<p>I totally understand wanting to maximize financial aid, tax savings etc and changing ownership of accts etc does make sense. But i'm wondering if the college selects the student for verification how much of these bank statements etc are actually asked for? Does anyone have experience with this? I know they ask for tax returns and have students fill out the school's own forms verifying income and savngs but what about bank statements or 529 statements? I would think someone would have a hard time explaining large transactions on their bank statements. Any thoughts on how they verify such things?</p>
<p>Another ? about 529 accounts, no matter whose name they are in:
Does the college/university expect a student to use the entire account or amount (depending on what that amount is) for tuition the first year, until it's gone?
In other words, say that the parents have a 529 for benefit of their kid and have accumulated (for an example only) $20,000. Student is attending a school that has a cost of attendance of around $45,000. Does the school expect the parents to drain that 529 the first year to pay the tuition, or would the school estimate financial aid (knowing that $20K) is there, over four years?</p>
<p>Subsidized = interest on the loan is paid by us fine taxpayers.
Unsubsidized = interest is paid by the loanee. However, the rate is and return to loaner is paid by taxpayer.</p>
<p>Such change in ownership may not be allowed by law, questionable ethics, tax evasion, information is tracked by IRS and FAFSA/Colleges can and do have access to financial information. Penalties severe.</p>
<p>NotMama-if you have $20,000 in a 529 you own for kid and $80,000 in mutual funds you own it doesn't matter for FA purposes where the tuition comes from since it is all assessed at the same rate (5% for parental assets). You might want to figure out the income tax consequences of liquidating each account in whatever year, though...and the income tax consequences of letting $$$ remain in each account as well. But good to use UTMA/UGMA assets if any up first since you won't control them after the age of majority.</p>
<p>nurseratchet-I do audits for another reason; but I ask for all bank/investment statements for the year, then supporting documentation (cancelled checks, deposit slips) for any irregular transactions (you can tell some regular payments are payroll deposits or mortgage payments right away) over a certain amount (maybe $1,000).</p>
<p>Hey guys this is a cut and paste job as I see there are alot of you on line right now.</p>
<p>Divorced Parent and FAFSA </p>
<hr>
<p>I am Divorced for 14 years and never remarried. Neither has my Ex husband. </p>
<p>My child now 17 and applying to colleges (already have various acceptances) has lived with his father in CT since she was 5 years old and has had the benefit of the good public school system there. Last June when her high school got out for summer in CT I moved her into my apartment in NY (she took some summer college art courses in NYC and continued to stay with me) so that during the past year she has lived mostly with me for FAFSA purposes. During her final school year I have driven her up to CT every morning (I work nearby) and she has attended the same high school she always has. We never informed the high school what we were doing as did not want to risk them telling us she could no longer attend school there and quite frankly it is none of their business.</p>
<p>That is the background now here are the questions/comments:</p>
<p>1) I will be claiming her on my 2007 tax return and will give my information on the FAFSA as a single parent. How much trouble am I going to have with the colleges due to our living in NY state and my child will graduate high school in CT state? My home is in another state but is only twenty minutes away from my daughter's high school. </p>
<p>2) I have no savings to speak of but do own my own coop in a regulated community which means the coop is not worth much. I am a mental health counselor and earn less then $35,000.00/annum. Is this too much money to make to qualify for aid. I live pay check to pay check.</p>
<p>3) I am a Bill Gates Scholar. That paid for me to get my GED and undergrad degrees and now I am attending school at night working on a Masters in Mental Health Counseling. I mention this because someone told me it is a good thing if me and my daughter are going to college at the same time. Is this correct?</p>
<p>4) Even though I think it is better to apply for financial aid under my information, In case they dont let me, I have some questions regarding applying under my ex husband's information instead (which he does not want to do) as follows:</p>
<p>a) He has his own small business (some sort of commodities broker I believe) and has not earned one penney in the past two to three years and his tax returns reflect that.
b) He has health insurance for my daughter and himself thru CT medicaid program because he has no income.
c) He lives at his parent's home in CT and pays no rent. That is where my daughter has been living as well for 14 years.
