<p>We have money that we inherited when my wife's mother passed away. We put the money into a savings account. We took some of the money and put it into CDs for our son's education. There is still over $50,000 in the savings account. </p>
<p>Is there a way we can move or "hide" that money so that is won't be used next year in our son's financial aid calculations?</p>
<p>No. You have that money, and it is there for you to spend if you choose to do so. Need based financial aid is intended to assist those who do NOT have that discretionary income.</p>
<p>I understand that you may want to use that money for other purposes, and that is fine. But it will be counted for purposes of financial aid (unless you fall into the automatic 0 or simplified needs formulas). In that case, you should be focusing on colleges that you can afford, so that you are not depending on money that you won’t receive due to the money you have available but do not wish to spend.</p>
<p>You can protect assets by putting money into IRA accounts, before your children are applying to colleges.</p>
<p>IRA’s are fine if you won’t need the money for anything else. However, it is very possible that $50,000 might not impact your EFC. Make sure you use a calculator to find out what, if any, impact the money has on your EFC.</p>
<p>You can also withdraw the money from the bank, put it in a shoebox, and put it under your bed. But hope that (1) your house doesn’t burn down, and (2) nobody rats you out, since lying on the FAFSA is a federal offense.</p>
<p>Parents assets are protected more than the students- FAFSA is derived from assets but also current & future income.
Since the CDs were bought to pay for the education, are they not enough to cover it?
After spending assets down you may find that you qualify for aid, regardless.</p>
<p>I would probably put as much as allowed into an IRA now or maximize your 401K contributions if this isn’t the year that will be used in the calculations…if your S is a junior or lower (and if you don’t need the money until you retire) and I also agree with Kelsmom…run the numbers it might not impact you as much as you think.</p>
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<p>parent assets are assessed at ~5.6%. With 50k in the bank, we are talking about your EFC going up 2800. In the case FAFSA only schools this is not going to make an appreciable difference since most of them do not closely meet 100% demonstrated need.</p>
<p>Both the CDs and the savings account must be reported as assets for FAFSA. Only 5.6% of parent assets go to the EFC. ANy interest must of course be reported as income. IRA assets are protected assets, but you are very limited as to the amount that can be put in an IRA in any one year ($5,000 - 6000 I think).</p>
<p>Income has a much larger impact on the EFC than assets. Up to 47% of income at higher levels (and by higher levels I mean around $60k after protected income allowances) go to the EFC compared to 5.6% for assets. $You also have a certain amount of protected asset allowance depending on the age of the older parent. If you don’t have much in other assets, $50,000 will not have a huge income on the EFC.</p>
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<p>Just FYI…the money you have in CDs counts too…that is considered an asset by the FAFSA as well as any money you have in regular savings. Only money that is already IN real retirement accounts is not counted as an “asset” for financial aid purposes. ALL other money in CDs, bank accounts and shoe boxes counts.</p>
<p>Another FYI, and please forgive me if you already know, the vast majority of colleges and universities don’t meet full need, and there are very few schools that will meet “need” without loans. </p>
<p>The handful of schools that meet need without loans are highly competitive for admission.</p>
<p>If you are willing to take out loans, then it doesn’t matter what your level of assets are. You can take out the loans anyway.</p>
<p>Pay down your home loan with it if necessary.</p>
<p>Get a copy of “How to pay for college without going broke” by Chany/Khany. REad through it carefully. </p>
<p>Pay off credit cards, car loans and do home repairs (new roof?) before offspring begins junior year of high school. </p>
<p>But beware. If the money is in SON’s name, then you need to spend it on SON. Sorry, but I do believe that is the legally proper course. You can pay Son’s expenses (maybe the next family car goes in his name-- but that means it is HIS) – laptop, etc are all valid. This reality hits many families who have a grandparent who leaves or gives money to an account named for a grandchild. Give thanks that the money is there and spend it on the kid’s education as was intended. </p>
<p>Given the high cost of college, kid may blow through the $50K in College Year One. Gads. Horrifying but possible. Ask college what subsequent years would look like after the nest egg is gone.</p>