<p>I posted this on FAQ, but didn't want to take over that thread with a more detailed question.</p>
<p>FAFSA asks for what is in our cash, checking, savings at the time we file. It is very confusing about whether timing matters.</p>
<p>For example, our checking account is NOT savings, it is a vehicle for paying monthly bills from our wages. I get paid once a month. So, if we file the day I get paid, it will show something different than after the mortgage is paid.</p>
<p>So, do the FAFSA folks actually account for the fact that this will fluctuate, and in reality, this is a reflection of income, rather than assets?</p>
<p>I can see it might raise a red flag if my normal income is $50K for example, and the amount in checking is $20K. But if the amount in the account is $4K one day and $2K another, is that really showing that my assets have changed?</p>
<p>It gets a bit tiresome to plan the filing to take advantage of the day when the account is the lowest. What if the next day it rises back up again? </p>
<p>I'm just wondering the following:
1) how this is actually verified by FAFSA
2) whether logic/common sense prevails, and FAFSA realizes that this amount will change within reason, and if they look at my wages compared to my checking they can see that we aren't scamming the system</p>
<ol>
<li><p>It could be verified with a request for a copy of the monthly bank statement. Some colleges will verify the FAFSA documents.</p></li>
<li><p>I think that “logic/common sense” does prevail. I never worried about the actual filing date for FAFSA or CSS/Profile for that reason (and never had that much money in the bank in any event). If you are only paid once a month, then logically your account will be at its lowest the day before you get paid. File then.</p></li>
</ol>
<p>I agree. Do your cash count after you’ve paid all your bills. Everyone realizes it goes up after you get paid. Remember the school is trying to see what reasonably liquid assets you have for school. It makes sense to measure that after you’ve paid the bills.</p>
<p>The way it works is that they want the actual cash value of your accounts on the day you file FAFSA. They don’t care if you have a $30K check in there you just deposited from your insurance that will be paid to the roofers next week. Too bad, if you included that. It’s wise to fill out the FAFSA on the day that you are as low as can be on your monthly bill cycle and all unusual amounts have been paid. Pay day is not a good day. They will not move easily on this one, trust me, so get it right when you do it. That you were ignorant and unlucky enough to pick a flush day is just bad luck and too bad for you.</p>
<p>And your kids should have a big fat zero in assets if possible. Open a joint account with parent’s name and SSn primary and dump all money in there as reimbursement for expenses and keep that as a slush fund for the college kid. Parent gets an asset protection allowance and is hit 5.6% towards EFC over that. Kid gets zip for protection and a full 20% goes directly onto the EFC. Can make a big difference. My friend whose son is independent just got hit that way—$9K in savings means $1800 directly on his EFC which comes right off of the PELL and kills him for some grant money allocated for those with the lowest EFCs. They appealed, too bad, so sad, next time you learn.</p>
<p>Can you spend it on the kid? On medical and school costs like right now? And then put an equal amount into a 529 or that slush account as I described. That’s what friends of ours did with the UGMA. They got full the full benefit of custodial parents zero EFC.</p>
<p>I have an additional question that I always seem to get different answers to each year.</p>
<p>Whose money is it in the account if it’s a joint with a parent? Only the student? Split between the two? Whoever happens to be listed first by name but both SS# are on the account?</p>
<p>I’ve gotten different answers from different financial people, from “it’s counts fully as the student’s” to “it’s split because both have access to it” and also “some of the money could of course be the student’s deposit and some the parent’s deposit”. </p>
<p>I’ve always gotten the same variety of answers regarding savings bonds which are listed in two names, Student name OR Parents, since either the student OR the parents could cash/own the bonds. They both can’t claim the full total because that would be counting the same amount twice…they certainly make it confusing…</p>
<p>I suppose it must depend on the type of account. I am a silent (joint) with my MIL and mother. They get the 1099 for interest, and my name doesn’t even show up anywhere. The same with my college kids. I am full joint with myhusband and both our names show up on the account and the check. If it’s really a problem, just put it in the parent’s name and SSN. You just don’t want it in the student’s name on the day you file FAFSA so it can be transferred out as needed. If your kid has $6K that he busted his tail working all summer to accumulate and you are Pell eligble, the additional $1200 can put you over. Sometimes its not just the PELL you lose, but other things that PELL eligible kids also get at certain schools. It can make a difference because every dollar on the EFC means one less dollar directly that a full need award will give. And PROFILE is similar enough that, yes, it can hurt you. Schools outright say that assets should be spent down out of student’s accounts and better to save in Parent’s name than the kid. THis is no hat trick or sneaky business but plain common sense that every guide for financial aid will include. YOU DON"T WANT ASSETS IN THE STUDENT"S NAME.</p>