d) I think he owns an apartment in NYC but had to start renting it out a few years ago when his business got bad. He was using it as an office before that. I have no idea what it is worth or how much of a mortgage he has on it. It is not a very big apartment but it is in a nice location in NYC.
e) He tells me he has very little money but I think he must have money saved away just to be able to be in a business that makes no money and he does not seem to care too much. If we were forced to apply for aid under his info as a single parent is FAFSA and/or the colleges going to require he tell how much he has in the bank even though he has zero income and is on medicaid?</p>
<p>I am asking this because my ex husband started giving my daughter a hard time last year when she said she wanted to study Art in college. He said he was not going to pay for a JOKE degree. That is why I had her live with me for the past 7 months. Could the FAFSA or the colleges request his financial information even if I am going to apply as a single parent? What if they do and he tells them to get lost? </p>
<p>Does anyone have some input? Thanks.</p>
<p>SashaB55</p>
<p>Hm, maybe I'll just pay the college for the summer housing and 2 classes my son intends to take in 2008 before I do the fafsa. that should clear the 12K out of my name legitimately!</p>
<p>Prep parent, I would have grandpa name you as the beneficiary of the 529. Then it is not reportable anywhere. However, unless your daughter goes to grad/prof school, she is going to be restricted in taking out that money when the beneficiary is changed to her when she finishes college. True, Profile asks if you have ANY other source of college money such as grandparents or anyone or anyhoo willing to pay, but that question lies in the gray area of ethics as any fin aid advice will tell you to keep that info to yourself. Ethically, I find it troubling in that the money is specifically set up for your daughter's college expenses to the point of financial penalties if used for anything other than college, and you don't want to include it on PROFILE, but that is my opinion. </p>
<p>The problem with making other folks beneficiary is that if any of those folks should die, there may be some problems in getting the money to whom it was intended.</p>
<p>OP, post #1.
[quote]
n addition, I attended a seminar about college financial aid and the officer in charge suggested that because having money in a 529 <em>will</em> in the end, have an often significant impact on a student's ability to get other financial aid, grandparents and others who hold 529 plans in benefit of their grandchildren hold onto the money (and continue to contribute to the fund) until the kid is OUT of college, and THEN give the $$$ to the grandchild to help him or her pay off college loans. Is this a viable option?
[/quote]
</p>
<p>529's can not be used to pay student loans. 529 can be used to pay for current year's college expenses either directly to school or to owner who paid for student's allowable expenses. </p>
<p>IOW. You have until Dec 31 to identify and pay college expenses incurred in 2007.</p>
<p>if you take an unqualified withdrawl and pay the penalties associated with that, could the proceeds then be given to pay off loans?</p>
<p>Seems stupid to me, but not undoable</p>
<p>Actually, what the poster was asking was about grandparents holding onto 529 money to help students pay off loans after they finish school. The way the FinAid! website suggests doing this is that the student does not declare on the FAFSA that they are a beneficiary of a 529 (this only pertains to 529s held by grandparents, or someone OTHER THAN the parents or student that names the student as beneficiary) and the student then accepts the financial aid award they receive, including loans. They take out in loans what their aid award allows them for each year, and in each year the grandparents withdraw from the 529 the amount the student took out in loans. Yeah, they have to withdraw it in the same year the school expense was paid, but they can put it away in savings account, in a cigar box, whatever, and hold onto it until the student graduates and give it to them to pay back the loans, and depending on the loan amounts, they may have to give it back to the students over some period of years in order to not exceed the tax-free gift limit of -- is it 12K per year now?</p>
<p>I'm not saying that's exactly legit because I don't know, but from financial people that hand out this advice, that's what they're advising others to do.</p>
<p>Obviously it doesn't work with the CSS Profile since that, unlike the FAFSA, does ask about such non-parent or student held accounts.</p>
