<p>I have a college savings with $30,000 in it. My school costs that much or more a year. My question is, will they have me blow it all my freshman year and then live off aid for the next three, or will they split it up ($7,500 a year)? My school commits to 100% of demonstrated need. It just would be so nerve-racking to have no money for college left. Thank you for any insight!</p>
<p>You can spend your money any way you want -- they can't force you to spend it a certain way.</p>
<p>BUT-- if these funds are in your name (BIG mistake!), when your EFC is calculated, about 1/3 of any assets in your name will be added to the EFC as your share of assets. So your EFC goes up by about $10K, and your aid goes down by about 10K (assuming you're eligible for aid). Ouch!</p>
<p>So, according to their formula, they figure you can afford to contribute about 1/3 of your assets each year for your education. But you can choose to use all 30K the first year on education, or take out more loans and keep the 30K there, or blow it on a vacation and a car (assuming it's not in some sort of restricted account that can only be used for education).</p>
<p>SO-- if you just keep the money there the first year, you'll again get dinged by a 10K reduction in financial aid your second year. If you use 10K for college the first year, and have 20K remaining, you'll get hit with a 6K reduction in aid your second year (over what you'd get if you didn't have these assets in your name. If you blow it on a sports car before you fill out the FAFSA the first year, you'll get an increase in aid of $10K or so.</p>
<p>If it's in your parent's name, much better. They get an asset allowance, below which they don't have to contribute to the EFC from assets. Even above the asset allowance, their contribution % from assets is much much less (about 4% as I recall) per year toward the EFC than yours would be. </p>
<p>Bottom lines: Don't keep assets in the student's name. If you expect any significant expenses around FAFSA time, spend down your assets before you fill out FAFSA. Spend down any remaining assets sooner, rather than later.</p>
<p>sbake, that was really insightful. But what if I don't want to blow all my money on something that depreciate like a sports car. Is there any other way?</p>
<p>Can I give the money to my parents? (temperorily)</p>
<p>Can I invest in mutual fund? (but that still counts as my asset right?)</p>
<p>Can you clarify? Thanks.</p>
<p>The reason I'm asking is because I might win $50000 from this private competition.</p>
<p>Remember that the FAFSA is a snapshot of your financial situation on the day you file. So time your filing to your advantage.</p>
<p>Puting cash assets into a mutual fund wouldn't change anything, they're still yours. "Giving temporarily" sounds a bit dicey to me -- I suppose you could loan the money, but you'd still hold the loan note . I think if you've got it, you've got to either report it on your FAFSA, or spend some of it (ie, convert it to an asset you don't have to declar) before filing. If you don't have it yet, you can file before you get it.</p>
<p>I suppose you could buy a car, thereby converting it to an asset that doesn't hurt you, and later sell the car when you need money.</p>
<p>Somewhere there's a line you don't want to cross, between positioning your finances to your best advantage (recommended), and attempting to defraud the financial aid folks (not recommended). Shady deals like temporary loans to shelter assets fall into the later category, IMO. Buying a car or other non-liquid asset, and timing the submission of your FAFSA to your best advantage, are examples of the first. I'd think. </p>
<p>And frankly, if you win $50K just before applying for college, most people would expect you to use significant portions of it for college. There are probably tax implications, so it will be reported as income, and show up on your tax returns. And the financial aid folks might understandably want to know where it went if you don't show it on the FAFSA. </p>
<p>So if you get it, you'll have a double wammy -- it will increase your EFC both due to the income, and due to the asset.</p>
<p>Some schools go beyond the FAFSA, too. If you show interest income on your tax return but no corresponding asset on your list, they will question it or even add a projected value to your assets.</p>
<p>Thank you! The money is in my name, unfortunately. I inherited it from my grandfather, for college, so that's the kind of account it went to: mind, college savings. If I'm allowed to transfer it, do you think it's shady to do so? And would they see that it was in mine (not this coming tax year, but the next)? Thank you.</p>
<p>I dunno-- sounds like more of a legal question re: transferring the ownership of the funds. I know it's not a simple matter if it's in a Uniform Gift to Minors account, not sure if it's easier if it's a simple savings account in your name. Sorry I can't help more-- you might need legal or professional advice.</p>
<p>As to "would they see that it was in mine...." -- I wouldn't recommending falsifying the FAFSA in the hopes that the financial aid folks might not find out.</p>
<p>Do what you can, legally, to arrange your financial situation to your best advantage before you file. Time your filing of the FAFSA to your advantage. But put down the real info at the time of the filing.</p>