                       \9
A Quick Overview of What You're Going To Do
-------------------------------------------
After starting CAC, you will select "New Data" from CAC's Main Menu. The CAC worksheet will be displayed, and you will be ready to enter the Brown family's data, beginning with: student name, state of residence, tax status, number of children in college, family size, age of older parent, etc.

Then, you will take their tax information (per the following table) and enter it into various worksheets which will be summarized by CAC in the SUMMARY Page. The Browns' asset data will be entered next. After all of the parental data has been entered, you will enter the dependent student data for Cathy Brown. That will complete the basic data entry operation. 

At that point, CAC will have already calculated an approximation of the Browns' Expected Family Contribution (EFC) by Federal Methodology and by Institutional Methodology. Next, you will play "What IF ?", to see if the Browns may have any options available for reducing their EFC.

                                       \A
Now for Some Brass Tacks...
---------------------------
Are you ready? ... The Brown family would like your assistance in optimizing their aid strategy.

Note: If you need to stop working at any point in this process, continue until the cursor is in one of the data entry fields (not in a pop-up) and then press [F10] to save your work. Next, press [G] to Goto Summary Page, [Q] to Quit to the Main Menu, [Enter], [Q] for Quit, [E] for Exit. When you are ready to resume work, reboot, select "Review Old Data." At the pop-up choose "Student," type the first threee letters of the student's name.
                                       \B
First Steps...
--------------
1. Start CAC

We assume you have successfully installed CAC. If not, you may want to refer to the README.TXT file in the COL_AID directory for information on how to do that, including how Windows users may add a CAC icon.

    * If you are not  using Windows:

	        a. At the MS-DOS prompt, type [CD COL_AID] and [ENTER] 
          		 This changes to the directory in which CAC was installed.  
	        b. Next Type "CAC" and [Enter]. CAC will then start up.

    * If you are  using Windows
	        a. Start Windows
	        b. Double-click on the College Aid Calculator icon (see README.TXT to install).

Depending upon the speed of your machine and the status of your computer housecleaning (defragmenting files, etc.), it will take from five to over ten seconds to bring up the CAC Main Menu. You will know when you have it, because it looks like a spruce tree! For suggestions on speeding up your computer, see the README.TXT file in the COL_AID directory. 

2. Bring up the CAC Worksheet

    * At the Main Menu use the [DownArrow] to move the lightbar down to "New Data," and then press [Enter]--or just press [N], the highlighted first letter of New Data--or click anywhere on the New Data line.

Depending upon the speed of your machine, it may take up to 45 seconds or more (on older 386 computers with badly fragmented hard disks) to set up your work space.

    * You will see a pop-up window which starts out New Data Entry:  If you see 0s below, just follow the directions, and you should soon see a blank worksheet.

                                       \C
Entering Tax and College Status
-------------------------------
Note: Press [Enter] after each piece of data has been typed.

    * The flashing cursor will be at the left end of the Student field. Type in "Cathy" (remember to press [Enter] afterward). Then, type in "Brown" in the Parent field and press [Enter].

Note: If you are a professional using CAC to serve multiple clients, you will want to enter student and parent names, last name first. If you do so, records will be filed alphabetically by last name to facilitate searching client records.

    *A pop-up will appear asking you to choose either Parental Contribution and Dependent Student or choose Independent Student. For the Browns, press [Enter] to choose the former.

    * A WELCOME window will be shown. Press [H] or [DownArrow] and [Enter] to select "HELP" ..."What do I do now?"

    * A window of information about how to move around in CAC will be shown. Read this and jot down any details you may wish to refer to later, then press [Enter] to exit.

For this or any screen you wish to have a copy of, you may use your computer's [Print Screen] key to make a quick-reference printout. See your computer manual for instructions on how this function works on your system. Some computers require you to hold down [Shift] while pressing [Print Screen]. Press [Enter] after you have finished with the navigation information. 

    * The Where are you from? window pops up next. Press [Enter], and then type the Browns' two-letter postal code (IL) in the blank. Lower-case letters are OK. Press [Enter].

_________________________________________________________

The Brown family revisited...
 
You will need the following data to complete this section of the CAC worksheet. The Brown family consists of two parents, (Phil, 45 and Nancy, 42) and two children (Jennie and Cathy); both parents work--Phil makes $32,750 at a full-time job, Nancy brings in $5,400 from her bookkeeping business; they file a joint tax return. The Browns live in Illinois. Cathy will be ready to enter her college freshman year in September, 1996. She will attend school for 9 months during the regular academic year. Jennie will start college a year later.

_________________________________________________________
 

    * A divorced and not remarried pop-up is displayed; press [Enter] to select "No" because this is not true for the Browns.

    * A list of classes will be displayed. Use [DownArrow] to move the lightbar to Cathy's class, HS Class of '96, and press [Enter]. 

    * A pop-up will be shown asking whether you're using estimated or actual tax data--choose ACTUAL. 

    * A list of tax-filing modes will be shown. Choose the Browns' tax filing mode (Joint Tax Return - 2 Parents). 

    *The cursor will be at Exemptions. The Browns take 4 exemptions on  IRS 1040 Line 6e.Type [4], press [Enter].
    
    *You will see a pop-up about Family Size. Read it, press [Enter]. Then type [4], press [Enter].

    * The cursor will move to the # in College field. Type the number of students the Browns will have in college [1]. Press [Enter].

    * The cursor will move to the # Mo. field, which will contain "9", the default value. Press [ENTER] to accept this number. If your student were attending college for more or less time, you would change this number, and your EFC would be altered proportionately.

    * Next, a pop-up is displayed which allows you to specify an income tax deduction for the first parent, if that parent happens to be blind or age 65 or older. Press [ENTER] to indicate that neither choice is applicable; a second pop-up will ask the same question for the second parent--press [ENTER] again. Do the same for student Cathy.

    * The cursor will move to the Oldest Adult field. Enter the age of the older of the Brown parents (Phil, 45). This should be true as of the date that the college aid application is filed.

    * Press [ENTER], and a pop-up will appear: 
	
			Detailed Calculation Method
			"FAST" Calculation Method
			"SELECT" Menu
			Edit above Data Entries.	

    * If you wish to make changes select "Edit." When you are ready, choose "Detailed ... ." The "SELECT" Menu will be explained later. "FAST" Calc is an instant-answer, twenty-question way to calculate your aid eligibility. This is explained below. Search for: #8 to look at this now. 
 
______________________________________________________

           Brown Family Tax Return and Aid Form Entries

IRS Line No.          Description                       Amount

        *W-2 WAGES & SELF EMPLOYED
 7       Wages, salaries, tips, etc.                    $32,756
12       Business income/loss (line 12 on 1040)         $ 5,428

        *OTHER TAXABLE INCOME
 8a      Taxable interest income                        $ 1,275
 9       Dividend income                                $   952
10       Taxable refunds of state inc. taxes            $   488

        *ADJUSTMENTS TO INCOME
23a      IRA deduction for Nancy                        $ 2,000
13       Capital Gain (Loss)                            $ 1,215 

        *ITEMIZED DEDUCTIONS
 1       Medical and dental expenses                    $ 2,952
 5       State and local income taxes                   $ 3,230
 6       Real estate taxes                              $ 2,056
 7       Personal property taxes                        $   443
 9       Home mortgage interest and points              $ 5,937
18       Total contributions                            $   804
21       Tax preparation fees                           $   353

        *UNTAXED INCOME   
         Depreciation on computer (Sch-C,Line 13)       $   872

______________________________________________________

                                

Entering Income Data
--------------------
Read the W-2 Wages pop-up window, and then press [Enter]. 

For now, press [ENTER] to continue, in order go to the worksheet.

1. Enter W2 Wages and Self-Employment

Note: Remember to press [Enter] after typing in each piece of data called for in the following instructions. To indicate numbers to be entered on the worksheets, we will use brackets [ ], (example: [3000] -- omit  the dollar sign, pennies and the comma). When providing information about the Browns' income, expenses, assets and liabilities, we will include  the dollar sign and comma (example: $3,000) in our explanatory text.

    * The "W2 Wages +Self-Employment" worksheet will be displayed. Enter Phil's salary [32756] under 1st Adult and press [Enter] six times.
 
    * Since neither Phil nor Nancy are in college, they will not need to enter figures for Scholarship & Grant Income or Work-Study Income. Press [Enter] six more times. 

   * The cursor will be at First Business-Farm-Partnership  2nd Adult column; enter Nancy's earnings from her bookkeeping service business [5428]. Press [Enter] then [F10] to save; the SELECT Menu will appear.

Note: The SELECT Menu is a "master navigational control panel" which enables you to go to any CAC worksheet, any informational SUMMARY window, or to the "What IF ?" window--or you may Exit by choosing Goto SUMMARY Page / Quit / Enter / Quit / Exit. 

Note: Pressing [F10] while in any worksheet will bring up the SELECT Menu. However, if you are in a pop-up window, you must first exit the pop-up by pressing  [Enter] before pressing [F10].
 
