FAFSA confusion with UTMAs

Paying for College
1

<p>My father opened a UTMA account for my son in 1999. It has been growing without attention since then. My son recently turned 18 and my father hemmed and hawed over this account. He was filing taxes on my son's behalf and paying the taxes due all of these years. When I filled out the FAFSA for my son in January, we had no information regarding the account, my father said that he could keep until 21 years of age. I didn't know what type of account it was and what it meant in terms of financial aid. After meeting with my father's attorney in April, I found out that the account must be transferred to my son. There is about $30K in the account, which is so nice of my Dad...however, I am very low income and my son qualified for all sorts of aid and grants. : ( My son doesn't have a car, a phone, etc. we haven't been able to afford things like insurance, etc. Is it wrong to buy my son a car and pay his first year of insurance, and then report the remaining UTMA balance on the FAFSA. Or must I report the full amount, which will strip him of his financial aid...saving this money was what seems like a big mistake and a bigger mistake that my father didn't investigate the ramifications. : (</p>

2

<p>

Your son owns the UTMA account already. So, were you neglected to report it as his asset in the financial aid forms?</p>

3

<p>how low is your income? what tax form do you use? If low enough and using a certain form, you may have an auto zero no matter what.</p>

4

<p>My adjusted gross was 18K. However, I have heard that the UTMA monies are taken 20% each year. And that this will disqualify my son from grants which he was awarded and will translate into loans. :frowning: I file a 1040A. My son was on the account, but my father was the guardian or something? We didn’t receive statements ever, and I had no knowledge of the account’s balance? If so, we would have bought him a car last year to help alleviate all the driving I do. :(</p>

5

<p>You may qualify for automatic zero EFC calculation and the FAFSA questions on your assets are skipped. See <a href=“NHHEAF Network”>http://www.nhheaf.org/index.asp?page=pay_zeroefc&lt;/a&gt;.&lt;/p&gt;

<p>However does your son’s school use other forms to calculate the financial aid?</p>

6

<p>I do get a zero, but the UTMA shows up as an asset of my son. And he wants/needs to buy a car. The UTMA funds aren’t restricted to education expenses. </p>

7

<p>

If you son’s school is only using FAFSA to calculate the financial aid and you qualify for auotmatic 0 EFC calculation; then it doesn’t matter how you/your son spend the UTMA money, it won’t get reported in FAFSA.</p>