<p>I don't buy the argument that just because it's legal it's ok. I know people with parents in nursing homes who were savvy enough to transfer mom's assets early enough to "protect her estate". That's BS in my book; you're protecting your own hide, and mom gets to live off the taxpayers for 60 grand a year or so. Mom's indigent and the kids are buying sub-zero refrigerators and new SUV's.</p>
<p>I don't like the use of the word "assessed" to describe how colleges view different asset classes. It seems fair to me that a healthy 18 year old with their entire working life ahead of them is expected to contribute a heftier percentage of their "amassed capital", vs. the 56 year old dad who has likely already passed his highest earning years and is facing retirement, and who may need to purchase long term care insurance in the next year or two. Makes sense to me. Someone earlier raised the idea that the kids earnings are for spending money and to buy stuff for their college dorm room, and not to pay tuition or books or lab fees. Hey-- better to have the taxpayers subsidize your kids microwave and lounge chair?</p>
<p>Yah, that question about how much you can provide feels like a trick question, what is the "right" answer. As to the relatives, how can any one say what Great Aunt Mille will be willing to do 10 months from now, if she's even still alive. I don't think you can plan for relatives to commit to anything, not and rely on it for the next 5 years.</p>
<p>I was really not addressing student money switching to parent money, but parent money being spent down before the forms are don, perhaps off-topic.</p>
<p>My point above was not about the ethics, but about the usefulness of it, in MOST peoples situations, the spending down for "fun" stuff is going to strip them of the liquid assets they would need for their EFC. I am sure there are some people who can take advantage of the perfect financial aid scenario, but all the middle class people who are not able to be offered 100% grant aid for the huge private tuition would be foolish to frolic about spending wildly & not leave themselves liquidity they need for their share of the bill.</p>
<p>Just as with income taxes, I am all for preplanning and be legally wise, but for the people who are surprised now to have to provide their info, and considering desperate measures, it is foolish to go crazy reducing your assts, once you are below the Pell grant or other published asset qualifying cut-off, not knowing what the school will offer.</p>
<p>"Should a family who is willing to compromise the rest of the family to pay a tuition do so whereas a family who wants to maintain its current standard of living be allowed to do so? It really makes no sense "</p>
<p>I wondered about this too. Do you get more Fin Aid if you have younger children in private school and pay tuition? I noticed that the forms all require the applicant to fill in details of tuition for other children. If I wanted to, could I switch my younger child to a more expensive school and get more fin aid? (hypothetical)</p>
<p>THe profile I believe takes into account private school tuition.
Schools also may be flexible on finaid outside of the FAFSA and PROFILE forms.
After 9/11 when Boeing laid off thousands of workers, my husband had to accept a downgrade in jobtitle and pay, even though the school year already had begun, the college adjusted the aid after documentation of new information was submitted.</p>
<p>To SBMom -
No - it wouldn't be $28,000 over 4 years, because the financial aid is calculated annually, and it is 35% of whatever is in the kids account - so if that money is spent out in the first year, the subsequent years don't take the extra hit....</p>
<p>EXCEPT -- for purposes of my illustration I deliberately oversimplified. You can realistically expect the kid to earn some money over the summer ... AND with each successive year in college, most colleges increase the loan burden for federally subsidized loans - so the out-of-pocket is increased. However, these factors would be the same whether or not the kid had money in his name, so I didn't account for it.</p>
<p>I want to make one other point clear to everyone: I think there is a distinction between money in the child's name that is merely redirected parental assets, and money that comes from an outside source, whether through earnings or gifts or inheritance from other relatives. If grandma gives my kid $2000 - than that is my kid's money, not mine - it never was mine. </p>
<p>But if I have $2000 of my own money and I am deciding whether or not to deposit in a UGMA account in my child's name .... or to keep it in my name but put it in an account that I intend to use to build up savings for college .... then I do see it as a matter of financial planning. I am not saying money ought to be transferred back once it is placed in an account.... I'm saying that good financial planning means that the parents are careful how they invest in the first place. If I want to provide for my kid's future by saving money for him, then it seems to me I do a better job by allocating my own savings that will reduce the cost of college and the loan burden on the child.</p>
<p>Until I read this thread, I had never even heard of what some are referring to as "spending down"...shows what I know. I don't think I have enough discretionary income to even think of such a thing, lol. </p>
<p>Blossom, I was the one discussing a child's account that is comprised of her work earnings she saved to take to college for "spending money" and if that is taken for tuition purposes, then how is a kid supposed to earn money for spending money in college? I see that as one purpose of her summer jobs. The way you implied that that money is for microwaves and lounge chairs is definitely NOT what I am talking about.To imply that I would want her to be subsidized so she could do that is really not what I was saying. In fact, I don't think the notion of "spending money" in college is so far fetched when in fact, in every single college brochure I have seen, when they list expenses for college, they list a line item as "personal expenses" for exactly the types of things I posted about....misc. items, sundries, minor food/drinks, even inexpensive social/entertainment activities, transportation home, dorm necessities the first year, supplies, postage, and so forth. I surely am not saying the kid should get to buy frivolous things rather than put it toward tuition. But every college kid needs SOME pocket money, even if just to do the laundry! Right now, my D has been told of some unexpected expenses she must pay for her varsity sport and I am glad she worked and saved that money, as well as grad gift money, because I am not going to be able to fund all of that. So, I don't think it is unreasonable to think that a child might earn money and save it for these sorts of things rather than tuition.