    * The SELECT Menu's blinking pointer will be at the "Other Taxable" line. Note that the description at the bottom of the screen indicates that Other Taxable Income includes Interest and Capital Gains, both of which are income sources for the Browns. Press [Enter] to save the Wages data and go to the Other Taxable Income worksheet. For a moment the prior worksheet will be visible on the screen and a menu bar (not applicable) will appear at the bottom of the screen. Ignore this and wait for the new worksheet to appear.

2. Enter Data for Other Taxable Income

    * The OTHER TAXABLE INCOME worksheet will be displayed with the cursor in the 8a (Interest Income) field. Enter the Browns' Interest Income figure [1275]. After a pop-up,the cursor will move to Exempt Interest, for which the Browns have no entry, so press [Enter] to move on. 

    * The cursor will move to Dividend Income, where you should enter the correct figure for the Browns [952] and press [Enter]. Press [Enter] again to pass the Other Taxable Inc. field.

    * The cursor will move to Refunds - Taxes; enter the Browns' figure [488]. Press [Enter].

    * Press [Enter] to move over the Alimony field.

    * The cursor will move to Capital Gain, for which you should enter the Browns' amount, [1215]. Note that, had there been a loss, you would have entered the figure preceded by a minus sign, i.e., [-1215]. 

    * That is all of the Browns' Other Taxable Income. In order to force CAC to calculate a total for your entries before you complete this worksheet, press [Enter] to record the $1,215 and then hold down [Alt] and then press [C]. If all values were entered correctly, the total at the bottom will be $3,930. If that is the case, press [F10] to return to the SELECT Menu. Note: From the SELECT menu you may always return to the worksheet just completed by selecting the second choice on the list.

    * If the total Other Taxable Income is not  $3,930, look over the entries for any errors. You can go back to an incorrect value easily by pressing [UpArrow] repeatedly until you reach the field which needs to be changed. If you encounter a pop-up message, press [Enter], then [UpArrow]. Then, retype to make the correction. Likewise, you can go ahead to return to where you were by using [DownArrow] or [Enter]. To recheck your total, press [Alt-C] again. When you have the right total, press [F10] to return to the SELECT Menu.

3. Enter Data for Adjustments

    * The SELECT Menu's blinking arrow will be pointing at the "Adjustments to Income" line--press [Enter]. When you arrive at the Adjustments worksheet, you will find a value of $384 already filled in for Self Employment Tax. [Note: this number--and others--may be $1 more or less than shown here, depending on the rounding logic used in your computer.] This is a deduction from income for half of the self-employment tax which Nancy must pay on the income from her business. 

    * Referring back to the Browns' tax data, you will note that Nancy made a $2,000 contribution to her IRA. Press [Enter] once, then enter [2000] in the IRA deduction field (b) for the second parent. Then, continue pressing [Enter] until you have gone through all the remaining fields on this screen. Once you have pressed [Enter] in the last field, CAC will present a pop-up containing the following instructions:

    Press ENTER to CONTINUE... Then,
    Alt-C to Recalculate (optional)
    and F10 to SAVE & go to "SELECT."

If you wish to resume editing the Adjustments worksheet, press [Enter] and proceed to do so. This message will appear after exiting the last field in all worksheets. 

    * Press [Enter] [F10] [Enter] to go to the "Itemized Deductions" worksheet.

4. Enter Data for Itemized Deductions

    * Note: the Browns had a bad year, medically, in 1995, with a total of $2,952 in medical expenses that weren't covered by their group insurance. A pop-up message explains that the Browns will qualify for a special credit from institutional-funding colleges for all medical expenses in excess of $1,669.  (Note: this number will change to $1655 later, when you enter Untaxed Income items). Press [Enter]. 
 
    * Enter the following values applicable to the Browns on the Itemized Deductions worksheet: Medical and dental expenses [ 2952], state and local income taxes [ 3230], real estate taxes [2056], personal property taxes [443], home mortgage interest and points [5937], total contributions [804], and tax preparation fees [353]. Note: The Browns' tax preparation fees will not affect totals because they are not greater than 2% of Adjusted Gross Income.

________________________________________________________

Remember, you can move back and forth among fields using the up- and down-arrow keys and [Enter]. Don't forget to press [Enter] after the last entry before pressing [Alt-C] to recalculate or [F-10] to save and exit from the worksheet.
________________________________________________________

    * When you're done entering the Browns' deductions, make sure to check your work. With the cursor in  the worksheet press [Alt-C]. The Total Itemized Deductions should be $12,470.

    * Now, take a look at the light blue band in the lower part of the worksheet. You will see that the Total Itemized Deductions is considerably more than the Standard Deduction allowed for a family of this size. Note also that CAC has decided that the "Itemized" value is the best one to use as the Browns' deductions figure. Press [F10].

5. Enter Untaxed Income

    * The blinking arrow now points at "Untaxed Income." Press [Enter]. Note the $2,000 entry--this is a carryover from the Other Taxable Income worksheet which you filled out earlier. You will probably remember that $2,000 was the amount given for Nancy Brown's IRA contribution. It is entered here because all schools consider the income used to make contributions to retirement funds (and many other items normally exempt from taxation) as income for the purposes of computing EFC. So, if you had Untaxed Social Security Benefits, Tax Exempt Interest, AFDC payments, or any of the items on this worksheet, they would be added to income to compensate for the fact that they were either disregarded or deducted from income on your tax return. 

Press [Enter] until you reach the end of the page. Note: If your income had been at a certain level, a pop-up would have been activated to tell you that you qualified for an "Earned Income Credit"--approximately how much that credit would be, and what you should do about it. The Browns do not qualify. 

When finished with Page 1, CAC automatically moves to Page 2. To go back to Page 1, use [UpArrow] or [PgUp]. Since nothing on Page 2 applies to the Browns, press [PgDn] to go to Page 3. Items on Page 1 and Page 2 are counted by both Federal and  Institutional Methodologies. Note that the Page 3 items are counted only  by Institutional Methodology schools. Read the message, then enter [872] for Business Depreciation on Nancy's business computer. Unlike the $2,000 for the IRA contribution, which is considered to be Untaxed Income for both  FM and IM, the depreciation will be added back to IM income only. Similarly, their $1,215 Capital Gain will reduce their IM income. Enter [1215] on the Capital Gain line. (Parentheses on the CAC screen indicate that this item will reduce  your untaxed income.) Press [Enter] to read the pop-up messages--until you are in the Other Taxable Losses field.

Note: Institutional Methodology schools vary in how they treat Capital Gains and Depreciation and other items covered on this Untaxed Income screen. Check with the schools of your choice to find out what their policies are, or, to be conservative if you are unsure of what to do, enter a worst-case scenario and then test the "What IF ?" potential of each item that may apply to you. 
  
    * The Browns have no other Untaxed Income. Press [Alt-C]. Federal Untaxed Income should be $2,000 and Institutional should be $1,657. Press [F10].
 
6. Review Excludable Income

    * Press [Enter] to SELECT "Excludable Income"--then [Enter] to review the pop-up messages. You will see that this screen contains the amount $1,297, which is the Browns' allowance for Medical expenses exceeding 4% of their Adjusted Gross Income. The source of this figure is the Itemized Deduction worksheet, which you have already visited. Institutional Methodology allows the deduction of this amount from income, while Federal Methodology does not. NCSA Living Allowances, Child Support Paid, and private school Tuition are also excluded from income for IM. (Note: The medical allowance will change when income, expense or other exclusion items are changed--this is a result of IM formulas and not a defect in the program.) The Browns have no other Excludable Income, so let's continue. Press [F10] and [Enter]. 

7. Review COLLEGE INCOME SUMMARY

    * You will see that COLLEGE INCOME SUMMARY is a review of all of the entries and calculations completed so far. It shows how the Federal and Institutional methodologies compute College Income, one of the components of the EFC formulas. On the top line is the Browns' Adjusted Gross Income (AGI--$39,730, line 31 on 1040). Following AGI are three lines showing how Taxable Income is computed, followed by Untaxed Income.  Untaxed Income is added to AGI and Excludable items are subtracted from AGI to give TOTAL INCOME CONSIDERED. 

Note: The flashing arrow is pointing at US Income Tax. If you have not completed your 1995 tax  return, and are filling out your 96-7 aid forms now, you can use this estimated  US Income Tax number to answer the aid form question that asks for that number. (The accuracy of the estimate depends on your having entered the correct data.) Think ahead to next year. CAC's next version will be ready by late summer 1996. Use it then to check on your plan. If you pinpoint the best strategies, implement them, and keep up to date, you will be ready when it is time to complete your aid forms. 

A pop-up at the tax line will allow you to correct for any discrepancy between CAC's calculation and actual tax paid.

To proceed from Total Income Considered, eight items are subtracted to give COLLEGE INCOME: 

    - US (Federal) Income Tax, 
    - IL State Tax and Estimated Other IL Taxes, 
    - FICA (Social Security and Medicare), 
    - Employment Expense Allowance, 
    - Medical/Dental Expense Allowance, 
    - Income Protection Allowance, 
    - Elementary/Secondary Tuition Allowance,
    -  Educational Loan Repayments (may be considered by some colleges).

