<p>I have a Uniform Gifts to Minor's Act that my parent's put aside for my college fund from money relatives gave them. It's in my name and as far as I know can only be spent on my behalf and not given away. I used the Collegeboard's calculator and if I have to count the fund under my "cash, savings and checking" then I get almost no financial aid because it's added on top of my parent's contribution. We're middle class 100,000 income. My parent's contribution would be $25,000 a year which they can't really afford. They were planning on only using that money and not paying much more out of pocket. Does it have to be reported under my savings? </p>
<p>When I calculate it with the money under their name the total is $25,000 EFC and $31,000 for the profile. Is there any way to transfer the money into something else at this point? I've read about 529s that are better on FAFSA, are they also better for the Profile?</p>
<p>Yes…because you HAVE that UGMA to help fund your education.</p>
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<p>You have LESS financial need because you HAVE money in that UGMA to help pay for college costs. If your parents earn $100K a year, their EFC is going to be in the $25K range regardless of where that UGMA account is held.</p>
<p>I think what you are saying is that your parents HOPED to use that UGMA to fund your total cost of attending college. The big question is how much can they afford to contribute including the UGMA and any other money they can/will contribute.</p>
<p>If the amount that the UGMA generates is the budget within which you need to work, you need to find some schools within that budget.</p>
<p>Yes you can transfer your UGMA funds to a custodial 529 account, which is a student-owned 529. Even though it’s still your money, all 529s are assessed at the parent rate for FAFSA. You’ll then need to spend that money on qualified higher education expenses. It may or may not make a difference where that money is for schools that use Profile to determine institutional aid.</p>
<p>You can also spend it down as much as possible. After we realized UGMAs were not the best way to save for college we used our DSs’ to cover travel costs for college visits, laptops for college and, in one son’s case, a new instrument. Other big ticket items might include orthodontia, lessons and camps. (At the time we did this the options for 529 investments were very limited; I’m not sure if it would still make sense.)</p>
<p>101mutts - In addition to looking into the 529, you’ll want to e-mail the Financial Aid offices at the colleges you’re considering and ask how they treat UGMA funds that were contributed by your parents. UGMAs are typically treated as student assets and assessed at the 25% per year rate, but some schools will allow the portion of the UGMA assets that were contributed by the parents to be assessed at the 5.6% parent rate. I know that Cornell, Macalester, Williams and perhaps Notre Dame will do this. Harvard and Vanderbilt treat UGMAs the same as parental assets regardless; Princeton may as well. It’s worth asking about.</p>
<p>This isn’t just a matter of the student having to pay more because s/he has more. It’s a matter of the parents’ funds being tapped at a rate 5X the norm due to an innocent clerical oversight in placing the account under the student’s name.</p>
<p>That was actually what ended up happening with us, gadad. S1’s school treated the UGMAs the same as parental assets and S2 went to a public and didn’t qualify for aid. In the end our careful spending and record keeping all for naught.</p>
<p>I read this as relatives having contributed the money, not the parents. That might be a distinction that some schools who work with the Profile will consider. You’ve got some generous relatives if they contributed money towards your college education. It might be them that chose the route of a UGMA, it’s a straight-forward way to gift money to a minor for their college fund.</p>
<p>Transferring the funds to a 529 might help you out under the circumstances. One poster has already verified that this will help with the FAFSA, I would also be interested in the answer to the question of whether this will help with the Profile.</p>
<p>It is kind of ridiculous because for 100% need schools my parents would be in the same position if they’d bought a bigger house or went on a long expensive vacation with that money, instead of saving it. They saved it so they wouldn’t have to tap into income or retirement funds.</p>
<p>Yes, but many private schools still apply the 25% (meaning that they will plan to capture the entire amount over student assets over four years).</p>
