<p>we are a working class family and over the years my parents have saved lots of money. they decided to put this money in the stock market and over the years they have made 50 thousand dollars off of it. if we do not put this on FAFSA will they in the end find out?</p>
<p>my second question is, if any one knows, if my parents make 20 grand a year what would the EFC be?</p>
<p>Yes it is likely they will be found out. Stocks generate dividends. Dividends have to be reported on tax returns. Dividends with no stocks to generate them = big red flag on FAFSA. And if you lie on FAFSA you are lying on a federal documents - penalties can range from up to a $20,000 fine to imprisonment along with repayment of any federal financial aid you have received.</p>
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<p>Remember there is an asset protection allowance in FAFSA the amount of which depends on the number of parents and the age of the older parent.</p>
<p>Also if your parents income is under $20k for 2008-2009 school year or $30k for 2009- 2010 school year and they file a 1040a or 1040ez tax return they may qualify for an automatic 0 EFC. If their income is above those amounts but below $50k and they file a 1040a or 1040ez they may qualify for the simplified needs test where assets are not considered.</p>
<p>Do not lie about the assets. The penalties are severe.</p>
<p>The value of your stocks on the day you file the FAFSA MUST be reported on the FAFSA. Failure to report is illegal. </p>
<p>If your parents make $20k/year, you will probably have a low EFC. However, there is more to the EFC than income … your parents’ assets (including the value of their stocks) will be taken into consideration, as well. There are other factors considered in the formula, too. No one can tell you one way or the other without all necessary info. Please put your info into a financial aid calculator to get a rough estimate of your EFC.</p>
<p>A question: Are the stocks in a retirement account? If so, they won’t be taken into consideration as an asset. If not, though, they must be reported.</p>
<p>EFC is calculated mainly from income. Income does include dividends, interest and realized gains from investments. Realized gains are profits realized from sale of investments. These are the same figures that need to be reported for tax purpose, and are reported on an annual basis. If you are going to be starting college in fall of 2009, the income used for financial aid will be that reported on your family 2008 tax forms only–not prior years’ gains or dividends.</p>
<p>The other part used for aid determination would be assets. That figure would be the market value of your parents stocks and other investments, savings accounts, etc on the date they fill out the FAFSA. There is an allowance allowed, and then about 5-6% of the the assets over that allowance is used as part of the EFC. So all of the gains from the stocks over all of the years is not assessed. OFten the tax forms are requested for verification of the FAFSA figures.</p>
<p>Absolutely do not lie. It is not worth it. You can explore your options:</p>
<p>[IFAP</a> - EFC Formula Information](<a href=“http://www.ifap.ed.gov/efcinformation/0809EFCFormulaGuide.html]IFAP”>http://www.ifap.ed.gov/efcinformation/0809EFCFormulaGuide.html)</p>
<p>A large chunk of your assets ($45-50k) are protected from FAFSA consideration. You may decide to move around some of the assets, for instance take a chunk of money above the protected amount and pay down the mortgage and that amount is now protected.</p>
<p>Before you do any moving around of assets, play around with the FAFSA and PROFILE calculators and see what would make a difference. Don’t go by general rules. There really are not that many cases out there where making big changes would generate more than a little bit of money. Life is not just college financial aid.</p>