    * Two allowances bear some discussion. These amounts are reductions  in the income to be considered in computing EFC. Their purpose is to take into account factors deemed important to the financial well-being of families applying for aid. For example, the Income Protection Allowance is an amount set aside to ensure that the family has enough income left over to provide for basic living essentials, such as residence, food, clothing, etc. Employment Expense Allowance takes into account the fact that there are certain extra family expenses necessary in order to enable a single parent or a second parent to work, e.g., transportation, work clothes, and so forth.

    * The COLLEGE INCOME figures at the bottom of the window, $14,583 (FM) and $10,872 (IM), are the part of the family's total income that the particular methodology considers to be countable as a partial basis for computing the EFC. As you will see in the next section, there is another quantity which is very important in figuring EFC, namely Assets. Press [Enter] as necessary to read the pop-up explaining other items in the table; then press [Enter] to return to the SELECT Menu.

                                       \E
Entering Asset Data
-------------------
_________________________________________________________

More about the Browns...

Phil and Nancy Brown began very early to save for their children's education, and have managed to accumulate $18,231. It is invested in mutual funds and is held in the parents' name (see Strategies  book for discussion of why). They have a house worth $155,000 (and a mortgage of $74,213). When the mortgage debt is subtracted from home value, their home equity is $80,787. The Browns are also holding an owner- financed second mortgage which they took back when they sold their previous house. The remaining balance owed them is $9,116. Their checking account balance is $2,347, and Nancy has $27,486 in her IRA. It appears that the colleges Cathy is considering will not view Nancy Brown's IRA as an asset, but some schools may. (Remember from entering untaxed income--see item 5., above--that the annual income contributed to the IRA is counted as income by all schools.) Nancy's business is valued at $9,586. This includes cash in the bank and the value of her computer equipment. Note that if you own all or part of a business, the college will require you to complete a form called the Business/Farm Supplement.

_________________________________________________________


1. Enter Data for Business and Personal Assets

    * Press [Enter] to go to the "Business & Personal Assets" worksheet, read the message and Press [Enter]. The cursor will be located in the first field of the BUSINESS etc. section of the worksheet. Nancy Brown's Business assets total [9586]. Type the number, then press [Enter] as necessary to move down to the first field (Cash-Money...) in the PERSONAL ASSETS section. Enter [2347], the Browns' checking account balance. The cursor will have moved down to the next line (Stocks...); type in [18231] This is money that the Browns have been regularly setting aside for their children's education. Press [Enter] twice to go to the Residence field and enter [155000] under Value and [74213] under Debt.  Press [Enter] three times and enter [9116] under Mortgages Held. This is the principal remaining on a note the Browns had to take back when they sold their former home a few years ago. 

Note of importance: All of the Browns' money has been saved and invested in the parents' name. If it had been saved in their children's names, the contribution consequences would be severe. According to the aid formulas, 35% of student assets must be contributed each year--compared to a maximum  of 5.64% of parents' assets--and parents may qualify for a lower rate. This means that, over the course of four years, if a student contributes 35% of his or her assets the first year, and 35% of the remainder each year thereafter, the student's eventual contribution will be about 82%--compared to a 21% maximum  for parents--a savings of 61%. Had this money been saved in the children's name, the Browns' Expected Family Contribution would have been $11,121 higher (61% of $18,231 is $11,121).

     * Press [Alt-C] to check your work when you have finished entering these numbers; the totals should be $29,694 for FEDERAL and $110,481 for INSTNL. Note the much larger asset amount considered "available" by IM. This is because it does not exempt the family's residence from consideration, whereas FM does. Press [F10] and [Enter] to proceed to the next sheet.

2. Review SHELTERED ASSETS and Est. CONTRIBUTION

    * Press [Enter] to pass the initial pop-up. This screen provides a review of all data entered and computed so far, including both income and assets. Note that there is another "allowance" here, one for Asset Protection in the amount of $39,200 (FM) or $38,200 (IM). The Asset Protection Allowance is intended to protect a portion of the assets that the parents or independent student have been building for retirement. It is based on the age of the oldest adult in the family.

In the Browns' case, Federal Methodology only counted $39,280 of their assets. The Federal aid formula allowed a discount for business assets, $5,752 for  Nancy Brown. In addition, the Browns' Asset Protection Allowance was $39,200. The combined Business Discount and Asset Protection Allowance is larger than their assets, so FEDERAL Methodology will not assess any of their assets in calculating the Browns' EFC. In fact, the Browns could own additional assets worth $5,672 under FM without being required to contribute one dollar more. (see SHELTERED ASSETS at bottom of the screen). On the other hand, INSTITUTIONAL Methodology counts home equity and other items, so IM views a larger asset figure for the Browns. IM shelters $110,933. After subtracting the Business Discount and Asset Protection Allowances, IM sees the Browns as having a Discretionary Net Worth (DNW) of $76,115. The latter amount is the basis for computing the asset portion of the PARENTAL CONTRIBUTION to the EFC. 

COLLEGE ASSETS is the amount upon which the asset portion of the Est. CONTRIBUTION is based and is calculated by taking 12% of DNW. The idea here is to convert assets to income by calculating a figure comparable to what might have been earned if the DNW were invested at an assumed 12% rate of return. Thus COLLEGE ASSETS for the Browns are zero for FM; $9,134 for IM. 

Now that assets have been converted to an assumed income figure (COLLEGE ASSETS), this income is added to COLLEGE INCOME. The result is Adjusted Available Income (AAI). The Browns' AAI is $14,583 (FM) or $20006 (IM). Finally, Est. CONTRIBUTION is arrived at by applying an aid formula to AAI. The Browns' FM and IM Est. CONTRIBUTIONS, are, respectively, $3,404 and $5,316. The Remainder is the portion of income and assets that is excluded by the formula--just an interesting number with no special significance.

Press [Enter] as necessary to read through all the pop-ups and to return to the SELECT Menu; then choose "Try 'What IF ?' " Read the pop-up window describing the "What IF ?" feature. Note the Browns' Estimated Parental Contributions according to FM and IM. They are $3,404 FM and $5,316 IM. These same numbers will be the INITIAL CONTRIBUTION at the bottom right of the screen once you press [Enter]. Press [Enter] to proceed.

                                       \F
Using CAC's "What IF ? Feature
-------------------------------
Note: The data you enter in this window must be an amount of change  for one of the income or asset items listed, not the final total. For example, let's say that your SUMMARY Page contains a value of $35,000 for W2 Wages Earned, and you want to find out what would happen if you increased that to $40,000. In the "What IF ?" window, you would enter 5000 (not 40000) to indicate the change. Each "What IF ?" result will show how the scenario tested will add an incremental amount to (or subtract it from) your Initial Contribution and Tax Bite.

1. "What IF ?" Phil were to earn $2,000 less and Nancy $2,000 more?

Enter [-2000] (negative number) under W2 Wages 1st Adult. Press [Enter]. Enter [2000] (positive number) under W2 Wages 2nd Adult. Press [Enter], then [Alt-C]. Tax-wise this is a wash--there is no Tax Bite. However, FM Contribution has been reduced by $203 and IM by $280. Remainder (Left 4 U) is the same. Contribution is reduced because there is a special 35%-of-income-earned credit, up to $2,600, available to single working parents or a second working parent. The credit is used up after the parent with the smaller income earns $7,428.

2. Suppose the Browns' House Needs Repairs?

The Browns' house is about 30 years old, the roof is in poor shape and needs replacing. They've talked to several contractors, and it appears that $8,700 is needed to reroof the house. Should they do it now or take a chance that the roof will last another year or so? They will need to use their home equity loan for this--they have a $25,000 line of credit and can write a check to pay for the new roof. Interest only, which is 10% now, is due for the first five years.

      a. Clear any amounts that are in the "What IF ?" fields.

      b. Go to the Itmzd. Deductions field and type [870] (positive number) [Enter], the additional interest (at 10%) which would be owed on the home equity loan during the first year.

      c. In the Instl Personal Assets field, type [-9570] (negative)  (to provide for: (1) the $8,700 decrease in home equity that would result from taking out the loan; plus (2) the $870 they would owe for interest). Note that nothing is entered under FEDERAL. FM does not count home equity. Press [Enter], read the pop-up, press [Enter] then  [Alt-C] (it will work while the cursor is blinking at "Try"). When "Try" blinks again, you may write a brief note to remind yourself of the scenario. Press [Enter]. Wait for pop-up. Choose to Continue with "What If?" or go to the "Dependent Student" page etc.

* Note that under FM, Contribution increases by $38 (because the previous tax allowance has been reduced), and "Tax Bite" is negative  -$131. Remainder Left 4 U is $93. That's not much of a difference if one were attending an FM school. IM is another story: Contribution is decreased  by $407, taxes are decreased by $131, leaving a $538 Remainder Left 4 U. It appears that re-roofing now would be quite beneficial. Increased college aid and decreased taxes will pay for more than half of the annual interest expense for the new roof--for the next four years. Worthwhile.

