<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>