<p>I have a question. I'll preface it by saying...we don't have any 529 accounts but I sure wish we had planned and did. I have to ask. WHY would you save money in a 529 account presumably for funding your child's college education, and then not use it to fund your child's college education? There are several threads going right now that deal with 529 accounts (some which hold over $100,000) and the parents/grandparents, whomever...are now trying to figure out a way to move this money around (and yes, I understand there are ways to do this) so that the child will more likely qualify for needbased aid. If we had a 529 that could fully fund our kids' college educations, we would be ever so grateful that this was the case, and this would be the BEST gift we could give our kids...no debt college (no debt to them or us). So...help me understand....why are these folks so reluctant to USE these 529 accounts for the educational purpose for which they were presumably started? I just don't understand.</p>
<p>I think some of the OP's concerns were that the 529 grandpa owned was subject to disclosure on CSS/Profile. If grandpa just kept the $$ in grandpa's savings account and gave it to the student after college rather than putting it in a 529, it isn't anyone else's business (but he would lose any income tax advantages).</p>
<p>I can't see any advantage to saving $ in the 529 account then not using it to pay for college unless you want to use it to send a different kid to college or you would rather keep the $$ for yourself and pay taxes and penalties.</p>
<p>If there's enough money to pay for college totally from a parent's or grandparent's 529, then I don't see the point either.</p>
<p>In cases where I've heard of this, it has more to do with a limited amount in a grandparent owned account, and trying to make that money stretch by not disqualifying the student for any other aid, including grants, they might be otherwise eligible for based on need.</p>
<p>If there's just enough money to pay 100%, then I don't get why all the bother, unless there are other children who could also benefit from any money left in the account.</p>
<p>joshuatreemom, thanks! That was, indeed, was my question: Is there any advantage to holding onto money from a 529 that was taken out by a grandparent on behalf of my daughter until she graduates, and then using the money to pay off her loans? I was told that this was a smart way to do things by a financial aid counselor at a prestigious university. I cannot seem to find reference to this on the FinAid! Web site, so if you see this post and can point out to me where to look for that, I would appreciate it.
Muffy, however, poses a good question, which is why would we want to do this? I am wondering the same thing! I asked, as I said, because it was presented as a sound financial decision at a FA seminar I attended. The presenter mentioned this option when someone in the audience mentioned that disclosing on the CSS that Grandma or Grandpa had a 529 in their kid's name would no doubt seriously limit the kid's ability to get financial aid for the first year at college.
If it matters, I should say that this 529 doesn't even have enough money in it to pay for one full year at any of the colleges or universities to which my kid is applying. It has about $20K in it so far, which won't go that far. However, needless to say, I am grateful beyond words that the grandparent did this at all.</p>
<p>prep_parent, to not disclose it on the CSS would be dishonest, since it does specifically ask, and it's strange a college financial aid counselor would suggest such a thing. It's different with the FAFSA, which doesn't ask, and doesn't even provide a place to reveal such information. Maybe that's a subtle difference to some, but to me if you're directly asked and you directly lie, that goes beyond prudently working the rules to your best advantage.</p>
<p>That said, the advantage in your case would be that if your daughter didn't reveal that 20K resource, then her financial aid award would be based only on her and your assets and income. She may, for example, get more grant aid that way, while her loans might stay the same (some schools have limits on how much they'll let students take out in loans, and they'll increase grant aid to cover the gap.) It all depends on the policies of the school where it comes to loan limits and grant aid, etc. It could be no advantage at all to conceal it, or it could be quite helpful.</p>
<p>Like I said though, it's not something I'd think of doing for a second if there was outright lying involved, regardless of what someone said at a FA seminar.</p>
<p>Prep parent, either you mistook what the fin aid cous said, or he was wrong. You cannot use 529 money to pay off loans, only to pay current tuition. What I would guess he said, was that if a grandparent had an account to pay tuition, non 529, it would be legit not to put it on the forms unless either your child or your name is on the account. Many folks do this. The grandparent can then present the funds at graduation to be used to pay off any loans or for whatever the child wants. </p>
<p>If the 529 fund has your child's name on it as a beneficiary, it should be reported on PROFILE. It would be dishonest not to. However, if your name were on it as a beneficiary, it would not be required to report it as the grand parent is the owner and your child is not the beneficiary.</p>