Susan</p>
<p>By the way, most of the financial aid package is loans which we have to pay back so it is more of a financing plan than anything else.</p>
<p>There are many financial decisions that can be made to lower one's taxes and get some benefits from programs at hand. To throw grandmom into a subsidized nursing home that is a hole in the wall is one thing. I have been fortunate enough not to see this happen. What usually happens is that one grandparent needs nursing care but the partner does not and there is just enough assets to not qualify for aid, and even if the hat is passed around the kids (which already may be happening), given the high cost of medical care, the choice becomes truly substandard care unless some creative financial planning is done. The problem also occurs with kids who will need perpetual care. College is a much less dire situation. I believe any legal strategies to qualify for some aid if you are on the brink of qualifying is the same thing as adjusting payments to lower one's taxes for the year by prepaying something or delaying the receipt of a payment when it is under your control. In my experience, I have not seen gross abuses of getting aid this way. </p>
<p>Where I see the majority of abuses is in divorced families where a parent able to pay refuses to do so, leaving the kid in a lurch. Many of these kids end up on financial aid by declaring their parent has deserted them and getting a statement from some qualified adult backing them up. Some of these kids may be getting subsidies that are not being declared from Dad's that give cars to these kids or slip them cash off the books. All illegal, dishonest, and I see it all of the time. In fact I have friends who live this way. One family I know who is quite well to do has a dirty little secret in the way of a college aged child from a previous marriage that they refuse to support fully as the federal methodology dictates. Instead they have given the child a fixed amount under the table to use, the kid applies for financial aid declaring that the father has flown the coop which in many ways he has--he is not in her life as far as most people who know her is concerned, and voila, she is now eligible financial aid. With that undeclared handout, she does all right. </p>
<p>People who are truly on the edge of financial aid are not the ones bleeding the system by moving assets from a child's name legally or running down such funds on behalf of the child. THe numbers don't add up to a huge amount. The true abusers are quite different from that. And I don't dare list the illegal ways to game the system and most likely get away with it as it would contribute too heavily to this abuse that is occurring.</p>
<p>Jamimom, I've seen all you describe and worse! One of the big things at the U. where I volunteer is phony disability. Apparently around here, if you are on disability they will stop paying if you go to work, but not if you go to college. I have had students brag about how they faked suicide attempts and are on disability for emotional distress. I could tell you several dozen stories. It has always astonished me - I was stunned to discover how many people don't want to work for a living!</p>
<p>(PS I am only referring to students who bragged about playing the system. I am well aware of the fact that most people on disability really need it. But these are people who recount with glee how they are collecting disability for carpal tunnel or whatever, as they sit in the computer lab typing away, or who brag about have two cash-paying jobs while collecting disability).</p>
<p>Sooviet said.. "Blossom, I was the one discussing a child's account that is comprised of her work earnings she saved to take to college for "spending money" and if that is taken for tuition purposes, then how is a kid supposed to earn money for spending money in college? "</p>
<p>Y'all. The money that kids earn in the summer as part of their expected summer earnings goes towards the college "budget" , which includes room, board, tuition, books, travel and personal expenses. Not just towards tuition. It's up to your kid and you to choose WHERE that contribution will go. In our family we solved it this way. Kid's summer earning go towards books and personal expenses (which in her college's budget equals about what her expected summmer earning are) - we pay room, board and tuition. HTH</p>
<p>soozievt - with regard to the kid's own earnings - that is just the way it works, and it can result in some problems. I confronted this when my son told me after his sophomore year that he was thinking of taking a year off and planned to work. After much stress, we had just gotten notice of the financial aid award for the following year, and it was a good award for us. </p>
<p>I realized immediately that if my son went out and worked for a year he would essentially be charged twice for the money -- the financial aid calculation would seek 50% of his earnings and 35% of whatever he had managed to save as of Jan. 1st. Figuring he would earn about $10,000 if he worked full time, I figured that quiting school to work for a year would cost him around $7000 in the following years' aid dollars. </p>
