<p>How much can a student have in assets before they are penalized, and what is the percentage on students assets that is lost in financial aid?</p>
<p>I don't think the student has any asset protection though he/she has some (around $3000?) income protection. 20% of students assets are penalised for 2007/2008 - an improvement from previous years.</p>
<p>swimcatsmom, was your last sentence supposed to read 20% of students income?<br>
I assumed that any assets held in a student's name were completely counted as funds available for education (assuming that the student is still being claimed as a dependent).</p>
<p>No I meant 20% of assets - this is per year so I guess it is assumed that all the assets will eventually be spent on the education. 50% of the students income (after income protection allowance) is expected to be contributed. I should also point out I am only talking about FAFSA - not profile. I don't know about profile other than it is different.</p>
<p>The crazy thing is that students DO have income protection...but kids like MY DD put all of their money in the bank...and spend very little. SO their "protected income" becomes an "unprotected asset". It seems like the amount of their income should be subtracted from their assets...but I guess they are supposed to SPEND their income. Oh well...that is the way it is. DD will be spending some of her assets on her college tuition BEFORE we file her FAFSA.</p>
<p>I agree thumper. It seems like double dipping from the same source to me. Any money my kids have in the bank is saved from income earned so taking 20% of the income then 50% of the income they have saved (aka assets) seems harsh.</p>
<p>We are encouraging DD to spend her money...tomorrow...on her tuition.</p>
<p>How is that any different than the parents' wages in year 1 being counted as savings in year 2 if they have not been spent?</p>
<p>Well I guess in our kids case the money was earned year 1 and saved year 1. Plus parents have some asset protection which does make it a little different.</p>
<p>unless you are divorced and your earnings are counted as earnings and then again as child support</p>
<p>Thumper, my daughter's college (Barnard) specifically asks how much of assets are derived from the previous year's income on their financial aid renewal form -- and the form says that question is there to prevent the double-counting you are referring to. So that's one thing that's nice for next year.</p>
<p>Otherwise the double-counting of income & assets for students really is a huge problem, and it is why my son did not qualify for financial aid this year when he returned to college after having worked full time for several years.</p>
<p>dt123 - the difference as far as parents are concerned is that income is assessed at a somewhat lower rate, and assets are assessed at a MUCH lower rate. If I somehow managed to end up with extra savings at the end of the year with a kid in college, only 5.6% of that money is counted in the financial aid equation -- which is pretty insignificant overall.</p>
<p>Well, OK I agree the percentages are different between students and parents, but the concept is consistent, which is, if you earn a dollar in year 1, better spend it before year 2 FAFSA or FAFSA's going to get a piece of it again in year 2.</p>
<p>Just yesterday I told DS#2 to pay his apt. rent a week early so we could get his bank account below $100 for FAFSA. It is a bit ridiculous.</p>
<p>Just realized that DD's account is actually an account with her dad as the principal account holder...good news, I guess. Her accounts are minimal.</p>
<p>I have a question related to this question:</p>
<p>If a student has about $20,000 in a UTMA (Uniform Transfer to Minors) Account, how is that counted. Parents, or as the child's? If the student is over the age of 18, the assets in the account automatically become his since he is 18, so it would be the student, right? How would this affect financial aid (I have a feeling it's going to be a bad effect!).</p>
<p>redknight - under FAFSA 20% of the students assets are expected to be contributed annually so the $20,000 would increase the EFC by $4,000.</p>
<p>Is that a lot when it comes to financial aid? In the grand scheme of things, it sure doesn't seem like much, but could it make a big difference? I always worry about being caught in the doughnut hole between being so poor you can get your college paid for by aid and wealthy enough to be able to afford. It's a pretty big hole these days.</p>
<p>It really depends on your personal finances. A $4000 increase in EFC just means you (or the family including the student) are expected to contribute $4000 more per year for school which reduces the amount on which the aid offer is based. For instance if, without the asset, your EFC is $10,000 and your COA is $30,000 the 'need' is $20,000 which is what the financial aid package is based on. With the asset your EFC would be $14000 so your financial aid 'need' would only be $16,000. Like I said depends on your personal finances - a $4000 increase in Ds EFC would make a big difference to us - might not to you.</p>
<p>If you saw $4000 laying on the ground, would you pick it up? How about every year for the next four years? If so, then it might be worth paying attention to.</p>
<p>Yes, a UTMA account legally belongs to the child, and the parent is holding it solely in trust for the child.</p>
<p>Chedva: UTMA: The child does necessarily become the owner at 18. The custodian must relinquish the funds to the child, some states say 21, some even longer if inschool and dependent. </p>
<p>There is a good forum that I learned from CC that I also use as ideas for tax and investment: savingforcollege.com which deals mainly with 529's but other financial topics are also discussed for younger people. I am personally not young and our kid is in done with undergrad but into grad school.</p>