<p>cpt - I generally agree with your advice here on CC, but I have to draw the line at putting money which clearly belongs to the child (summer earnings, etc.) in the parents’ account. This is simply wrong (and lying on the FAFSA). How do you explain what happened to the $6k of summer earnings? Gambling?</p>
<p>When parents are setting aside money for college, I have no problem with them putting it in a “special” account with the idea that it will be available for college, but also available to them in the event of an emergency. Personally, I think that a 529 Plan is the better vehicle, but if you want emergency access to the money do it your way. And for the child who earns $6k in summer earnings, let him set up his own 529 Plan. It is treated as the parents for FAFSA purposes.</p>
<p>You reimburse your parents for all of the expenses you have incurred the last year or so, and also gift them the funds in anticipation of the great expense they are about to undertake for your educations. You don’t have to explain a danged thing about what happened to the money. IF you are eligible for financial aid, your household is highly likely to need those funds. But it’s up to you what you want to do. If you can anticipate the situation, you can pay your family rent, pay your own expense, etc as you go so you never accumulate the funds. But what happens too often, is that most people do’t know until too late. In fact, those who catch this before filing FAFSA the first time will take the hit like my friend’s son did. </p>
<p>It used to be 30%, so the 20% is an improvement, and it has widely been acknowledged as foolish and unfair. I don’t know of a single case where doing this has been challenged, and I’ve known many who have undergone verifications and some audits as well. Putting your money under the bed and saying you don’t have it is lying and illegal, and IMO immoral. Can’t prove it but it is WRONG to do that. Giving it to your parents who have and are going to be pounding salt to pay for you, is a perfectly legal thing to do and what many do. Giving the money to a friend to hide in your account when it is still yours is one thing, to have it in an account so your parents can use it for your college costs, or their own costs is perfectly above board. And I’d have no compunction telling a school that a kid handed over his money to remiburse parents for expenses incurred and to be incurred. It would not even have occurred to me to lie as to what was done with the funds if asked. Gambling? You’ve got to be kidding!</p>
<p>I agree about the 529, by the way. But a lot of times this is easy access money for college , and most of the time we are talking about small amounts. The student can put the money in a 529 if he so pleases or the parent can when the student reinburses them with those funds, and get more use of the state tax deduction if one is in the picture.</p>
<p>It really is so confusing to figure out. I appreciate your comments. They don’t get 1099s because the interest is too low, and both the student’s name and parent’s name show up on the monthly statements. In the past we’ve just split the balances and the interest because of that, according to the advice we received, but I’ve always been afraid we’ve been doing it incorrectly. We always deduct any student loan refunds from the balance that haven’t been spent, as indicated, although it gets tricky figuring it out correctly because one of them has it deposited to our account for expenses that are easier to pay from home, and some of it they want to save for possible summer class expenses.</p>
<p>This year, I have one who works (very minimal hours) but currently has almost a zero balance in his bank account because of expenses and paying utilities and such, and he came home over break so hasn’t had income for a month. But now I’m afraid they will wonder why he has a tiny balance even though it’s legitimate, lol. Ugh! I always feel so stressed at this time of year trying to figure all this out.</p>
<p>We transfer money that they earned themselves to our account for their monthly contribution to rent, as they live together and it’s just easier to write one check for it.</p>
<p>Re: Knowing how much is in your accounts on a given day.</p>
<p>Other than two puny old hometown bank accounts left from when we spent every summer with my mom, all of our account balances can be checked electronically. Earlier in the month I paid a bazillion bills, then filed the preliminary FAFSA on a day when all had cleared but before payday. In about half an hour I was able to verify the current status of all but those two ancient accounts, and since those have no activity fir months on end, the figures from the previous month’s statement are fine.</p>
<p>The timing is definitely tricky! I finally got things submitted tonight, even though we can’t file taxes until mid-February because the IRS isn’t yet accepting anything with the education credit forms. But we all get paid Friday so I had to rush to get things done at least as “will file”.</p>
<p>Like Happymom, I always go to the online banking and print off the balances right before I submit the FAFSA. I don’t really like to do anything financial online, but in this case at least I have proof of what was in the accounts right at the same time I sent the FAFSA.</p>
<p>Oh well, some things aren’t meant to be. . .</p>
<p>Filed the FAFSA just now and realized that a mistake was made in the data! Hopefully they will let is correct it later, but I guess that is what happens when one is stressed over the FAFSA!</p>