<p>I was accepted to Penn and they offered me about $31,000 in grant/scholarship money, which left my family with about $21,000 to cover the rest of the $52,000 tuition and fees. A generous relative has given us $15,000, which brings the amount we have to pay down to just about $6,000 or so. My question is: how do I use this gift money to pay for my tuition without it detracting from the money Penn has given me? Thanks.</p>
<p>I'm not sure I understand your question. Penn has given you what they've given you and doesn't care where the rest comes from. The smartest way to handle the part the relative is giving you will be to have the relative write the check directly to Penn so that they money doesn't pass through your or your parent's bank account.</p>
<p>The relative may have a tax issue though on the amount over $12K, the maximum tax free gift to an individual. This may not actually be an issue if he pays the college directly, but he'll have to consult a tax specialist.</p>
<p>Tax is not an issue. We have figured out a loophole to evade being taxed. My question is about whether or not Penn will lower the value of my award after seeing that my parents, having cashed the checks, have more money in their bank accounts, and if this is so, then how do I avoid this?</p>
<p>Gifts by relatives paid directly to colleges do not fall under the gift tax limitation (not relevant to the OP since he/she has the money already).</p>
<p>The value of your bank account is reported to be the balance as of the date you file your financial aid forms. If the cash is not in your bank account on that date, it's not an asset. If you file financial aid forms in January and receive the gift in July, then it doesn't show up on your form. However, it looks like you've already received the money. If it's in your parents' bank account, it will be assessed at 5.6% which only brings your EFC up $840. If it's in your bank account, it will be assessed at 20%. Next year, if your relative wants to continue his/her generosity, have him give you the money later in the year, or deposit it into a 529 account. Some states (NOT California) give an income tax deduction for 529 deposits.</p>
<p>Note that there's a question - I believe on the Profile - which asks if anyone else will be paying for your college. You must answer that question honestly.</p>
<p>Sorry, I was not clear. My parents have not cashed the checks yet. With that information, what should I do now? Ask the relative to make a check out to Penn instead? Thanks again.</p>
<p>...You should have listed that additional ''other'' source of payment on your CSS profile...the HONEST thing to do would be to update the changes with your college : however, you probably don't want to do that ...
In that case I suppose the relative could send the check directly (but would the college find it bizarre that you have a new source for money ..?) , but I'd suggest giving your parents the money or depositing it yourself. Their assets at the time of application is what counts, not after.</p>
<p>Another update: I filled out the CSS a month ago for Early Decision, and we just were given the gift checks yesterday. So please do not tell me that I should've entered the gift money when I didn't have/foresee it.</p>
<p>The cleanest and best way, tax-wise, is for you and your family to return the checks and ask the relative to pay Penn directly. Then, you need to let the chips fall where they may. After all, pretty much anybody can pay bills for someone else, if they want to. But as previous posters have mentioned, you DO need to note this source of funds on the CSS Profile. If you are asked to update, you need to be honest. I would presume that is the kind of person you want to be. And if there are changes in your award, well, that frees up money that someone who does not have those sort of relatives, may really need to have THEIR dream of college come true. Or it could be your own child when you are the parent trying to send your progeny off to college. You are a blessed and lucky person to have someone able and willing to do that for you (but do have them pay the college directly).</p>
<p>If this person is financially secure in the long term (and I'm going to go ahead and guess yes), give them the check back and have them contribute on the first tuition payment. I'm going to disagree with everyone else haha. The economy is rough enough as it is, and it's not general income. This is someone being generous and offering you money for your tuition, nothing else. I understand the idea of freeing up money and everything, and if finances TRULY won't even be an issue for you, then sure free it up. But your own education has to come first, right.</p>
<p>By waiting till the first payment, you won't even have to "lie" about the income for the CSS. That'll be long done with.</p>
<p>I wouldn't worry too much about what everyone is saying. Many people have graduation parties and are given gift money(substantial) in anticipation that it will end up used for books, supplies, computers, clothing and other things necessary for starting college life\ even helping with tuition costs. Most peple I know do not generally report this to the college. I don't think they are being dishonest, but customarily they just don't think it is required. You will choose best how to handle your gift money and not worry about things too much. In this economy everything helps, and I agree with,student92 use it to pay the first payment due in August. Have your relative hold onto it til that time.</p>
<p>All right, thanks for the replies, everyone.</p>
<p>I am just wondering, on the FAFSA worksheet it asks about money given to the student as gifts or bills paid by others. It does not ask about the parents. Would the FAFSA answer to this question be better if it went to the parents than the school?</p>
<p>Also, even if OP does not need to report it on this Profile, won't it need to be reported next year? Would they be better off to write it up as a loan and then the relative can later forgive $12k a year.....assuming he wants to and is still in the mood to do so later? Obviously a risk, as things change, but I would think the OP is trying to cover EFC and if the larger family helps make up the EFC it may lower future financial aid in an unpleasant downward spiral of award amounts as the EFC is increased.</p>
<p>Frequently on this board people advise to take student loans and have a relative pay them off after graduation, like the relative loan, there is the risk the person changes their mind or loses their money.</p>
<p>But if a family (including aunts & uncles, grandparents, etc) wants to pitch it to cover the EFC it seems a shame that can be used to increase the future EFC amounts</p>