My sister died and left her only son. She was not married to the father & he was never in the picture. Since my nephew has turned age 18 he had some money released to him from a guardianship account. I am trying to help him complete the FAFSA forms. It asks how much is in his savings/checking accounts at the time of you completing the form. Some things I have read online indicate that he could give what he has away as a gift, with hopes that he may receive more in grants. However, I did see that if you do that, the person giving the gift, has to file a paper with the IRS that money was gave as a gift (if over $14,000) I believe) so, if they pull your tax form from the IRS to verify your answers, that filed gift paper will show up the next year anyways right? So, then they would see that that money was there but you got rid of it…?
Why not just use what he has to help pay for college instead of giving it away? How twisted.
I’m sorry for the loss of your sister and his mother. Are you suggesting he make a gift of his funds 'til he qualifies for aid and then you give him the money back? What you are describing sounds like a criminal conspiracy. It will cost you more for lawyers than it will gain in federal aid.
Please . . . your nephew’s first lesson on reaching adulthood should not be how to scam the system! If he has money, he’ll be expected to use some part of it to pay for his education. Support him in taking responsibility for doing that.
This is a stupid idea. If he did give away his money and as a result receive more in grants than he would have received if he had not given away his money, the “more” in grants would only be a small fraction of the amount that was given away.
The FAFSA formula assesses student assets at 20% of their value per year. So if he has $100,000 in the account, $20,000 will be expected to be used…in the FAFSA formula.
I have never filled out the FAFSA for an independent student, but I expect that the system will shelter an orphan whose money has to cover ongoing expenses, compared to a trust-fund kid whose entire account is disposable. This is a serious concern, since it represents his entire safety net for his lifetime.
I don’t know the answer, but it is unique enough that I don’t think a FA officer at one of his target schools would mind discussing how to fill out the form. If he is applying to a school with a huge endowment, they may be more helpful, and more disinterested. I am not sure where else to suggest to go for advice. Obviously, the FA officer is not an unbiased source, and does have a vested interest. Companies that advise/help with this, like college counselors, may be helpful. I don’t know any.
I always have a feeling, with taxes and with the FAFSA, that there is a “right” way to fill it out, and what I am doing may not be it.
If he has the miney, he has to put it on the FAFSA…but what kind of account is it? Is he getting a lump sum? Or is he getting a set amount annually?
The financial aid officer can’t tell you how to fill out your FAFSA…but they can review the issue, and determine if this would be something they could use professional judgement to deal with. But that is handled by each school separately.
Contact the colleges and explain the situation. They will tell you what they might or might not be able to do to help…and the process.
Thank you for the help, to those of you that were nice. We are not rich, just middle class and my sister, just did the right thing, worked all her life and had a little money for him. For those of you that were mean, he does not have a mother or father for support in any manner anymore. I am not in anyway trying to defraud, I am simply trying to smart and look at all the available options. There are many places online that indicate that you are able to gift money or move it into a parents account because of the percentages and/or moving it into a 529 for a lower percentage break. One of those publications being from Forbes Magazine article, How Assets Hurt College Aid Eligibility On FAFSA and CSS Profile by Troy Onink. Thank you, ItsJustSchool. Yes, it does represent his entire safety net and he isn’t a Trust Fund kid with disposable income. Thank you Thumper1 for the usable information. Dodgers mom, we are good people, not scammers and he will be paying as well. OspreyCV22, I appreciate your comment. There are others more needy within the family, down the line, that he actually could help out and if it also helps him then I was just trying to look at the bigger picture.
Ok, Thank you thumper1. I will ask the college for help with the FAFSA.
I guess I’m one of the mean ones. He could put the money in a student-owned 529 account, but it would still get assessed for financial aid purposes at some percentage. Given his situation, I’m not sure that it would be any better than having the funds in a regular bank or investment account, and it would leave him with less flexibility.
No…ask the college whether there is any chance they could use professional judgement to help with this guardianship account.
The schools will not be able to tell you how to complete the FAFSA. But the schools might be able to tell you if some exceotion can be made for this guardianship account. Professional judgement is handled on a case by case basis…at each school.