<p>Don’t know if this means anything, but on the CSS Profile’s worksheet “Section 529 college savings or pre-paid tuition plans” is listed under Parent’s assets but UGMAs are listed under student assets.</p>
<p>Mutt, I’m always a bit taken aback when I hear people say they should have bought a bigger house rather than save for college.</p>
<p>Every dime of aid you get is someone elses money. There is no financial aid fairy.</p>
<p>Every year I call classmates and plead with them to give generously to our Alma mater so that kids who can’t afford it have the opportunity to attend. If I asked them to give so that upper middle class families could have bigger houses, there would be no money for aid.</p>
<p>So be thankful you have parents who saved for you, and be happy the really needy will have the opportunity to go to college too.</p>
<p>I’m sorry. I was partially joking that my parents would have gotten a bigger house and not saved. I just don’t think it’s fair that someone who did that would get more financial aid. It would be great if there was something built into financial aid to reward people who saved and students who worked during high school, building up savings.</p>
<p>You don’t need to apologize, we were in the same position as you. My mother had contributed generously to an UGMA account for my daughter which put us out of range for receiving any financial aid. Coming up with what is left, in your case $25,000 per year, is daunting. We got lucky and received merit aid from one college that made it possible for our daughter to attend.</p>
<p>In the end it’s always better to have the money than financial aid. Financial aid is never dollar for dollar and is never enough and is only good for one year. If your circumstances change then so will your financial aid award. Consider your UGMA account as the first steps towards your tuition, a lot of people have to start from ground zero. Good luck.</p>
<p>*You have LESS financial need because you HAVE money in that UGMA to help pay for college costs. If your parents earn $100K a year, their EFC is going to be in the $25K range regardless of where that UGMA account is held.
*</p>
<p>I think the valid point is…</p>
<p>The $25k in EFC (without UGMA) is supposed to get paid for out of past earnings (savings), current earnings, and future earnings (loans). But, in this case, the savings can’t go towards that EFC, because it is creating a larger EFC. </p>
<p>I don’t think we can really argue that EFC is supposed to come from past savings, if past savings (in the child’s name) substantially increases the EFC to the point that it can no longer help with the EFC (if the savings didn’t exist).</p>
<p>The situation is a problem because the savings is in the kid’s name, instead of the parents. If it had been in the parents’ names, the effect would have been negligible.</p>
<p>Once parents are aware of this situation, there’s no reason to ever save in a child’s name.</p>
<p>This thread illustrates why it’s a good idea to find out all you can about FA by early in your child’s junior yr in hs, at the latest – know the concept of “base year” for FA, how student vs parent assets, and student vs parent income are assessed by FM & IM. Reading Kalman Chany’s “Paying for College Without Going Broke” is something I highly recommend. This page is also very good: [FinAid</a> | Financial Aid Applications | Maximizing Your Aid Eligibility](<a href=“http://www.finaid.org/fafsa/maximize.phtml]FinAid”>http://www.finaid.org/fafsa/maximize.phtml)</p>
<p>At any rate, it may be too late (depending on the OP’s deadlines for FAFSA &Profile), but if the $$ in the UGMA could be transferred to a 529 before submitting the forms, then the $$ would be assessed at the lower parents’ rate of 5.64% (FAFSA) or 5% (Profile), after subtracting out the asset protection allowance. If still in a UGMA, that money will be assessed at the student rate of 20 or 25%.
I don’t have a feel for how long it would take to open up a 529 and transfer the funds - someone here may know this.</p>
<p>You’re right, Pea - I stopped reading the sentence after the words “that my parents put aside . . .” If the funds weren’t the parents’ assets to begin with, then the advice about seeing whether colleges will treat them the same as parental assets isn’t relevant.</p>
<p>^Except, of course, if it’s in a student-owned 529 account…those are always reported as a parent asset, despite the fact that they clearly are not.</p>
<p>It is a screwy system. The fact that moving money from one type of an account (UGMA to 529) changes the financial aid calculation ignores the fungibility of money. Nevertheless, having a big UGMA account is a big no no when it comes to FA.</p>