<p>So now that the FAFSA is done and we are getting financial aid offers, my DD grandmother in Germany has offered to pay part of her tuition. Do I have to report this to the college? The amount is $25,000 so should she write us a check, the school a check or wire transfer the amount to the school? We are happy she is offering but wishes she would have told us sooner.
Thanks for your help.</p>
<p>You might be better off having grandmother pay off your child’s loans, after she graduates. If you take the money now you are obligated to report it and it will reduce your financial aid.</p>
<p>If it is sent directly to the school, it is not part of parents’ assets.</p>
<p>It would not be an asset all.</p>
<p>If she sends a check now and they use it in the fall, then it is not an asset, but if she sends it to the school, wouldn’t that be reported in future years as cash given to a student or used to pay student’s bills?</p>
<p>Are you getting finaid from the school, if not don’t worry about it. If so, is this a one time gift or every year? Maybe she could put it aside until senior year if it is a one time gift??</p>
<p>Or she could lend it to her now. And then make a generous gift upon graduation.</p>
<p>It is not a one time gift she is willing to pay this much every year. Again we are excited for the help just do not know how to handle the money. Yes we are getting financial aid but our Parent Contribution is around $32,000 at most of the schools she is thinking of attending. We ideally would like to use the $25,000 gift to offset some of our contribution.</p>
<p>Does anyone think grandma should not simply send it to the school?</p>
<p>To NOT interfere with gift tax law (altho she does not live in the US) she can pay med bills or school directly.</p>
<p>I’d go with the direct payment. In fact, if her health is cruddy, she might want to pay ahead (check be sure the college will refund if DD transfers).</p>
<p>My cousin’s grandmother paid the WHOLE thing up front about 2 mo before she died. The plan was perfect cause it took that $$$ out of her estate, which they would have owed taxes on. (estate was rather large)</p>
<p>Profile or FAFSA school?</p>
<p>^ Even before we know: Why does it matter?</p>
<p>“give” the money to the parents (10k each from each GP if you are afraid of the gift tax). The parents can then use it for their own living expenses, vacations, replace car, etc. That would free up cash for the parents to support the student.</p>
<ol>
<li>If grandma lives in Germany, and does not file US income taxes, then gift tax will only be an issue if Germany imposes one. The recipient never pays gift taxes in the US.</li>
<li>If grandma sends money to the school, the school will quite probably treat this as available income and reduce grant aid/loans accordingly.<br></li>
<li>If grandma gifts the money to the parents, the parents can pay the tuition share…</li>
</ol>
<p>If it is a FAFSA school the parents do not have to report gifts of cash to them, they would have to report gifts of cash to their DD. Since the parents are the ones paying the EFC, maybe it should be a gift to them??</p>
<p>I think arabrab is right, if Grandma pays the school directly, you must note that on the next FAFSA and that would reduce need based aid as the need is less.</p>
<p>I believe profile would ask about this in any way that it is done, other than if the grandmother loans (with a written note) the money and then forgives it after the last Profile is done. If there is a gift tax in Germany it may need to be forgive in yearly gift amounts and there is the risk that Grandma does not live long enough to make those gifts, making the estate more complicated.</p>
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<p>But regardless of how the parents spend the money, it does have to be reported to the school next year as money received this year (and this would be true even if grandma paid the mortgage, for example, and never handed over the cash). I think swimcatsmom has the best solution (for a Profile school anyway–not sure about FAFSA-only).</p>
<p>Loans don’t have to be reported on FAFSA.</p>
<p>We are in the same situation with a grandparent offering to help with our son’s tuition. If the funds being offered are less than $12,000 per year (gifting cut off), do we have to notify the school? We thought we would just deposit the check and in turn write out the tuition check to his school. </p>
<p>Are we violating financial aid rules by doing this?</p>
<p>Thanks!</p>
<p>We have the same question for our son. His aid for the in-state universities is terrible and he/we are panicking since the economy has affected us as with most people. Someone (a biological grandparent, but not legal grandparent) has offered to contribute. We don’t want jeopardize anything.</p>
<p>Just draw up loan papers for the amounts and she can then give you the money and forgive the loans at the end of the four years. That is the cleanest and easiest way to do it. You don’t have to report loans for anything, anywhere.</p>