What else should the Browns be considering?
 
Clearly, it is possible to answer almost any financial aid strategy question with CAC's "What IF?" capability. Not only does CAC tell whether you will qualify for more aid or less aid, it even approximates your tax liability changes! Now that you know how to use "What IF ?", you will be able to make much more informed decisions. (For more "What IF ?" examples, see the ten sets of sample data entered into CAC and the explanations below. Search for:  \X.)

Note: If you intend to leave your last "What IF ? " scenario on the screen, use the last field--"Try..." to write yourself a note to remind yourself what was tested. Only the first few characters of what is written will show (e.g., "New Roof").

Press [Enter] when done. At the pop-up choose "Dependent Student Data," which is a combined Summary, worksheet and "What IF ?" calculator for Dependent Student information.  (If we were working with an independent student, instead of a dependent student like Cathy Brown, we would skip the Dependent Student worksheet and proceed directly to the "Need and Cost of Attendance Worksheet.") 

                                       \G
Entering Dependent Student Data
-------------------------------
In both the Federal and Institutional Methodologies, the student is expected to assume responsibility for some portion of his or her college expenses. This worksheet computes the DEPENDENT STUDENT CONTRIBUTION.

_________________________________________________________

Cathy Brown's financial situation...

Cathy started working at odd jobs shortly after her twelfth birthday--mostly it was baby-sitting. However, it was regular enough so that she managed to build up a savings account, even after buying a lot of her own things. Two years ago, a friend of her father's offered her a very good full-time summer job. This extended into work during the school year, amounting to six or eight hours a week. Last year, she earned $2,738 in wages. Her savings account, which stood at $5,655 at the end of the year, earned her $226 in interest.

_________________________________________________________


1. Enter Data for Income and Assets

     * College Aid Calculator accepts data for dependent students all on one screen. First, enter Cathy's wages [2738] on the W-2 Wages Earned line. Press [Enter] as necessary to move down to the Other Income field, reading any informational screens as you go. Type Cathy's interest income [226] into Other Income. A pop-up will ask about your tax exemption. Since Cathy is dependent, her parents claim her as an exemption, so enter [0]. Then, move down to School Minimum Rate (Instl) and enter [900], the minimum value. (If Cathy chooses a school with a higher minimum, the Browns can enter it later.) Finally, go to the next line, STUDENT AVAILABLE ASSETS, where you should type in Cathy's savings account balance [5655] under only  FEDERAL, and press [Enter]. Do not enter the 5655 figure under INSTNL.; the formula used here assumes  the same figure for INSTNL. that you have entered for FEDERAL. The slot under INSTNL. should be reserved, as the pop-up window attached to this field explains, for any asset(s) that is specific to a particular institution.

    * A pop-up asks if you would like to "Change Above Data Entries" or "Data is Correct." For now, select [C] for change and then press [Alt-C] to calculate.

    * Let's review the results of what you have entered in the Dependent Student worksheet. The program has computed Allowances for Taxes of $302 (FM) and $302 (IM), which are deducted from Cathy's income. It has also calculated $1,750 as an Income Protection Allowance, which reduces Income under FM. This results in STUDENT AVAILABLE INCOMEs of $912 (FM) and $2,662 (IM). Both methodologies now multiply this STUDENT AVAILABLE INCOME by 50% in order to determine the student's contribution from income. For IM, the student will owe the greater of the School's Minimum Rate--usually $900 to $1,800--or the 50% assessment rate. In Cathy's case, the 50% rate is higher. Note the arrow pointing at $1,331. The asset contribution is calculated by taking 35% of STUDENT AVAILABLE ASSETS, which is $1,979 for Cathy. Note that $1,979 is filled in for both methodologies. Press [Enter] several times, then select "Data is Correct."

      *A pop-up will appear regarding Actual Tax Paid. If taxes were different, this is where you would enter the actual amount. Cathy's match the CAC amount, so press [Enter] twice. 

   * Read the pop-up window which presents Cathy's estimated contribution. If  her data is correct, you should see $2,435 for FM and $3,310 for IM. Later, this Dependent Student Contribution will be added to the Parental Contribution to total the Expected Family Contribution. Press [Enter] to go to "What If?"

     2. Play "What IF ?"

    Remember that any entries in the "What IF ?" window are for amounts of change. If Cathy earns $1,500 in addition to her $2,738, the amount of change is $1,500.

    a.  Earnings Comparison Test:

        * Cathy enjoys her summer job. If she attends college near home, she can work at the same job during the school year and earn an additional $1,500. She has also been offered a work-study job. It would also pay $1,500. She knows that work-study income is treated favorably. How much so?

        * In the W-2 Wages field, type the number [1500] and press [Enter]. Read the pop-up about saving--you can try that experiment on your own after this. Press [Enter], then [Alt-C] to recalculate. Compare your results with what you see below--then change the type of income from W2- to Work-Study. The figure for "CONTRIBUTION Change" is the difference between the Initial Contribution and the new scenario being tested.

                       M e t h o d o l o g y                                              
                            Federal (FM)      Institutional (IM)
                Total Wage              Contrib.              Contrib.
    Test For    Increase     Tax Bite   Change      Tax Bite  Change           
    ---------   ----------   --------   --------   --------   --------
    W-2 Wages    $1,500         196        652        196       652
    Work-study   $1,500         166        -83        166       -83

Earning $1,500 in regular wages made Cathy's contribution increase by $652 (FM) and $652 (IM). However, when she earned $1,500 in Work-Study wages  her contribution decreased by $83 (FM) and $83 (IM).

Conclusion: If one has a choice, Work-Study income is preferable to other sources of income. (The reason that Work-Study income can actually reduce Contribution is that half of the Tax Bite ($166 divided by 2 = $83) on Work-Study income is deductible.) Bottom line: The old job may be great, but not that  great. Work-Study earnings are not counted when calculating Dependent Student contribution--all other wages are counted. (The difference between FM and IM Tax Bite here, and in all examples, is due to different treatment of state taxes by FM and IM.)

     b. Assets Comparison Test.

        * Cathy will need many school supplies, clothes, luggage, etc. when she attends college--all of which will be her responsibility to buy when the time comes. Now is the time. She compiles her list--the cost is nearly $2,000. "What IF ?" she waits until late summer to do her school shopping--or should she shop right now, before she completes her aid applications? Winter coats are on sale now too. Delete the old "What IF ?" changes. Enter [-2000] at FM Assets  and press [Alt-C]. Time to shop now! Cathy will qualify for $700 more aid if she buys now instead of waiting.

    * Press [F10] to return to the SELECT Menu.

                                       \H
Entering Independent Student Data

An independent student would enter his/her data in exactly the same way as the Brown parents, starting with entering family information in the Tax and College Status window, proceeding to the worksheets, and then on to the "What IF ?" window. The only significant difference would be the Dependent Student worksheet, which would not be completed. See Sample Records #2 and #6.
 
                                       \I
Using the NEED + COST of Attendance Worksheet
---------------------------------------------
At this point, you should have finished filling in the Parental/Dependent data for the Browns and have tried out the "What IF ?" function for the Brown parents and for Cathy. You should have come up with an Expected Contribution to college expenses for both Cathy and her parents. Now it's time to see how the information you have collected will work in conjunction with the cost of attending one or more colleges. 

The purpose of the "NEED + COST of Attendance" worksheet is to find out whether or not the cost to attend a college of the student's choice is likely to be covered by the EFC, and if not, how much more will be needed. Chances are that at least some additional financial aid will be needed in the form of loans, work-study, grants, and/or scholarships.

To access the worksheet from the SELECT Menu, choose  "NEED & COST of Attendance." At the blinking arrows, you can enter the Cost of Attendance at a college at which only federal aid is provided and then the Cost of Attendance at a college which also provides private aid funds. The Cost of Attendance includes tuition and fees, room and board if the student lives at school, books, and a fixed amount for personal expenses. Cathy is interested in a state university which costs $9,300 and in a private college which costs $28,800. Press [Enter] to get by the pop-up. Then type [9300] [Enter], [28800] [Enter].  

Read the pop-up about # of students in the family attending college, which in the Browns' case is 1. The number l has been carried here from your initial entries for the Browns. Press [Enter].

You will see that the second line on the page is the Parental Contribution, the third line is the Dependent Student's Contribution, and the fourth line is the total Expected Family Contribution. (If the student were independent, the worksheet would not include a Dependent Student's Contribution.)

Press [AltC] to calculate. The Cost of Attendance minus the Expected Family Contribution is the Need. For the Browns the Federal formula calculates a Need of $3,461. The Institutional formula calculates a need of $20,174. Cathy needs financial aid.