I think you first need to determine if he is an independent student now for FAFSA purposes. You say he has no father, but is that just your interpretation or is that a legal fact? Just because he has a father who has been uninvolved doesn’t mean the schools will see it as he is an orphan. An independent student with assets may be different than a dependent student with assets. He could put the money into a 529, but it is still his money and will still be his asset if he has no parent to claim it as an asset. Your really need to establish his status first, then list the assets.
If he’s independent and has no income, doesn’t he qualify for ‘simplified’ assets? Anyone? Kelsmom?
He could give away his assets if he wants to, but then they are gone. Say he has $25000 and gives the money away to two cousins. Now he has nothing and may get $5600 as a Pell grant. Where will he get the rest of the money he needs to pay for college? If he doesn’t give away the money, he may not get the Pell grant, but will have $25000.
Also, you say SOME of his inheritance has been released to him. If he has a right to other money, he needs to report that too, even though he may not have access to it right now.
Does he meet the second test? He probably has no earned income…but what is his unearned income from this asset, and does it require a 1040 tax form?
the student may need to request Professional Judgement.
How much money was he left?
I can’t imagine that it’s a good idea to give away the money.
Where is his father? Is he on the birth certificate? Is he aware that his son’s mother has died?
This kid may not be independent.
@AuntieAnn, I just wanted to add how sorry I am to hear of your loss. Even if your nephew’s absent father has not historically been in the picture, many colleges would have demanded information from him even if your sister were still alive.
A friend of mine had no involvement with her babydaddy following their separation when her daughter was not yet 2. He never paid his child support, and she wanted nothing to do with him. When her daughter was 17, she met with her high school guidance counselor about college, and was told she would have to report both bio parents income on financial aid applications.
She ended up getting a pro-bono legal aid attorney to help her file a claim against her bio father for back child support, which he could not pay, but they were able to compel him to provide his information. I understand different states’ laws may vary on this. But if it had not been for her HS guidance counselor’s foresight, she would have been in a difficult position when applying for financial aid.
So, may I suggest you talk to your son’s guidance counselor? If they themselves have not dealt with something similar, I understand they have connections with colleagues at other schools and are often able to track down help.
BTW, her daughter is a senior at one of our state’s public colleges, and is doing well.
Is it enough to pay for 4 years of college?
You are a great Aunt. He is lucky to have you.
Here is the FAFSA formula. Print it out, and work through it on paper. That should give you a better idea. http://ifap.ed.gov/efcformulaguide/attachments/090214EFCFormulaGuide1516.pdf If you have questions about any of the lines, you can call the help line at the FAFSA website https://fafsa.ed.gov/
Putting money in a 529 account is not giving it away. You are indicating that he wants to give it away to get more aid, then help others ‘down the line’ so you cannot blame anyone here to think that it indicates fraud, otherwise he would not have any money to help others down the line. When you gift money you do not have it anymore, ever-that is the only legal way.If the student is verified and a big chunk of money is seen as having been given away instead of being used for college I’m pretty sure what conclusion would be drawn and I would expect the school with withdraw the offer. So I would caution to use only legitimate plans to maximize aid eligibility.
I worked with someone who was in foster care and had some inheritance in trust until age 18. Nearly all the schools estimated 20 percent of the student’s money as part of the EFC. Only 2 highly selective very generous schools did not ask the student for that portion or give any loans, they funded completely but these were top 20 schools. Another highly selective LAC gave a very generous package but would use 20 percent of the student assets each year. When the student visited (paid for by the school) she met with a financial aid office and said she would like to consider them but all her fund would be depleted at graduation and she did not have a parent to go to live with like other kids so needed the cushion but was told there wasn’t anything they could do. The instate school was a FAFSA only so the student was auto 0 EFC so no assets had to be reported, but there were loans in the package that would total about 25,000 at graduation, still a reasonable deal.
So maybe the student qualified for simplified means and will be 0 EFC and should target FAFSA only schools.