Broker account affecting scholarships?

Paying for College
1

I’m currently a rising junior in high school. Recently, my dad thought that it would be a good idea to open a broker account for me. I would like to if opening a broker account under my name would affect my chances of getting scholarships? Thanks.

2

It depends what type of scholarships they are. Merit scholarships: no affect. Need-based and hybrid merit/need-based scholarships: possibly, but it’s impossible to say to what degree without having details about your overall financial situation.

Wait – are you saying that if having a broker account under your name affects your chances of getting scholarships, you would like to open an account under your name? Affect in what way - good or bad? And until you’re 18, you can’t open a broker account in your name. It would have to be opened as a trust account or as a UTMA/UGMA account.

3

@spectre729

Could you please explain your post?

It is very possible that having a brokerage account in YOUR name only could affect your need based aid awards…it could be less. But really…more details needed.

  1. Are you only applying to colleges that meet full need for all accepted students?
  2. What is your parent annual income? It’s very possible you won’t qualify for much need based aid anyway..depending on their income.

I will add…that if they have money kicking around to open a brokerage account for you, you are likely not low income…right?

  1. How much will be in this brokerage account?
  2. Are you over age 18...as noted, this can’t be in your name only if you are under 18.
  3. Why do your parents want to do this?
4

Really, if your dad is opening a brokerage account under your name, it isn’t likely you will be on the hunt for FA? Lots of parents have their kid start a Roth for sure. If it is a Roth he just opened, that isn’t a big chunk due to limits. As always, have the money talk with your parents before hitting the internet. They can be surprisingly helpful.

5

For pure merit scholarships, no. However, if you are looking for financial aid, yes, it can. Any assets in a student’s name are assessed at 20% towards the FAFSA EFC vs ~6% for parental assets.