Bank Accounts and Financial Aid

Paying for College
1

<p>My daughter just got her first job and we are looking to open a checking account with/for her so she can have her paychecks deposited and have access to her money. Because she is only 16 she can't have a checking account on her own and I have to be on it also (bank rules). I'm thinking of opening the account jointly with MY name as the primary name (and my SS #). Assuming she has earnings (and saves some, which she's good at) over the next two years (she's a junior) how will it look when filling out FAFSA and CSS Profile that she won't have any account or money in her own name. Or should we open the account with her as the primary name so she has some money to show for herself. </p>

<p>Also, she already has a savings account in another bank which we will be transferring to the new bank and I think this amount should definitely be in an account with my name as the primary name. It's not UTMA money but her own from gifts and babysitting that she's saved over the years. I want to limit what is going to be assessed to be used in financial aid calculations.</p>

<p>Thanks!</p>

2

<p>If the bank account is in your name, that would count as your asset on the FAFSA.</p>

3

<p>Parent assets are evaluated more favorably for FAFSA. If you have the option, put your name and SSN first.</p>

4

<p>That was the point - to have the account evaluated as a more favorable parent asset. But will they question if she has NO money in her name? Is there an amount that students are allowed to have before their contribution percentage kicks in?</p>

5

<p>If the parent is the primary on the acct, but the child is still on the acct, will FAFSA consider it the parent’s acct and not the child’s?</p>

<p>No, it won’t matter that she’ll have NO money in her name. many kids have no money in any accts. If that’s the concern, have her open a child’s savings acct and put $20 in it.</p>

6

<p>If the money belongs to the student, then it should be reported as their asset on FAFSA. Hiding the asset under someone elses name is fraud. Is that really a lesson you want to teach your child? A legal way to reduce the impact of the child’s asset on the EFC would be to put it in a 529 account. It would then be treated as a parent asset.</p>

7

<p>Are you talking a lot of money?</p>

8

<p>

There is really a bank that has rules like this? I would check into a Credit Union where your D could have her own account (perhaps tied to yours if you are the qualifier).</p>

9

<p>It is a credit union and those are their rules. They don’t allow students to have a checking account in their own name until they are 17. But they can get one jointly with a parent before then. I’d rather she start learning how to manage her money and balance an account now than wait over 6 months until she turns 17, especially since she is now working and will soon be driving and will need access to money for gas! Plus she can’t get a debit card on the account until she turns 18, just an ATM card.</p>

<p>As for fraud, I could have her spend her money on school tuition or dance lessons and put the same amount in an account in my name for her benefit with the same results. I won’t be filling out a FAFSA for her until 2014, so there’s plenty of time. And we’re not talking about a huge amount of money, a couple of thousand now. I’m assuming she’ll be spending a significant amount of what she earns now on gas, clothes, and her own entertainment. And I don’t want it in a 529 account because it will probably need to be spent on non-qualified expenses, like a computer.</p>

10

<p>In our state, a child under age 19 cannot have an acct that is only in their name…a parent must be on it.</p>

11

<p>I know I’m going to sound self-righteous here but if she has available resources it should be used to fund her education. </p>

<p>Lots of us did and do work our way through school and used every penny at our disposal to do so. That gave me a greater sense of pride than the pride of having fooled the system would have.</p>

<p>I’d worry more about what is right than “how will it look”.</p>

<p>“As for fraud, I could have her spend her money on school tuition or dance lessons and put the same amount in an account in my name for her benefit with the same results.” That in itself sounds fraudulant!</p>

<p>“And we’re not talking about a huge amount of money, a couple of thousand now.” Then why worry about it to the point of bending, if not outright breaking, the law? </p>

<p>Is she going to stop working in January of 2013 so that she won’t have any income to report on her FAFSA?</p>

12

<p>KKmama,
If you’re claiming your child’s earned income on your tax returns. Fraudulent? Yes. </p>

<p>If you’re depositing your child’s earned income to your bank account. What’s wrong with that? Fraudulent? No.</p>

13

<p>It is hiding assests, deliberately and with intent to qualify for assistance that the OP’s daughter would not get if she put HER OWN money in HER OWN account. Not all that different than someone depositing their assets with a family member (ex. “lending” them antiques and jewelry) and then applying for food stamps or declaring bankruptcy. That’s why the federal govenrment has a 5 year look back before allowing someone to have the government take over nursing home payments. </p>

<p>OP said that the money would be available to the daughter - treated as the daughter’s money for all purposes except applying for financial aid. Using daughter’s money to pay daughter’s expenses and then giving daughter spending money out of “mom’s” money is not dissimilar to money laundering.</p>

<p>Americans have long prided ourselves on being self-sufficient and taking pride in our own accomplishments… now it seems to be in how well we can cheat the system.</p>