If the college promises to meet full need, and an aid officer allotting private funds does not alter the EFC, then the Need figure is the amount of college financial aid the Browns can hope to receive. However, as explained in our book Strategies to Reduce College Costs, aid officers at private colleges have discretion in awarding funds, so aid packages will vary from school to school--and be aware, aid means Grants and Loans and Work-Study--not just Grants.

Congratulations! You have completed the COACH  guided tour of CAC. You should now have a good understanding of how to harness the power of College Aid Calculator to reduce your family's college costs. Good luck!

Press [F10] to return to the SELECT Menu. Note that "Look at Questionnaire" is highlighted. We are interested in your comments. Either now, or later, please complete our questionnaire. Thank You!

                                       \J
                   III. REFERENCE GUIDE TO CAC MAIN MENU,
                         SUMMARY PAGE, AND WORKSHEETS

                                       \K
To reach the Main Menu from any worksheet, press [F10], [G], [Q],[Enter], [Q], [Exit].

CAC Main Menu
-------------
The Main Menu includes seven choices, arranged in a spruce tree shape. You may select a choice in three different ways:

    1. Type the first letter of the choice. For example, to Select Sample Data, type [S].

    2. Use [DownArrow] to move to the desired choice, and press [Enter].

    3. Click your mouse on your choice.

The actions taken in response to the various Main Menu choices are as follows:

    Help - Displays a series of messages which provide information about the following: 

        * How to use the keyboard to navigate CAC's screens windows, and 	    worksheets
        * What materials are needed to use CAC
        * How to speed up CAC operations in some instances
        * What to do about error messages
        * How to change data in a worksheet or window
        * How to call up previously saved data
        * The aid formulas used in CAC
        * Where to go for additional help

    New Data - Opens an empty data record to receive new data

    Sample Data - Opens a data record containing pre-entered data--there are ten samples for different types of typical families; this is a good place to start when you first begin using CAC

    Review Old Data - brings up a "Find" pop-up where you may search for any record by student name, or parent name.

    Questions to Answer - Displays an easy-to-complete questionnaire which you may use to provide feedback to Think Ahead, Inc.--we value your comments.

    Benefits... of Upgrading - describes why you will need  CAC 97-8 and how to order it.

    Exit - [E]  exits the program.

                                       \L
CAC Main Screen
---------------
After you select  New Data, Sample Data, or Review Old Data, CAC's SUMMARY Page will be displayed; it is easily identified by the boxed-in title "COLLEGE AID CALCULATOR 96-7" at the upper left. 

For purposes of discussion, we will consider the SUMMARY Page  in two broad areas, the Data Area, and the Information and Command Area. The Data Area includes all but the two colored bands at the bottom of the screen, which constitute the Information and Command Area. 

                                       \M
The Data Area
                                       \N
Tax and College Status Window

When you choose New from the CAC Main Menu, the SUMMARY Screen will appear with a pop-up message instructing you what to do. Wait for your blank screen with cursor flashing in the top line of the right hand side of the screen--at the Student Name line. This is the normal place to begin entering data. This window also includes parent name, location of residence, family size, etc. Make sure to press [Enter] after each item typed in.

Note: After entering the name, you choose whether the data you are entering is for Parents and Dependent Student or for an Independent Student. Do not skip this or any other field, or CAC will be unable to accurately calculate your Contribution. Make sure that your tax filing status is accurate. For Dependent Students fill out both the Parental Worksheets and the Dependent Student Worksheet.

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The SELECT Menu

Whenever you complete a worksheet, and then press [F10] to SAVE, the SELECT Menu will pop up. This is CAC's main navigational tool. It enables you to go to any other worksheet, to the "What IF ?" window,  to the CAC Questionnaire, or to the SUMMARY Page, where there is a seven-choice menu bar which allows you to press [Q] [Enter] [Q] to find the Main Menu where you can choose to Exit the program. 

To access the SELECT Menu when you arrive at the SUMMARY Page (says "VIEW" in the lower left corner), press [S] for "SELECT" Menu--which is one of the seven-choice menu bar options. To access any item listed on the SELECT Menu, press the first letter of your choice, or move the light bar to it and press [Enter], or click your mouse on it. 

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SUMMARY Page

The left half of the page contains a SUMMARY of Data from all worksheets. For example, any entries on the W2 Wages Earned and Self-Employment lines (upper left) come from the subsidiary worksheet that carries those two labels in its title.

The left side of the SUMMARY Page is divided into two categories: INCOME and ASSETS. Within these two areas are the various data lines which make up your types of income and assets. Note that there is a plus (+), minus (-), or equals (=) symbol at the left of each line in both the INCOME and ASSETS windows. These symbols indicate, respectively, whether the value on that line is added or subtracted, or is a totaled value. Note also that the first five income lines are used to compute TAXABLE INCOME. 

Coming after TAXABLE INCOME are the headings FEDERAL and INSTNL. "FEDERAL" refers to data and results according to Congressional formulas for the awarding of federally funded financial aid at public and private colleges. At many public colleges, this is the primary source of aid funds. "INSTL" refers to data and results according to Institutional aid formulas used by private colleges to award their own funds.

 Coming next is the Untaxed Income line, which is followed by the Excludable... figure. No "+" and "-" signs show here, because all income is summarized on the COLLEGE INCOME Summary Screen. This is accessed from the SELECT Menu by pressing [C]. Only the COLLEGE INCOME Total is listed on the SUMMARY Page. 
 
Note: When you are in CHANGE (Edit)  Mode on the SUMMARY Page (there is a three-choice menu bar), you may click anywhere on the black border at the far left of the Income/Asset Area, and the SELECT Menu will pop up.

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"What IF ? " Window

Immediately below the Tax and College Status window is an area labeled "What IF ?"  This is where you try out alternate financial scenarios in order to see what combination of factors will be most advantageous in terms of lowest taxes and  lowest family contribution for college. 

Note: The data you enter in this window must be an amount of change  for the category. Suppose that your SUMMARY Page contains a value of $25,000 for W2 Wages Earned, and you want to find out what would happen if you increased that to $30,000. In the "What IF ?" window, enter [5000] (not 30000) to indicate the change. 

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Contribution and Taxes Report Lines

Immediately below the "What IF ?" window is a series of five lines that summarize all of the calculations that CAC has done based on the data you have entered in its worksheets and windows. These lines are:

    Tax Bite... - An estimate of how much your taxes would change (increase or decrease) as a result of the scenario you have entered in the "What IF?" window. Note: Taxes, as listed here, are a combined total of federal taxes, social security taxes and state and local taxes. Each methodology views state and local taxes differently. So, "Tax Bite" (as far as the state tax portion is concerned) is inexact. To be conservative about what your estimated  savings  may be, use the lower of FM or IM Tax Bite." The COLLEGE INCOME Summary Screen will show the breakdown of taxes by source--prior to your "What IF?" scenario testing.

Note: Be aware of the fact that Tax Bite may sometimes appear to be producing an impossible answer. There are two reasons for this. First, as mentioned above, FM and IM utilize different tax allowances for the same state. Second, sometimes your "What IF ?" scenario may gap into another tax bracket--the dollar result of which will retroactively be applied to all previously entered income--and then that result will show up as the Tax Bite, possibly causing FM tax to be a positive number and IM to be negative--strange, but correct.

To illustrate, go back to the Browns' "What IF?" example. Remove any existing numbers (to move back beyond a pop-up, press [Enter] then [UpArrow]). Then type negative [-1386] as Other Taxable Income. Press [Enter] twice and press [Alt-C]. Note the result below. Now change that amount by $1 [-1387] instead of -$1,386. [Alt-C] and note the IM Tax Bite--a $799 difference.

                              Amount  FM Tax Bite  IM Tax Bite
    First Example              -1386       -278           -347
    Second Example             -1387       -279           +452
    Difference                     1          1            799 (tax                                                                                                                      bracket gap)

What happened? The allowable tax credit for IM (for Illinois) changes from 12% to 10% at $40,001. The difference , $800, is arrived at by taking 2% of $40,000. It appears as $799 due to round-off anomalies.

    Remainder (Left 4 U) - The amount which remains after taxes and Contribution Change have been taken into account. In most cases, this will be income change: Tax Bite minus Contribution Change  = Remainder Left For You.

    Initial Contribution - The estimated amount that the Parents and/or Student will need to contribute to college support, based on the data you have entered in the subsidiary worksheets and summarized on the SUMMARY Screen (note that this does not  reflect any values entered in the "What IF ?" window--they are summarized at the bottom right.) 

    Contribution Change - The estimated amount by which the Initial Contribution will change as a result of what you have entered in the "What IF ?" window.

    Revised Contribution - The estimated Contribution amount after the Contribution Change has been added or subtracted.

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The Information and Command Area

Information & Commands Displayed at the Bottom of the Screen

    1. VIEW or CHANGE Mode - VIEW Mode has a seven-choice menu bar including "Edit Above." The Edit choice will take you to CHANGE Mode so that you can make entries and changes to a record. To return from CHANGE to VIEW Mode, press [F10] and choose Goto SUMMARY. The record you were editing will be saved and recalculated.

