So I have a good chunk of money sitting in my checking account. I know if I don’t do anything with this it will need to be reported when filling out the FAFSA. This will result in significant less aid being estimated on the EFC. Could you legally withdraw this money from your bank account and then report whatever remains as what your currently have?
You can report whatever is left as your bank balance, but you also have to report ‘cash on hand’ which is what this would then become. The total of all cash and bank balances has to be reported.
You can pay bills with it, including next semester’s tuition, before you file the FAFSA.
Or if you know you are going to spend it before going to college (like if you need a new computer), you can do that.
Budget carefully to make sure you’ll have enough cash for expenses, and then spend it. As mentioned above, you can use it to buy a computer, pay bills, etc. It doesn’t have to be used for college expenses if it’s just in your checking account.
If the cash is substantial, you can pay down major debt like car loans or mortgage, but you still have to be able to pay your EFC at the end of the day so be careful.
$1,000 is assessed $200 towards your FAFSA EFC (20%), so unless your EFC is under $5,000 which would then be in Pell Grant range, the savings might not add that much to your EFC to make a difference in aid.
Also would you qualify for simplified needs test on FAFSA? If parent income is under $50,000 and they could file a 1040A in 2016 or were a displaced worker, or someone in the household received a means tested federal benefit like free/reduced lunch, then assets would not be reported for parents, or student.
No. If you withdraw the money from the bank account but don’t spend the money, then you still have it, right? It doesn’t matter if your money is in a bank account or stuffed in an envelope under your mattress. It needs to be reported on FAFSA.
For those of us who qualify for substantial, but not full, needs based aid, we have every incentive to show as little cash/savings as possible so we can maximize our financial aid. Every year just before we file the FAFSA and CSS Profile, we have paid down as many of the bills we can ahead of time. Mortgage, taxes, prepay the year’s worth of heating oil for the winter, car payments/insurance, doctor bills, etc. are all paid to the extent we can. It is another reminder of how cash poor we are but we won’t have any surprises. Since full needs met colleges usually presume that cash/checking is available to pay them, if you don’t have it, they can’t take it. So it is smart to plan
and re #5 - @mommdc , for the past several years, we have paid our roughly $10 grand per year in these type of expenses just before filing the FAFSA / CSS Profile statements. Since these would have otherwise been assessed at 20%, it means we have gotten a couple grand more in FA each year - that’s a very meaningful amount to us. It may not mean as much to many others here who are not struggling with the same financial issues we are.
@3puppies 20% is the assessment for a dependent student on FAFSA.
Parents get an asset protection allowance on FAFSA based on age of older parent and then assets above that are assessed at about 5% I believe.
I answered the question based on the assumption that OP is a dependent student for FAFSA.
If that assumption was incorrect, please let me know.
CSS profile depends on aid policies of the individual college and they can figure in home equity as well and don’t use simplified needs. Very few CSS profile schools probably base their need based grants on FAFSA EFC.
Judging from other threads, the OP is a student.
@taylor96 how much is your substantial amount in the bank? $2000? $20,0000? $200,000?
Also, do your colleges guarantee to meet full need for all accepted students?
What I’m saying is…you could spend your substantial savings on some purchase like a computer or something…but it might not net you a nickel in additional need based aid.
Is there some reason why you don’t want to use some of this substantial savings to help pay your college costs?
@thumper1 My "substantial"amount is around $6000 dollars.
What is the EFC and what schools are you applying to?
Did you run net price calculators with or without your savings?
FAFSA EFC would go up about $1200 with $6000 in student assets.
If you apply to only FAFSA schools you could put some of the money into a 529 account to be used for college and then it would be considered a parent asset.
Is there some reason why you can’t use some of your saving for college expenses?
@thumper1 first off, why would I do that when if could get it from the fafsa? also yes, I am saving it. I am planning to go a year abroad for the 2018-2019 school year.
Because before you ask someone else to pay for your education (in the case of money that comes from submitting FAFSA, that would be taxpayers), you should pay what you are able to out of your own funds.
The maximum Pell Grant is $5920
It helps but there are not many schools where that is enough to pay for tuition.
The federal aid is not going to cover all of your costs for books, transportation, shampoo and toothpaste. You might want to go get Pizza out with your friends sometime.
“what you are able.” what a very subjective statement. I guess I could be considered “able” till I have no money at all. thanks for the input though.
I would define “able” at the moment as spending no more than 500 dollars up front.
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