That all sounds pretty clear to me.
You can arrange the HELOC but not draw the fund out before you need them to pay the contractors, for appliances, etc. Not really different than having a credit card with a high credit limit but you don’t use it until you need it.
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that was the plan I was thinking of. Just wanting to confirm that it won’t be counted against the EFC calculations.
The unused line of credit will not count against the EFC.
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To clarify, you don’t report the unused line of credit as an asset. Is that correct?
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Correct, and “unused” here also means that you don’t have any funds available (sitting in a checking account, stuffed under the mattress) that have been drawn from the line of credit. If you have drawn from the HELOC and spent the funds on a kitchen renovation, there is nothing to report on FAFSA. If you have drawn from the HELOC and the funds are sitting in your checking account, those dollars are a reportable asset. If you have the HELOC available to draw from but you never have, there is nothing to report on FAFSA.
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So if one has assets awaiting use during a renovation, could those be gifted to trusted grandparents to hold until they need to be paid to the contractors? ($30 per person= two $15k gifts from each parent). Does the CSS etc ask about gifts given away to those not in the household??
This is not honest. If the money is yours and you are just temporarily “giving” it to a relative with the clear expectation that you will get it all back right after you file your financial aid…that is not being honest. It’s still your money unless you give it away with no strings attached.
Keep in mind that if you get need based aid while knowingly reporting inaccurate information, this is fraud. That’s a crime…look it up.
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We wouldn’t get it back if it is paid to a contractor.
Money transferred to a trusted grandparent to hold until the contractor provides an invoice for services is not a gift. That money being held by the trusted grandparent would need to be reported on a financial aid form as an asset belonging to the person who temporarily transferred it to the trusted grandparent. Come on, use some common sense. If this was a legitimate strategy for increasing need-based financial aid, don’t you think that every parent with a kid heading to college would be asking a trusted grandparent/sibling/friend/whatever to hold all their assets while FAFSA and Profile are completed?
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It’s YOUR money.
ok.
didn’t know so asked.
Please be focus on the question the OP asked.
Any question from a user other than an the OP that falls into the category of " Yeah, but what about…" should be asked on a new thread. Hijacking threads is considered rude.
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And just to add, if you have already drawn down funds from a HELOC, temporarily paying part of it off with any cash you have available on the day you complete the FAFSA/CSS and then taking that money back out the following day, will potentially reduce your EFC. Similar to how it makes sense to complete the FAFSA the day before your paycheck hits your bank account, not the day after.
The key is to file your Fafsa and Profile when you have the least amount of money possible in your asset accounts. So…if you are planning to buy a house, or do renovations or whatever…and the money is in your bank account when you file…it counts as an asset. But if you pay the bills before…and the money is gone…it’s not an asset.
It’s all about the timing.
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It also makes no sense to withdraw money from a HELOC until you need it. The interest will start when you withdraw it and even if you put it in an interest bearing account, you will be losing money. Just wait until you need it to pay the contractor.
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Also….once you withdraw from a HELOC, you also get to start paying it back…immediately.
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I saw someone ask a similar question and lawyers answered this way::
https://www.avvo.com/legal-answers/authorized/if-you-gift-someone-money--within-the--15k-yearly--5407134.html
Your link takes me to a site where I need to create an account and log in. Perhaps you could summarize.
If this is about gifts…that is completely different than temporarily placing YOUR money in someone else’s account to avoid it being counted for financial aid purposes.