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    2. RECALCULATION Setting - Visible in CHANGE Mode. If it appears as Manual  (lower left of screen), the worksheet can be recalculated by pressing [Alt-C]. Using the Manual  setting will help slow computers run faster. If you do not see the word Manual, this means that Automatic  recalculation is turned ON. In Automatic, worksheets will be recalculated after each new data entry--this is handy when working with CAC's "What IF ?" window. To change the settings, press [F2] then [T].
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    3. RECORD Number - Visible in VIEW or CHANGE Mode--the number of the record displayed on the screen. In VIEW Mode, using the up and down arrow keys will change to different record numbers.

    4. HELP Line--Visible in CHANGE Mode--displays a constantly changing series of prompts and explanations to assist you as you move from field to field.

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The Menu Bar

After leaving CAC's Main Menu, the bottom line of each screen will contain a Menu Bar that is used to access other menus or options which are available through a single keypress or mouse click. 

VIEW Mode Menu Bar

     * The following seven choices are available from CAC's Summary Page:

    Edit Above - This places the cursor at the Student field which is the 
    beginning for data input. Once you press E for Edit, note that you are             now in CHANGE Mode. 

    Find Name - Displays a pop-up window which lets you specify one of six 
    search methods.

    New Blank - Opens a new worksheet record which is ready to receive data. 
    The cursor will be in the student field.

    "SELECT" Menu - Pops up the SELECT Menu, which provides links to all CAC 
    windows and worksheets

    Print - Prints the current data in a crisp, formatted manner; use Shift-
    Print Screen] to print what you see if this option does not show on the 
    menu. Note: You will need to select your printer setup before using the 
    Print function. This will be one of the choices when you choose Print.

    Delete - Deletes the current record and all its data--permanently and 
    irretrievably.

    Quit - Goes to a pop-up where you can press [Enter] then [Quit] to         find the Main Menu, from which you may choose to Exit the program.

CHANGE Mode Menu Bar

* Once you have begun entering data (by pressing E to Edit or N for New      Blank record), the following 3 choices are offered on the menu bar:

1.F2Options - Opens the Options submenu, which lets you select:

--ReCalculate computed fields, which updates all calculations. You may also hold down the [Alt] key and press [C], i.e., [Alt-C]. 

--Toggle recalculation mode, which alternately turns automatic recalculation ON and OFF (on a 386 you will want to leave it off--it should then say "Manual" just to the right of CHANGE).

--Undo changes - Cancels any changes made in the current data since it was last saved.

--Insert Date and Address Correction--These features are not available.

2.F10Save - Saves the current data and causes the SELECT Menu to pop up. 

3.EscForget - Pressing [Esc] exits from the current data without saving the 
latest changes

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Worksheets
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CAC includes many different worksheets into which you may enter your data. Examples are the W2 Wages Earned Worksheet, the Itemized Deductions Worksheet, and the Business and Personal Assets Worksheet. All of these worksheets can be reached through the SELECT Menu (see above). The data from all worksheets, except the Dependent Student Contribution screen, is summarized and displayed on the Parental or Independent Student Contribution Summary Screen. The Dependent Student Contribution Screen in many ways mirrors the Parental Summary in that it contains fields for income and assets and also a "What IF ?" calculator. Both the Parental/Independent Student Summary Screen and the Dependent Student Contribution Screen are summarized on the Need & Cost of Attendance Worksheet.

All lower-level worksheets operate similarly. To enter data, type a number into a field (a blank) and then press [Enter]. To move the cursor downward between fields, press [Enter] or [Down Arrow]. To move up, press [UpArrow]. If a pop-up window is encountered when moving upward, press [Enter] and [UpArrow] to go beyond the pop-up.

To exit from a worksheet:

    Press [F10] and the SELECT Menu will appear.

 
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                     IV. COMMENTS ABOUT SAMPLE DATA SETS

     * CAC contains ten sets of pre-entered sample data with various scenarios and financial situations highlighted. A very brief description follows. If any of these sound similar to your situation, you may find that viewing the sample data would be beneficial. After reviewing the worksheets, try out some of your own "What IF ?" ideas. The one displayed in each sample is described below.

    * From the Select Menu choose [G] for Goto SUMMARY. Press [DownArrow] or [UpArrow] to see the record numbers and titles of the samples. Or, from the Main Menu press [S] for Sample Data, [F] for Find,  [R] for Record Number, and press [Enter].

Record #1  Complex Financial Situation, Joint Tax Filing

     * Parents with complex self-employment income and asset situation--from Massachusetts. (If state name is not correct, press [E] to Edit and change it back to [MA]. This sample data set illustrates a "What IF ?" scenario--they paid off the car loan by using a home equity loan. Under IM, this could save $643 per year--each college year, and even more, because the Tax Bite (in this instance) does not reflect the state tax savings (since the aid formulas start at Adjusted Gross Income and do not take into account Itemized Deductions). Read more about how state taxes are treated at  \R.

    * Dependent Student "What IF ?" (To look at the Dependent Student Worksheet, press [E] to Edit. Click mouse in far left margin to bring up the Select Menu. Press [D] for Dependent Student.) Once a student has earned more than his or her IRS standard tax deduction and owes the college more than a minimum contribution from income, attempting to save additional earnings may not produce the results desired. If this student earns $1,000 "extra" W2 Wages, saves all of it (an asset), and then fills out aid forms, the IM contribution will increase by $775 and  he or she will also owe additional taxes of $150 +/-, leaving a net of $75 out of the $1000. With FM the situation would be worse--only $65 net. Check out what would be left if this had been work-study income--and all the money had been spent, nothing saved. Erase [1000]  W2 Wages and [1000] Federal Assets, then enter [1000] Work-Study. Press [Alt-C]. Answer: Left 4U  $940 and $890, a great improvement over $65 or $75. Contribut
ion actually decreases because taxes increase and they are deductible when calculating Contribution.

Record #2  Independent Student with Child

     * Independent student--married, spouse also attending college, one child: FM Contribution for both students is 2382; IM Contribution is 2200--that is 1100 each, the minimum for non-freshmen Independent students. Note that these students could earn  1000 more and still qualify for the minimum $1100 IM Contribution--well, $1 more. This is because IM has a more generous state tax allowance. To see how this works, press [S] for SELECT Menu, then [C] for COLLEGE INCOME. Look at the tax allowances, and then go back to the SUMMARY Page by pressing [G] at the SELECT Menu.

     * Note what happens to Contribution if the family size is 2--married with no child. Press [E] to Edit and then change Exemptions and Family Size " from  3 to [2] and press [Alt-C]. FM after-"What IF ?" Contribution jumps to 10577 from 2382 and IM goes to 11234 from 2200. There is definitely an allowance built into the formulas to help Independent students who have children and who want to go back to school.

Record #3  Simple Need

     * Note that the Standard Deduction is $7,300. This amount is $750 higher than the usual $6,550 allotted to those filing Joint tax returns because one parent is blind. This is not an aid application question, but is asked here in order to calculate income taxes correctly.

     * This family's assets are not counted by Federal (FM) Methodology, because the family met the FM "Simplified Needs Test." i.e., both the student and parents qualify to file IRS Form 1040A or EZ. 

      *Note: They only have to qualify  to file; they may file whatever return they wish. In order to qualify to file either of these forms (in addition to income having to be less than $50,000) there can be: no self-employment income, rent or royalty income, capital gains (or losses), alimony received, or a taxable gain  resulting from having received a state or local tax refund. (A tax refund gain can only occur if Deductions were Itemized  the year before and the refund received had been deducted the year before. If one did not itemize or did not receive a tax reduction for the amount of state or local taxes refunded, the refund is not taxable and one would not be disqualified from meeting the Simplified Needs Test.)

     * Note what happened to Contribution when just $1 of the "wrong" kind of income was earned. Suddenly FM Contribution increased by $6,927! This could be important  when attending a school which only uses FM.

    * Note that, even though the Dependent Student had $6,258 in assets, $-0- was counted under FM Est. Initial Contribution, because both the parents and the student met the Simple Needs Test. However, since the parents have listed $1 of Self-Employment income in their "What IF" section, they thereby automatically disqualify their Dependent Student from qualifying for the Simplified Needs Test too--thus the 2190 of additional contribution that is listed under C.Change in the Dependent Student worksheet. IM Contribution remained the same because the Simple Need Test only applies to FM. The FM contribution will be -0- only as long as both parent and student file, or qualify to file,  Form 1040A or 1040EZ. 

Record #4  Head of Household, Divorced
 
     * Divorced Parent--Head of Household tax status--one parent and 4 children, Family Size of 5. Look what happens if the family size and exemptions are reduced from 5 to [3]--2 children instead of 4.  e.g., if the noncustodial parent takes the exemption for two children and custodial parent takes the exemption for the other two, FM Initial Contribution goes from $7,308 to $9,724--that difference will amount to almost $10,000 over four years. IM Initial Contribution goes from $2,275 to $3,947. (If your computer gives a slightly different answer, this could be caused by its using a slightly different rounding logic.)  For a higher income person, this Contribution increase would be much larger. Message: The custodial parent should arrange to be the one to take the tax exemptions for all of the children--or EFC can be increased significantly.