<p>I discussed this fact with my son and told him that I would not make up the difference -- it really would have to come from him. But you can see how the system is stacked against the kid who wants or needs to earn extra money to pay for college -- it is not really cost effective for a kid on financial aid to get a high paying job. I don't like that simply because it discourages kids from working -- that is, the kid might as well take an unpaid internship or low-paying job over the summer. To me that is sending the wrong message to kids. </p>
<p>But that's the system. My son is not going back to the private college, in part because in the end he realized that he was paying far too much, whether things came out of my pocket or his. It wasn't just the tuition -- in the course of an academic year, there were all sorts of extra costs which were paid out of pocket, like overpriced food in the campus dining hall, or unwarranted end of the year charges for nonexistent "damage" to the dorm room.</p>
<p>Emeraldkity, in case anyone hasn't answered your question about Brown's aid:
Brown was given a huge gift of $100million, the largest in their history, and it is designated to replace the loans of the lowest income students, starting in 2005 (class of 2009). I don't know if there is a cut off or a specified number of students, but if you call or email Brown's financial aid office, ask about the Sidney Frank Scholarship, as that's what it's called.</p>
<p>There is a lot of outright fraud. People do cheat, steal and lie to get more than their share. And I certainly am not advocating anyone do anything of that sort. But there are legal ways to rearrange ones finances to get the most benefit out of the system, and that is a whole different story. Anyone who feels that this sort of financial planning is unethical simply should not do it. But I do not draw the line at that point. Not to say that there are not things about financial aid that smack of being unethical in many ways. But if you can rearrange your finances within the rules given to get more financial aid, then go for it, unless you feel it is unethical or not right. I know families that do not take the Earned Income Credit on their tax returns because they feel it is unethical and smacks of welfare, and given the history and purpose of this credit, there is the slightest grain of that, but, heck, if you are eligible for welfare and need its help, you should go for that as well. The programs are in place for those who need them to use them, and though there may be those who do not need them that are eligible, hopefully, the rules eliminate most of such cases. I have seen the tax law change so many times to benefit a particular situation of ours or be be rescinded. I enjoy the benefit when I can, and pay when the situation is changed. </p>
<p>Though there are people who are enrichening themselves with aid packages unethically, I do not believe that it is a big problem with the student vs family account. Why should one family who decided to label the account with the kid's name pay so much more than another family who earmarks the same amount but wants to keep in general family funds? That is absurd. And as I remarked earlier, the colleges that can most afford to do so are recognizing this. There are other inequities in the system as well, but the families that are getting hurt the most with this 35% hit on student assets are those who are not so savvy but are going the old fashioned way of setting up a college account for their kids. The more sophisticated family would never go that route, knowing the ramifications of having assets in the kids' names. So why shouldn't the family upon discovering this oddity in financial aid rules rectify the situation and make things more equitable. By the way, assets put in the other kids' names are assessed as family assets for the collegebound kid, as well.</p>
<p>Anxiousmom wrote: "Y'all. The money that kids earn in the summer as part of their expected summer earnings goes towards the college "budget" , which includes room, board, tuition, books, travel and personal expenses. Not just towards tuition. It's up to your kid and you to choose WHERE that contribution will go. In our family we solved it this way. Kid's summer earning go towards books and personal expenses (which in her college's budget equals about what her expected summmer earning are) - we pay room, board and tuition. HTH"</p>
<p>Well, I certainly agree with you there. We pay for tuition, room, board, books. I do think it is up to us and our child where her contribution goes to the total and we meant for her earnings to go toward spending money. But what I was saying is that if her earnings are in a bank account under her name, when the school figures out financial aid, they see that the child has X number of dollars and puts that down as her contribution to the tuition/room/board on the aid package. That is what I see them do and that is why having her earnings in her name is not great if you want the child to take that money to college for their spending money. </p>