<p>Our S want to cash in some savings bonds (They are in his name and his social security number is listed but I am a co-owner) to purchase a few school related items. Should he cash them prior to filing the fafsa application? If he cashes them now prior to filing the fafsa will there be a problem?</p>
<p>Not sure what kind of “problem” you mean. If he is holding the cash, he must report this on FAFSA as current cash/savings/checking; bonds (current value) must be reported as current investments. If he cashes the bonds, and SPENDS the money prior to filing FAFSA, then the amount spent will not have to be reported.</p>
<p>If they are in his name they are currently a student asset. If he cashes them in and they are in a savings account when fafsa is filed they are still a student asset. If he spends them before filing fafsa then student assets are reduced. The interest received will be student income for the 2015-16 fafsa. Since they are in his name they aren’t eligible for the savings bond interest exclusion if used for qualified education expenses.</p>
<p>@Whataprocess. Thanks. Our S did CSS profile for the ED school he applied. He reported the savings bonds in the CSS. The awards letter mentions that he has to send in the 2013 parental tax and W-2 information once filed. The savings bonds amount reported will differ from the FAFSA amount if he cashes in now to buy the few school related items he want to purchase now. We are hoping to file FAFSA in February once the taxes are filed. I am aware the student contribution to the school will not change as the CSS is already done. What I am worried about is reporting a reduced student asset amount in FAFSA than the CSS amount. Will this be a problem? He want to purchase these items (such as a good computer etc., now in order to use them for some work he has undertaken) Thanks once again for your information.</p>
<p>@annoyingdad. Thank you for your information. I was aware about the interest income for the student for 2014 tax year. I believe he will have to file taxes for 2014 in any case if he work during summer this year.</p>