<p>Perhaps someone can answer this question about assets for me. I have twins headed for State Universities in the Fall. I have custodial UGMA CD accounts for each of them, same dollar amounts. In 2010 my husband was unemployed for 7 months. In 2009 he had taken a $20,000 salary cut. Needless to say, things have been financially challenging. So...do I total the two account amounts and note in parent assets? If I do that it appears that we have cash on hand, which we don't. OR...do I note the amount of each child's account under student assets? I think that's the better choice because the FAFSA will reflect only what each twin possesses, not double the amount as it would appear if indicated under parent assets. I'm hesitant because at a college fair a FAFSA person said I should list the amounts under parent assets. What do you all think? PLEASE ADVISE.</p>
<p>UTMAs have to got in the name of the student except for 529 accounts. But 20% of student assets go to the EFC and students have no asset protection (parent assets have some protection and then only 5.6% goes to the EFc).</p>
<p>If there is any way to convert the CDs to 529 accounts then they would be reported as parent assets, which would be much better for the EFC.</p>
<p>Thanks swimcatsmom. I did not realize the broad percentile difference as it is applied to student and parent assets. I don’t file separate income tax for my twins. Their dividends are reported on our income tax. Maybe that is why the FAFSA person said to indicate the amounts under parent assets. With that great percentile difference, I now understand why, in which case wouldn’t it be better then to report under parent asset with the 5.6% calculation applied? From what I have read, with two children in college simultaneously, my EFC is split 1/2 and 1/2 on each child’s FAFSA.</p>
<p>Yes, the part of the EFC generated by parent information is split between the number in college. Any part generated by the student’s own income and assets stays with that student.</p>
<p>I am surprised the FAFSA person would tell you to report is as a parent asset if it is a UTMA. Your husband is the custodian for the UTMA account, not the owner. UTMAs are supposed to be reported as student assets, unless they are 529 accounts.</p>
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<p>Yes, I understand that now. I had never heard of a 529 or Coverdell until about a year ago. I guess I’m old-fashioned. I put the money in the bank. I will see about transferring to a CD, but my guess is there would be a penalty. The thing is, both my kids actually have more than my husband and I. We really have no assets. Our home is worth less than our mortgage and our IRAs total way less than $100k. And we are in our late 50s. We don’t live big, very modestly in fact. No vacations, new cars, manicures. We are pay-check-to-paycheck. I’m pretty sure we fall into the need-based category based on the 4caster. I just want my kids to get the most need out there. Let me ask this, based on your post, how does the FAFSA know if you are reporting your assets accurately? By that I mean, we file income taxes, we have nothing to hide, and the dividends from those CD UTMAs are reported on our income tax, with the twins as dependents. It’s money I saved. It’s my money. My kids never had a job.</p>
<p>Does your income tax include “Parent’s Election To Report Child’s Interest and Dividends”? That’s how you’d show that this dividend income was your children’s, not yours. From the IRS website:</p>
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<p>I agree with swimcatsmom - look into moving these funds out of CDs and into 529 accounts. If the penalty is too severe to make the move right now, find out when you can cash in the CD with no penalty and make plans to do so then. Either that or calculate the cost/benefit of taking the penalty anyway.</p>