I am in a bit of a predicament…
I’m going to a private college ($46,000/year), and I have received alot of scholarships, grants, etc… My family EFC is $0, and I have been saving money for college. The way I am set through various external scholarships, I will come out of college debt-free with no loans.
Of course, this is great, but I would also like to begin investing in the stock market. Although, I’m very confused and wary of doing so in case it hurts my financial aid… I have saved up nearly $13,000 (in cash) and would really like to begin investing. I can’t just leave $13,000 in cash at home or in my dorm room at college, and I can’t necessarily put it in the bank (in fear of FAFSA seeing it). I don’t have anywhere to put the money. Is there a way I can begin investing without alerting FAFSA and losing Financial aid because I ‘have money’? Perhaps I can open some kind of custodial account under a grandparent? (If that is a possible thing?)
I also plan on obtaining a doctorate, so I can’t just wait until I’m all done with college.
Thank you for helping me navigate through this questionable problem!
The questionable part of the problem is that you are trying to hide assets. That’s fraud.
Of course, I want to do everything legally. I don’t intend to do anything against the law or unethical.
FAFSA will “see it” whether it is in a stock, in your wallet, in your bedroom, or in a bank account if you report it properly. When it asks if you have assets, that includes money in the stock market.
You may not have had to report it. If your EFC is zero because your family didn’t have to report assets, then you don’t have to report assets either. If that’s the case, invest away.
If it helps anyhow, all of the money that I have saved throughout high school has been cash from mowing lawns, babysitting, etc… I didn’t know that I had to (if I have to?) Report that money. We’re not talking about me starting a business and making 6 or 7 figures, then hiding that money! I am just a hard working teenager that wants to see my hard earned money put to use. As I mentioned, I can’t just have that much money sitting around in my dorm. I need a place to put it.
How much of this money did you have (anywhere…bank, under your mattress, etc) on the day you filed your FAFSA? That amount was supposed to be reported as an asset. Did your family qualify for auto $0 EFC? If not, your EFC with $10,000 in the bank would have been $2000…20% of your $10,000.
If your EFC was $0 and you didn’t qualify fo auto $0 EFC…I’m guessing you didn’t put that $ in savings on your FAFSA.
The simplified formula would also result in the OP not having to report assets, not just the auto 0.
If the rules require it, then that hard earned money can be put to the use of helping to fund your college. That’s a darn good use. Families and students are expected to help fund college before other, unrelated people are asked to help fund your college expenses.
I’m confused as to why it’s ‘wrong’ to save money, but no one even questions if you use the money to buy an Xbox or something. I’ve never heard of anything like it, but is there an limited amount that you can use to invest safely without having to report it as ‘income’? (Legally, of course.)
I answered in your other thread and will cut and paste below, but you pose another interesting question here…
Yes, you can buy an X-box or a new computer or a car (or all of the above!) and you won’t have to declare them as assets, If, however, the money is in any type of savings or investment account that is NOT a retirement account, it is counted as part of your assets (minus the exclusion I mention below). This was what I posted on your other thread (after trying to preserve your reputation with was being much maligned…)
To answer the question - the only way one can shield - not HIDE - assets is to put them into an retirement account (a traditional or Roth IRA, SEP (Self Employed IRA), 401K, etc. You probably need to declare the income, though, and it’s not clear how that may or may not affect your EFC. Assets not in retirement accounts need to be reported, although there is a exclusion (i.e., a portion not considered for the purposed of calculating your EFC). Not sure how much. You probably should talk to a financial planner or tax person that knows about college funding.
OP- how did you pay for college application fees, SAT testing, etc? Did you get fee waivers or did you pay out of pocket?
It is wonderful that you’ve worked and saved. There are very few ways to stash that much cash that are both legal and safe.
It is not wrong to save money. It is wrong to claim that you have no assets (if in fact that’s what you claimed) when you had 13K saved up. Got the distinction?
I paid for my SAT and ACT out of pocket.
It is not wrong to save money, it is wrong to hide your asset and not reported in FAFSA.
When I filed my FAFSA, I was planning a trip to Austria. A few months later, my money was refunded because not enough people were planning on going (and I didn’t go. 
)
When I filed the FAFSA, I had about $7000 that I was going to be spending completely for college, but then (in the past few months) I was extremely grateful to have received some really great external scholarships that pretty well paid for all of my college expenses.
I guess : + / makes a questioning face…? I thought it meant ‘bummer’. Anyway, I was sad that I didn’t go to Austria.
Oh please tell me that this thread is not for real. The OP had money that was not reported on the FAFSA. PLUS had the resources to take a trip to Austria (which he would have done of not cancelled)…but wants now to figure out a way to shield $13,000 from his colleges for financial,aid purposes? Do I have that right?
Oh…and now he wants to invest in the stock market?
I don’t hear the OP saying he qualified for simplified needs or auto $0 EFC. So I’m assuming he does not (OP…correct us if your family qualifies for either of these).
That being the case…$7000 of assets which is what the OP says he had on the day he filed the FAFSA would have given him a $1400 EFC based on those assets alone. If he didn’t report them, and got the full Pell Grant, he has defrauded the government of $1400.
This is called not being honest.
College, we are all sad that you didn’t get to go to Austria.
You’ve got a number of misconceptions about how aid works- and some of what you’ve posted doesn’t fully answer all of our questions.
But the biggest in my mind- was your FAFSA accurate or not? If you correctly listed your assets when you filed, then your real problem is next year, when you will have even more money (whether it’s cash or stock or bonds) to declare on your form.
Before you start worrying about investment strategies, you need to dial back to see if you committed fraud (and maybe you didn’t- if you sent in your money for a trip and had no money when you filed that’s fine- but now you have the money…) when you filed your forms.
He said his EFC is $0, so it is most likely that his family is extremely low income or qualified for the simplified assets test.
My mother filed out the paperwork my FAFSA because I didn’t understand any of it - I don’t know if my family is auto EFC or not.
If your family income is below $50,000 AND you meet one of the following, you would qualify for simplified needs.
- Ability to file 1040A or EZ tax form
- Qualify for means tested benefit like free lunch or SNAP.
- Parent is a dislocated worker.
If your income is below $28,000 (I think that is the amount this year) and you also have one of the above three other criteria, you qualify for auto zero EFC.