I am in the process of filling out the fafsa form for the 2015-2016 school year. My husband and I have 70k+ in savings and I feel like this hurts us on the fafsa. It shows we can pay a full year of tuition no problem, but in reality we need that money for three more years of tuition and I have two more children who will be attending college in the future. Would it be beneficial for us to move the money into our youngest daughter’s account? She will not be going to college for 5 years. Would we then not have to show the assets? Help!
I’m a little confused. In your other posts…in early February…you indicated that your daughter was a sophomore in HS. Why would you be doing a FAFSA now?
Or…Is this a different daughter?
You also mention that your son is full pay at Holy Cross. That school meets full need…so if that is the case, your income would be north of $150,000 a year. That income would be more the reason for a high EFC than $70,000 in savings.
If you are looking for estimates on costs, you would be better off doing the net price calculators on the college websites. The FAFSA EFC does not tell you one thing about need based aid…unless you are Pell eligible (EFC of less than $5000)…and I don’t think this is your case.
It doesn’t matter where you move that money. It is still YOURS and needs to be reported as YOURS. You could stuff your mattress, put it in a hole in your backyard, put it in someone else’s account…doesn’t matter. It is still YOUR money.
You are a little misinformed regarding assets and the EFC. Your assets are assessed at 5.6% of their value for this year…not 100%. So your EFC per FAFSA would increase by less than $4000. Not $70,000. And not the full cost of attendance.
In addition, there is an asset protection allowance. It’s maybe $30,000…so really, your asset would be $40,000 not $70,000. And on $40,000, your EFC per FAFSA would increase by $2240.
All of these financial gymnastics really might not be worth considering anyway. The FAFSA EFc is heavily weighted towards INCOME…not assets. If your FAFSA EFC is more than the cost of attendance at the colleges, it is likely because your income is on the higher side. Your asset assessment would not equal the cost of attendance.
Make sure you do not do anything fradulent. But there are some tips
Thanks!
You likely have an asset protection allowance of $30-35k for fafsa depending on the age of the older parent. Using $35k, the remaining $35k of you assets would count at 5.64% toward the EFC or $1974.
Unless you are permanently gifting the money to your youngest daughter, simply moving it to her account and not reporting it would be fraud.
I highly doubt that the $70k is what is making you be full pay. What is your income level?
I am very sorry to hear about the pain that this $70k+ in savings is causing you. It will be a sacrifice for my family, but we are willing to come to your aid and relieve you of your burden. We will allow you to gift this money to us so that it no longer hurts you. Between yourself and your husband, you can each gift $14k per year to an unlimted number of people without gift tax consequences. Therefore, there will be no tax consequences for you and your husband as you unburden yourselves of this money to my family of four. You may contact me via PM to set up the transaction. And, you’re welcome. We’re glad we can be of assistance.
You could put some of the money into a retirement account or college savings account (529), but others said the big EFC is due to your income and not the assets. It would provide over $15,000 a year toward a four year college education, more than alot of people have saved. If the child then gets some merit scholarships from schools or contributes with summer work savings or commutes to school to save on housing, you should have some affordable options. The student can also take out a $5,500 loan so if you find some schools with net price of around $20,000 you should be fine. Since this money is already saved you can now start saving for the next child.
Before making a lot of big decisions with this money, I would run the Net Price Calculator with and without the money to see if it’s even worth the effort. Most schools that only use FAFSA don’t have a lot of need-based aid; even if you were able to cut your EFC in half, it might not actually yield even a dollar of additional financial aid at most schools, so there may not be any purpose in trying to get rid of or hide the money even if doing so would lower your FAFSA EFC by a lot.
(I feel like a lot of families overestimate the incremental benefit of lowering their income or assets. Most schools do not promise to meet need. Unless you can get your EFC to around $5000 or less, you’re probably not going to get a lot of financial aid.)
The first $70,000 in parental assets typically adds about $2,000 to FAFSA EFC.
I agree with MiddKid. Your 70K in savings is twice my gross income. It offends me to no end when wealthy people come on this board and ask how to break the law and hide assets. Financial aid is for people who NEED the money, not people who would prefer not to spend money that they have.