This is my first time posting on this forum so excuse me if this has been brought up already…I didn’t find it searching.
Does anyone know (or can you speculate) what is going to be done for Simplified Needs and Auto-Zero with the new tax law and the elimination of 1040A and 1040EZ? My oldest will be filling out the FAFSA for the first time next fall and unfortunately this could throw a massive monkey wrench in our plans.
No way to know but it could be an income limit or income to dependent ratio.
There already is an income limit. 25K AGI for Auto-Zero and 49K for Simplified Needs. But you also need to either be on government assistance OR be able to file the 1040A or 1040EZ.
https://ifap.ed.gov/efcformulaguide/attachments/1920EFCFormulaGuide.pdf
It’s now $26,000 for auto zero for FAFSA 2019/20.
Nice. It’s about time they raised that some. Of course, without the 1040A qualifier it won’t do me any good anyhow. I would have done this financial aid planning thing differently had I known this was going to implode. Now it’s too late.
Would your kiddo be eligible for free or reduced lunch?
Unfortunately no. Child support takes us over.
My son has a large UTMA account from his grandparents (about 30K) that we just assumed all these years would be ignored on FAFSA, but now it might not be which is stressing me out a little, but I guess not much I can do now but wait and see.
Had I known even last year that this might be a problem, we would have rolled it into a 529 or something. Now I don’t think we can without it being counted as income for him in 2018 or something like that. Haven’t investigated fully yet.
And your income is too high for SNAP?
If it’s his money at age 18 (when is his birthday?), then why couldn’t he move the money to a student owned 529 then?
Yes, too high for SNAP. Gross is about 42K.
The interest or investment earnings in 2017 on the UTMA account will need to be reported as student income on the 2019-2020 FAFSA, and the total account balance as of the date the FAFSA is completed will need to be reported as a student asset. When did your son receive the money from his grandparents?
You/he can still liquidate the UTMA account (assuming it’s held in something other than cash) and move the funds to a custodial 529 account (if he’s still a minor under your state’s UTMA laws) or a regular 529 account (if he’s no longer a minor under your state’s UTMA laws), but if this means selling investment assets (stocks, bonds, mutual funds, etc.) you need to take into account capital gains that may be realized and taxed. The benefit would be the FAFSA assessment in a 529 account would be done at the lower parent rate of 5.6% instead the higher student rate of 20% in the UTMA.
He won’t be 18 until July 2020. I was told moving to a 529 would make the entire amount count as income for the student that year which would be worse.
The money can be moved to a student-owned 529 at any age. If the UTMA is being managed by a custodian because the student is still a minor under the state’s UTMA laws, a custodian (student-owned but custodian managed) 529 could be opened.
I don’t think that’s right. Only unrealized gains upon liquidation (if that’s necessary) would be considered income. How are the funds in the UTMA currently being held?
The money is all in a science and technology fund that his grandparents opened with Edward Jones. He won’t get the money until he turns 18. They offered to pay tuition to his school now a few years ago to cut down on financial aid hit (he goes to a private school…3K/year) but I declined thinking it would be ignored anyhow. I guess they could still pay senior year yet. That would come out before FAFSA next year.
So your son is a high school JUNIOR now? Can they pay the rest of Junior year and all of senior year tuition?
Was he planning on applying to any CSS Profile schools?
Where was he thinking of applying?
As a backup, include some schools where his stats will get huge merit.
He’s a Junior. Junior year is paid for.
Were you hoping for a portion of the Pell Grant? If so…why not just use the money that would be paid towards HS towards college?
It’s a wonderful gift from his grandparents.
Any money paid by the grandparents in 2018 for the student’s private school would be reported as untaxed income on the 2020-2021 FAFSA as “money received, or paid on [the student’s] behalf (e.g., bills), not reported elsewhere on this form. This includes money that [the student] received from a parent or other person whose financial information is not reported on this form and that is not part of a legal child support agreement.”
Likewise, money paid by the grandparents in 2019 for the student’s private school would be reported as untaxed income on the 2021-2022 FAFSA, and money paid by the grandparents in 2020 for the student’s private school would be reported as untaxed income on the 2022-2023 FAFSA.