Fraud fraud fraud?!

Paying for College
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<p>Hi CCers,</p>

<p>I was told something by a friend of mine that really upset me. Said friend has an incredible house - and this is in NYC, so the property value is through the roof! Anyway, I remember in the conversation, finaid came up and this friend is going to a private LAC (as am I). This private LAC has exceptionally good aid; they meet all demonstrated need (as does mine). </p>

<p>Long story short, she's paying *exceptionally less*for college than I am and I asked her how that was possible (with the house fully paid off) and she said that her parents bought the house under a relatives name, so it wasn't considered their assets. Can someone chime in on this? Is what my friend doing completely wrong, or is that a common occurance with families trying to get as much money as they can in grant aid? It's extremely disheartening... </p>

<p>Thanks!</p>

<p>-An extremely confused MM.</p>

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<p>If it’s their primary home, it shouldn’t matter becasue FAFSA doesn’t count that.</p>

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<p>No…as JayDee said, for FAFSA and even for Profile the value of the family’s home is eliminated or at least equity has a large cap. Also, few families would do this as the deed would be in the relative’s name, as well as any financing that was needed at the time of purchase. Assuming they had knowledge of how the FA process worked, which is a big assumption, my guess is very few would consider college FA ramifications to be an important part of the structuring of such an asset.</p>

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<p>MM, consider this a life lesson. You are going to come across many, many examples of people who use loopholes or even bend the rules to try and twist the system to their advantage. I understand your feelings completely and have heard too many stories that can make me feel like somewhat of a sap for trusting in the system and trying to do things the right way. All I can tell you is, I sleep better at night knowing that I’m not engaging in risky behavior that could result in potential legal or financial troubles down the road.</p>

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<p>I agree with the other, missmurder. It’s not worth spending any time fretting over. I have a feeling you’re not getting the whole story. In fact, your friend may not even know it herself. And generally speaking, you can’t look at what one family is paying and then look at another at a different school, with a different life, and compare them. It’s way too complicated, for one thing, but you’ll find lots of cases that do not seem to meet a “fairness” test. All you can do is deal with your own situation and make it work as well as possible for you and your family. Just let it go. It doesn’t matter and there’s nothing you can (or should) do about it.</p>

<p>Enjoy your college experience! It’s an exciting time.</p>

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<p>What business do you have in someone else’s financial business? You are taking the word of a college student who may or may not be telling the truth, certainly is not telling the whole story, and may not know the whole story. If you get upset about every story you hear about someone cheating the system, you are going to have a stroke at a young age. If you actually witness a fraud, there is a moral ground to report it. If you hear a story about fraud, forget about it. It’s questionable, especially coming from a college kid.</p>

<p>First of all, if someone wants to take the risk of putting a home in someone else’s name (and there are some big time risks in doing this), fine and dandy. Basically, they are buying a house and giving it to them. Yes, they could live in the house, if that is the agreement, yes, they can be living in some relative’s house for cheap or no rent too. They can also have a house with no equity in it, not uncommon these days, so the zero or less value is not going to affect the need. For FAFSA , if that is all the school uses, and for a number of schools the value of a primary residence is not taken into account for financial aid or the amount is capped. So there are many reasons why someone in an expensive home can legitimately have financial need. I see it all of the time. Nothing new. So the bottom line is that if your friend’s family bought a house in someone else’s name, it would not be included in their assets, but there could be many other explanations for the situations, all legitimate. They can also be cheating and lying on their forms. Yes, this happens too. Happens everywhere, anywhere. Nothing new with that. But unless you actually know for sure, not just from some kid’s flapping his jaws, it really is just talk.</p>

<p>It would be a very stupid idea to buy a house for someone and live in it as if it were your own, just to get one up on college financial aid. First of all, there are very, very few colleges that meet full need and there is no guarantee your kid will get into one of them. And you have to do all of this finagling the year before your kid is going to school. Doing this imposes a huge risk and probably other costs in transferring the properties back and forth. Unless cash is paid for the house, some sort of financing need to be obtained, and that can be very, very messy. FOr someone to have that kind of cash lying around with out an income would be unusual. </p>

<p>Financial aid is very heavily based on the family income, and less so on assets. My guess is that your friend’s family makes a lot less money than yours. The house may or may not be theirs, may or may not be included in the equation, may or may not have a high market value less mortgage. You just don’t know. And it’s none of your business. What your friend is getting in aid does not impact your package at all. Look at your own family financials and see if there is anyway to legitimately increase your aid. Forget other people’s money.</p>

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<p>If your school only uses FAFSA to determine need, then the school wouldn’t consider their home anyway.</p>

<p>If their school uses CSS Profile or something else and does consider home equity, then it would be an issue.</p>

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<p>Thanks for the responses.</p>

<p>ctpofthehouse; I’m not saying that it is my business - I don’t care how much she is paying for college or what her financial situation is, fraud or not. What I was asking is the commonality behind such an act. And I wasn’t as upset, per se, as I was surprised. Thanks for the input, however.</p>

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<p>I sounded harsh because I read similar posts each year where the story is that someone is cheating the financial aid system. They might be. And they might not be. If they are, they are taking a risk, probably many risks. If your are pretty sure that there is fraud, report it to financial aid so that they can investigate the situation. But do bear in mind that there are things that are permissible if the people are willing to take the risks in doing these sort of things, and it is often legal. You can drive yourself nuts trying to figure out these stories. Rarely is the whole truth told accurately, and the details are often what are important in such cases. And yes, they can be cheating.</p>

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<p>You did care according to your original post. Reread it. The commonality of someone living in a house they don’t own is not widespread but not that rare either. I know a lot of people living in houses that their parents helped them buy. My SIL’s brother lives in his parents’ old house. They let them live their–never officially sold it to them, but let the brother and his family move in there. THey have a college kid. That house would not appear on their financial aid forms, not that it matters since the daughter goes to a FAFSA only school that does not tend to meet full need. If she went to a full need met LAC, if her parents’ income did not put them over the EFC needed for college costs, it would make a difference in the aid package. They would be in the exact situation as your friend; living in a nice big house that they don’t own. So what?</p>

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<p>I guess it’s only in a perfect world where everyone does things by the book. :)</p>

<p>Thank you very much for the advice, it is always helpful.</p>

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<p>miss…I would encourage you to be concerned about YOUR financial aid issues and not be concerned about others. To be honest, the less you say to others about your situation the better for you…and remember that in ANY situation when folks are talking about their assets, sometimes, the story you HEAR and reality are not the same thing. </p>

<p>I know this may sound harsh but it’s not your concern what another family SAYS they are doing or got for financial aid. The only concern you have should be YOU.</p>