     * Go to the SELECT Menu and press [D] to review the Dependent Student pop-up; after passing over all fields, select "Data is Correct," and soon after, note the "Under INSTITUTIONAL  Methodology ... " pop-up that states, "You could earn about $1544 in W-2 type wages and not owe more than your...  contribution." This feature could be useful when a student has a choice of earning more or doing something different. Compare this situation to the student in Record #1--who earned $1,000 more, and had only $75 left after taxes and contribution. Each situation encounted by CAC brings up a different series of pop-ups. 

Record #5  High Income - Two in College

     * High Income Parents filing Separate Tax Returns--Second Adult self-employed--two students in college. "What IF ?" the Second Adult's business (which is run on a cash accounting basis) paid all business bills (that would otherwise not be due until January)? Effect: Business Income would be reduced (line 12 on Sched. C) by $10,000 and Business Assets would also be reduced by $10,000. Result: IM Contribution would be reduced by $2,776. 

     * Note how much money this dependent student (press [S] to bring up the SELECT Menu then [D] )  has been able to save for college. And note how much "Contribution" can be reduced if this student spends some money (to buy the computer, school supplies, etc. that will be needed) before completing the aid applications--instead of spending that same money after completing the aid applications. If $4,250 is spent, 35% of that ($1,488) could be saved. Significant.
 
     * Now go to the NEED... worksheet. (Press [F10] [N].) Need is the college's Cost of Attendance minus the Expected Family Contribution. [Need = COA -EFC.]  Thus, Need is equivalent to the dollar total of the financial aid package (grants, work-study, and loans) that the family hopes to receive. In this case FM Need is zero because EFC is greater than the Cost of Attendance. For IM, Need is $11,421--and Parental Contribution is $14,528--for each of 2 students, total $29,056

     * Change the number of college students to 1, press [Enter] twice, than [Alt-C] to recalculate. With one student in college, IM Need drops to 0, and IM Parental Contribution is $28,193.  

     * Having two students attending IM colleges simultaneously over four years (instead of being split over five years) can eliminate one full year of Parental Contribution. Depending on the situation, it may be worth considering encouraging a student to take a year off from school--to travel, to work, to see what life after school is like, and then go to college at the same time as their sibling. 

Record #6  Independent Individual

     * Hard-working, well-paid, independent, individual student. "What IF ?" a $3,000 bonus were received in January instead of December? -- over $1000 could be saved.

Record #7  Zero EFC 

     * The Federal "Simplified Needs Test" has been met (see explanation in the comments for Record #3), and  this family also meets the Federal  Zero EFC Test. This means that neither income nor assets will be counted by FM because the Adjusted Gross Income does not exceed $12,000. (Interesting point: it appears that the student  can earn more than $12,000 under current rules and the family will still qualify for zero EFC.) Again, note what just $1 of the wrong kind of income can do to the FM contribution--oops, FM contribution goes up by $14,488. IM does not use the Simplified or the Zero EFC Tests, so there is no IM contribution change.


#8 - 10  FAST CALC

CAC's "FAST" Calculation Method is one of the choices you will be offered after entering your basic information in the "data block" in the top right section of the screen. If you want a quick answer and already know your taxable income and asset totals, select "FAST" Calc. Enter your numbers. Read the pop-ups and press [Alt-C] to recalculate when instructed. Then, press [ENTER] to continue to the next pop-up where you may select "Dependent Student Data" and "NEED & Cost of Attendance."  If your situation is complicated, or any special situations apply (as mentioned in the "FAST" Calc pop-ups), or if you wish to play " What IF?", it is recommended that you also run through the "Detailed" screens.

Record #8  Parental Est. 

     * Notice on the left side of the screen, it says FAST CALC and under that, Parental Est.. To the right is TAX BITE (Fed = 3241)  9079   9832. The 3241 is the Federal IRS 1040 Estimated Tax due. The other two numbers represent the total tax allowances (IRS, State and Social Security) utilized by the FEDERAL & INSTNL  aid formulas. Press [S] for the SELECT Menu. This Menu is an abbreviated version of the Detailed Method. Press [D] to look at the Dependent Student Worksheet. This too is a short version, with no "What IF ?" option. Press [F10] to Save, and press [N] to go to the NEED and Cost of Attendance screen, which is the same one as is used in the "Detailed" method.

Record #9  Parental Est. -- Simplified Need 

     * Press [S] for SELECT Menu and then [A] to Adjust Numbers (lower right). Read the next two pop-ups, and then enter $1 in the Self-Employment income field. Press [ENTER]. Note that FEDERAL Contribution is 1651. Press [Alt-C] and see what happens when the Simplified Needs test is no longer met: FEDERAL Contributions jumps from 1651 to 9076. For some people, there is a penalty involved if you decide to start your own business and you intend to attend a school that relies strictly on FEDERAL Methodology.

    * Press [Esc] and answer [Yes] to the question, "Do you want to lose all changes to this record?" Then, press [S] and [D] to go to the Dependent Student page. This Dependent Student's Initial FEDERAL Contripbution is 650. Press [Enter] three times and enter $1 of Self-Employment Income here. Press [Enter] and then [Alt-C] and note that Contrubution jumped from 650 to 3716. Press [F10] and [G] to go back to the Parent screen and note that the Parent Contribution has automatically changed (due to the student's earning $1 of the wrong kind of income) back to the 9076 number.

    * Press [S] and [N] and [Enter] to go to the NEED screen. This family does not qualify for any assistance at a school utilizing FEDERAL Methodology. Press [F10] [D] and [Enter] three times and then the [space bar] (to delete the $1). Press [F10] and [N] and [Enter] again. No more wrong kind of income--FEDERAL NEED is now 6599--INSTNL NEED stayed the same throughout.

Record #10  Independent Student

     * Note that INSTNL Methodology Contribution (3349) is less than FEDERAL (4198)--this is because INSTNL has a more generous income protection allowance for Married Independent Students when only one is attending school. Change the tax filing status to Head of Household Independent Student and the situation flip-flops. FM Contribution is 0. IM is 1262.


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                               V. GLOSSARY OF TERMS

ADJUSTED GROSS INCOME - Line 31 of your IRS 1040 form, income that is taxed.    
 
ADJUSTED AVAILABLE INCOME - AAI.  The dollar total of: COLLEGE ASSETS + COLLEGE INCOME. This is the base amount used in the Parental Contribution (and Independent Student) Contribution table. Once AAI has reached $20,701, the contribution rate is set at 47%--below $10,301 it is 22%. There are incremental increases in between.

ADJUSTMENTS (Income section of CAC SUMMARY Page) - Deductions from Income for various contributions, fees, and taxes (see IRS Form 1040 lines 23-30)--includes self-employment health insurance deductions, moving expenses, half of self-employment taxes paid, contributions to various retirement plans, alimony, and penalty for early withdrawal of savings.

ALLOWANCES - Various dollar amounts allowed before aid formulas consider income or assets. Examples are income protection allowance, employment allowance, asset protection allowance, medical allowance, and tuition allowance.

BROWSER - A software tool, e.g., Netscape, used to access the World Wide Web.

BUSINESS ASSETS - The value, less debts, of assets owned by sole proprietorships, partnerships, or corporations of which the aid applicant is a full or partial owner. Net assets are reduced by a discount percentage based on the total amount of assets. The discount is 60% for the first $80,000 in assets, less above that, and none above $410,000. Some IM colleges require that business asset information be filed on the Business/Farm Supplement form. 

COLLEGE ASSETS - After deducting the asset protection allowance, remaining assets are multiplied by a 12% asset conversion rate. The resulting figure ("COLLEGE ASSETS") is added to "COLLEGE INCOME" to come up with "Adjusted Available Income," used to calculate the EFC. (Instead of "COLLEGE ASSETS," FM uses the term "Contribution from Assets." IM calls this "Income Supplement.")   

COLLEGE INCOME - The income remaining after allowances. (FM and IM call this "Available Income.") COLLEGE INCOME and "College Assets" are added to come up with "Adjusted Available Income," which is put in a formula to decide your EFC.      

CONTRIBUTION - Number of dollars expected from student and/or parents toward college expenses. See "Expected Family Contribution."   

DEFAULT VALUE - As it is used in COACH, a value which has been preloaded into a field because it is the most commonly encountered value, e.g., the number 9 in the "Months in School" field.

DEFRAGMENTING - A process in which you run a special MS-DOS program (DEFRAG) to consolidate files which were broken up by the operating system when they were stored. Defragmenting will usually allow your computer to execute programs more quickly.

EFC - See "Expected Family Contribution."

EXEMPTIONS (Income section of CAC SUMMARY Page) - Amount deducted from Income in computing federal income taxes; is based on family size. (See IRS Form 1040 lines 6 and 34.)