14

<p>“As for fraud, I could have her spend her money on school tuition or dance lessons and put the same amount in an account in my name for her benefit with the same results.” That in itself sounds fraudulant!</p>

<p>No, that’s not fraudulent at all. A family can have a rule that the child pays for dance lessons or whatever, and the parents can still put their own money in savings to use later for what they choose…college costs, whatever! Whether the amounts are similar are irrelevant…and not illegal.</p>

<p>I could tell my child to make his own $200 car payments, and then put $200 into my savings every month. That is not fraud.</p>

15

<p>If you have up until now given your daughter an allowance, or otherwise given her spending money, and now wish to have her use her own money for those expenses, that’s great. If you still want to be able to help her with college costs two years from now, that is great two. The two don’t have to be connected.</p>

<p>The money she is earning at her job is hers, and it should be in her name. There will already be a record that she earned that money. FAFSA does have an asset protection allowance, so some of her money is protected. If she manages to save more than that good for her - she is helping put herself through college. As it is, they will only take 20% of those savings, which is not unreasonable.</p>

<p>Put her name on the checking account, not yours. It’s NOT your money. If she doesn’t want any assets when she files her FAFSA, then she can spend the money down. But that isn’t YOUR decision, it’s HERS. If she wants to spend it on college, she can put it into a 529 account to stretch its value. You’re worried she will need it for non-qualified expenses, but you can just as easily pay for those as you can pay toward her tuition. If She isn’t going to have qualified expenses to use that 529 money, why are we even having this discussion? The whole point of hiding/shifting assets is to reduce those qualified expenses.</p>

16

<p>

Please tell us which laws require us to put the child’s money in his/her bank accounts? That putting the child’s money in parents’ accounts would be fraudulent.</p>

17

<p>If you have up until now given your daughter an allowance, or otherwise given her spending money, and now wish to have her use her own money for those expenses, that’s great. If you still want to be able to help her with college costs two years from now, that is great two. The</p>

<p>Exactly.</p>

<p>I would tell my D to spend all her money on things that I normally pay for…clothes, gas, car insurance, school field trips, etc. Then, each month I’d put money into my savings for about the same amount (or more). THAT IS TOTALLY legal. </p>

<p>“The money that she is earning at her job is hers, and should be in her name.”</p>

<p>Says who? I have money that I earn, and I regularly put money into my kids’ accts for them. </p>

<p>While I do think that large amounts of money that kids have (thru inheritance, college funds, etc) should be used for college, it is a crazy idea that kids can’t have a small bit of money saved for emergencies that FAFSA leaves alone. </p>

<p>I know that very low income kids will have their assets ignored, but there are a lot of kids who are in the gray area of family income, and those students need to have a few thousand saved (untouched by EFC) in order to cover those emergencies that many families can’t afford…a phone replacement, a laptop replacement, a car repair, etc. </p>

<p>Because the FAFSA formula won’t allow students (beyond the very low income) to have any assets ignored, then a family can get around that by having the child spend all his money on day to day expenses, which then frees the parent to put an amount into their savings.</p>

18

<p>I’m going to chime in, too. </p>

<p>I agree with m2ck- who says it needs to be in her name? I’m the only one in my family with a job right now so I am regularly giving my parents money. Just like when I was younger, they would deposit some money in my accounts if I needed it. Giving your parents money is fraud? I don’t really think so and I highly doubt anyone is going to question why it’s not in her name.</p>

19

<p>

This is a contradiction. First you say she should fund her own education, then you say it would be fraud to have her fund her HS education or dance lessons (also education). I see no reason why the D shouldn’t or couldn’t contribute to things like dance lessons, and if the op puts the money she saves as a result into savings accounts which are later used for college, so much the better.</p>

20

<p>It’s not going to matter much. The small insignificant amount of money your daughter makes won’t really change the financial situation of student loans. Unless you plan on sending her to community college, which I would just pay for out of pocket rather than take out draconian loans for, you don’t need to worry about the few thousand your child will make in a year or in a summer.</p>

<p>You are still going to have to cosign for those loans and your income will really be what matters.</p>

<p>As far as the bank account is concerned, yes that’s how all banks work. Children, any person under the age of 18 cannot have a checking account. I just recently worked at a bank as a second job, so I know that’s a fact. I wouldn’t go through all the trouble of worrying about this. Just open an utma in her name with her ss# and have you be the custodian. Once she turns 18, close that account and have her open a student checking and savings acounts with you as a joint account holder as you can deposit money in her account and manage her funds if she needs your assistance to pay school/food/book/transportation/dorm bills. Also many banks and credit unions have no minimum balance or monthly maintenance fees for students for at least 5 years. Make sure they bring a student id or some form of enrollment info/proof when you go to set up one of these accounts.</p>

<p>The amount of time, effort, energy, and stress you waste on trying to save your daughter maybe a few hundred dollars in the long run for the average state school or even a private or ivy is not worth the hassle.</p>