<p>My daughter has applied for graduate school for fall 2014, and she needs to fill out FAFSA soon. She got her BA in June 2012, then worked as a consultant till August, 2013.
Since August 2013, she had been working full time earning ~$30K per year. She will work till August, 2014.</p>
<p>For 2012 Tax year, we claimed her as a dependent as we paid her college fees that year.
For 2013 tax year, she will be filing tax on her own. </p>
<p>She needs to get a loan or scholarship money to pay for her college as what she has saved is not sufficient. </p>
<p>(1) Would her ability to get a loan for Graduate school be affected by her current income? She won’t be working in the graduate school.</p>
<p>(2) She had been saving for her college : (i) savings account and (ii) Investment account etc. Would she benefit by transferring the $$ she doesn’t need for first year to a 529 account? My understanding is that if she leaves the $$ where they are at, she may have to pay tax on the gains though she will be using the funds to pay her fees.</p>
<p>(3) If above is an option; should she transfer the money to a 529 before filling out her FAFSA?</p>
<p>(4) I just submitted my son's FAFSA for undergraduate school. Would there be any benefit to claiming my graduate college bound daughter as a dependent this year as well?. </p>
<p>I know too many questions, and I am hoping that those who have gone through such experience would provide some guidance. </p>
<p>Her FAFSA will be based on her earnings in 2013. She can estimate her earnings using her final pay stub from 2013.</p>
<p>Her FAFSA will ask her assets on the day she fills it out. If she has money in a savings account, it is an asset. If she moves the money to a 529 plan (if she even can), it is an asset. Wash.</p>
<p>You can only claim her as a dependent if you provide more than half of her support in 2013. Did you? If not, there isn’t an issue, you can’t claim her.</p>
<p>Any gains on the savings to this point would still be taxable if she transfers them to a 529 account. it is only gains once they are in the account that receive a Federal tax benefit. (though there may be some State tax benefits). And 529 savings are counted the same in the EFC formula as other non protected assets.</p>
<p>You can’t claim her as a dependent on her FAFSA. She is considered independent as she will be going onto Grad school. In general she can not be listed on her sibling’s FAFSA as she is independent for FAFSA. I have heard here on CC that some schools might allow a Graduate school sibling to be included in the undergrad’s FAFSA if the parents are providing more than half the grad student’s financial support. That is something you would have to ask your son’s school about.</p>
<p>Federal aid for Grad students is mostly unsubsidized loans so her income won’t prevent her from getting those.</p>
<p>Thank you Rwainandone and swimcatsmom for the input.
I already filled out my son’s FASFA and haven’t included her. </p>
<p>Would she have been better off going to graduate school right away without working.
Will her EFC be high because she earned this year even though she won’t be working while in gradate school. I wonder how much higher.</p>
<p>It probably won’t make much difference. There is no Federal grant aid for Grad school, only loans and direct loans for grad students are unsubsidized. </p>
<p>In general there is not so much need based aid for Grad students. There is more in terms of stipends for assistantships depending on the program and the school. My S-I-L is a grad student and is a GA - it waives part of his tuition and also pays him a monthly stipend.</p>
<p>Unless she goes to a fully funded PhD, I agree with scm, that most of her FA will be in the form of loans. As long as she is credit worthy, she can borrow the entire cost of attendance - any financial aid as a gradplus loan.</p>
<p>Does she work full time at her current job? Does it have a tuition aid plan? Sometimes employers will pay for grad school if it is work related. this would mean that she would continue to work and attend classes in the evening</p>
<p>I wonder whether there is any tax benefit for her if she keep her current funds in a 529 rather than in an investment account. She has saved enough for ~1/3 of her college expenses. We could probably find a way to loan her the remainder from our retirement account as we don’t need it for another 10 years or so if it comes to that.</p>