EXPECTED FAMILY CONTRIBUTION (EFC) - The number of dollars the student and/or parents are expected to pay toward college expenses. There are two ways EFC is computed--by Federal and by Institutional Methodology. CAC uses both of these formulas to estimate how much of a family's financial resources should be available to help pay for school. Income and assets are both considered.

EXCLUSIONS (Income section of CAC SUMMARY Page) - Various items of Income which are excluded in computing Expected Family Contribution; includes grant and scholarship funds, work-study and other need-based work, and child support paid. IM schools also exclude part of medical expenses and elementary and secondary school tuition paid for younger siblings.

FM - Federal Methodology. "FEDERAL" on CAC worksheets. 

FEDERAL METHODOLOGY (FM) Set of Congressional formulas which compute the Expected Family Contribution for use in awarding federal funds to students at public and private colleges.  Federal funds are the major source of aid at most public colleges. (See "Institutional Methodology.")

FEDERAL WORK-STUDY PROGRAM (FWS) - A program of part-time employment designed to enable qualified students to earn part of their college expenses, based on the applicant's financial need. Eligible applicants are offered a FWS opportunity in the award notice and are instructed how to secure employment. This is a basic component of financial aid.

1ST ADULT (Income section of CAC SUMMARY Page and in worksheets) - Label for those items of income that are paid to one of two parents, or to married independent student(s).

GRANT - This is the best type of aid, because it doesn't have any strings attached. Aid formulas will not count it as income available toward the family contribution. To the extent that it goes toward direct educational costs, it is tax free.

HOME EQUITY - Home value minus mortgage and other debts owed on the residence. Home equity is not counted in the Federal (FM) aid formula, but is counted by the Institutional (IM) formula. 

HOME EQUITY LOAN - That portion of a home equity line of credit that has been borrowed and for which the collateral is an interest in a residence. The borrower may be allowed to write checks against the credit line up to a preset limit. The loan balance at any time is the total amount of all checks written plus interest, less any repayments of principal which the borrower has made. Interest is tax deductible on loans of up to $100,000.

IM - Institutional Methodology, abbreviated on CAC worksheets as "INSTL."

INSTITUTIONAL METHODOLOGY (IM) - Formulas used to determine Expected Family Contribution by colleges which have private (institutional) funds to award. Colleges vary in type of income and assets considered. Think Ahead, Inc. has obtained permission from the College Board to use its formulas in CAC's IM calculations. (See Disclaimer at the beginning of COACH and Strategies to Reduce College Costs and the first CAC Help screen--and elsewhere.)

IRA - Abbreviation for Individual Retirement Account, a type of retirement plan set up and managed by a private individual. Contributions to an IRA are considered wholly or partly as a deduction against income for income tax purposes, primarily by self-employed persons or those who have no other retirement plan. For financial aid purposes, any amount that is allowed as a deduction against income will be counted as Untaxed Income. The same treatment is applied to other retirement account plans where income tax on contributions has been postponed.

ITEMIZED DEDUCTIONS (Income section of CAC SUMMARY Page) - Items which are subtracted from Income because they are not taxable partially or completely by the Federal Government (see IRS Form 1040 Sched. A lines 1, 5-7, 9, 11, 13, 17-19); includes medical expenses, various non-federal taxes, investment and home mortgage interest, and contributions.

LOANS - Loans and Grants and Work-Study are the basic components of financial aid packages. In additional to the loans included in an aid package, families may need to borrow additional amounts to pay their required Expected Family Contribution if they have not set aside that amount previously or cannot pay their EFC from current income.

OTHER TAXABLE INCOME (Income section of CAC SUMMARY Page) - All income other than wages and self-employment income (see IRS Form 1040 lines 8-11, 13-17, and 10-21); includes income in the form of interest, dividends, tax refunds, alimony, capital gains (less losses), the taxable portions of IRA and pension distributions, real estate earnings, unemployment payments, and social security distributions.

PERSONAL ASSETS (Assets section of CAC SUMMARY Page) - Include cash, savings and checking accounts, investments including trust funds, money market funds, mutual funds, CDs, stocks, bonds, real estate, mortgages or loans owed to the aid applicant. FM formulas do not  count home equity. IM aid formulas do  count home equity. Some colleges ask the amount held in retirement accounts. Find out what your school counts.

SCHOLARSHIP - Grant aid which does not need to be repaid. Aid formulas do not count this type of income as available toward paying family contribution. The IRS does not tax the portion which goes toward direct educational costs, such as tuition, fees etc.

2ND ADULT (Income section of CAC SUMMARY Page and in worksheets) Label for those items of income that are paid to the "second" parent in a two-parent family, or to the spouse of an independent student..

SELF-EMPLOYMENT INCOME  (Income section of CAC SUMMARY Page) - All profit received during the year from businesses you own by yourself or in partnership--includes sole proprietorships, partnerships, and/or farms; does not include salary, dividends, or stock distributions from a corporation (see IRS Form 1040 lines 12, 17, and 18).

SHELTERED - Assets or income which is not counted by the formulas which determine the Expected Family Contribution.

UNTAXED INCOME (Income section of CAC SUMMARY Page) - Various items that are credits or non-taxable income for federal tax purposes, but which public and private colleges consider to be income for purposes of computing the Expected Family Contribution; includes Social Security benefits, retirement plan deductions taken, tax exempt interest, some IRA and pension income, child support, AFDC/ADC payments, earned income credit, fuels tax credit, and foreign income exclusion.

WAGES EARNED (Income section of CAC SUMMARY Page) - All W-2 wages earned during the year being considered (see IRS Form 1040 line 7).

WORK STUDY - See Federal Work Study.

WORLD WIDE WEB - A collection of locations on the Internet. Each of these sites provides access to documents written in HyperText, a system which allows linking of documents at any site with those at any other site. Such linkages make it possible for a user to jump directly from one document to another (anywhere) to obtain additional information, to answer questions, etc. Think Ahead, Inc. has a World Wide Web site which you may visit to obtain information about our program and about college financial aid in general. Its address is: 

    http://www.maine.com/collegeaid

In order to use the World Wide Web, you must have an Internet connection and a World Wide Web browser program.


                                       \Z
SHAREWARE

Please share your head-start version of College Aid Calculator, Strategies to Reduce College Costs,  and COACH. You have permission to pass copies along to friends as long as the products are reproduced in their entirety, including all pages and the copyright notices. Please help others to start their college financial aid planning now--in time to qualify for the most aid possible.

                                       \ZZ
Why UPGRADE ?
-------------
	Formulas - aid and taxes - change every year. So, CAC 96-7 will be
	Obsolete - by late summer 96 - You'll need CAC 97-8 to keep current.

BONUS  -  Order Now  -  We'll send you 1-2-3 immediately:
---------------------------------------------------------
	1. Making the Most of Your College Visit--What to Be Sure to Ask
	2. Speaking with your HS College Advisor--Essentials to Cover
	3. Money-Saving Considerations--Middle School through College

ESSENTIAL:  You'll need CAC 97-8 as soon as it is available to:
---------------------------------------------------------------
	1. Update your plan.
	2. Use our new Four-Year Cost Estimator

ORDER  NOW: $49.95 for CAC 97-8 ... Shipping late summer 1996
----------- + 9.95 for CAC 96-7 ...  Shipping now ... with your Bonus
	      + 4.95 Handling and Shipping

Call 1-800-780-0513, ext.147 (order-taking # only)
----------------------------

VISA or MC: we'll bill you for CAC 97-8 when it is shipped 
----------- we'll bill you for CAC 96-7 + handling and shipping now

Money-Back Guarantee - 30 days - Unconditional
----------------------------------------------

					\ZZZ

Print this ORDER FORM   -   mail it   -   or fax it to    1-800-780-0515


Please circle Items and note Quantity and Prices: 

$49.95 for College Aid Calculator (CAC 97-8)--shipping late summer '96
       -- includes Tutorial and Strategies... book  
+39.95 for additional copies ordered now--n/c for shipping to same address

 59.95 for both CAC 96-7 (shipping now)& CAC 97-8 (shipping late summer '96)

$100 plus $10 per station for site licenses --schools, colleges and advisors

     	 4.95 Handling and Shipping 
	 7.95 for Priority Mail
	12.95 for UPS next-day delivery

	Maine residents add 6% sales tax.

$ 4.95 (only if all you are doing is paying for this copy of Strategies ...) 

							   	Total:                   
									-------------------
Name:

Address:                                             City:                                State:              Zip:

Phone #:                                             Fax #:

E-mail address:

Check           Money Order            MasterCard           VISA 

Card Number:                                              Expiration Date:

Signature:___________________________

Send your personal check to:             	E-mail your order to 							CollegeAid@maine.com
    	Think Ahead, Inc. 			Call 1-800-780-0513, ext.147 
    	PO Box 5G         	                    (order-taking # only)
     	Dresden, ME 04342                   Fax  1-800-780-0515 

Unconditional 30 Day Money-Back Guarantee.                 

Thank You.  Bob and Sally Fesler, authors

