<p>My D has begun working and has saved some money into her bank account.</p>
<p>We've all heard the warning that the student's own money is counted at a higher rate against financial aid compared to the parents income and assets.</p>
<p>But, judging by people we know (in our income bracket) there is no way we're getting FA anyway. So, why bother worrying about D's account? Just keep it there? Thanks.</p>
<p>Run the calculators with and without her account. Does your family qualify for aid under either of those scenarios? If so, then think about whether moving the money elsewhere or spending it down makes sense. If not, then where she keeps her money really is up to her.</p>
<p>If you want Federal student loans, your D have to file FAFSA.</p>
<p>How much are we tLking about ? Hundreds? Thousands?</p>
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<p>You have to trust me on this. Though we are very far from wealthy, we are not getting any FA.</p>
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<p>I never said we weren’t going to fill out the FAFSA (and the CSS Profile).
I was just asking about liquidating (spending) or “hiding” my D’s saved income.</p>
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<p>I suspect she’ll have earned a few thousand dollars.</p>
<p>If she wants to use the money for her schooling, then put her money in her 529 savings plan.</p>
<p>If she wants to use the money for something else, then spend it before filling the FAFSA.</p>
<p>Your D is going to need some spending money, so why not just keep it in the bank/credit union so she can draw on it when needed? </p>
<p>Agree with happymom that you can try running the Net Price calculator and see if your D’s money makes any difference. If there’s none, there’s no need to spend down the money.</p>
<p>If you know that your family EFC is not going to even come close (too high) to the college COA, then by all means there is no reason not to have the funds in the student’s account.</p>
<p>Surprisingly, however, last year, our EFC was such that with our two in college, they would have qualified for some subsidization of Stafford loans, had they both gone to the highest cost colleges and did not have merit aid. Not much, but some, and, yes, their bank accounts would have made a difference.</p>
<p>What if you die, become disabled, or lose your job? What if you lose your assets in a lawsuit or other financial calamity? If the savings are definitely for college, a 529 is the safest place to save. If they are general savings, then the bank is fine, but the savings will be virtually forfeit if she ever does qualify for financial aid.</p>
<p>Even if you want loans by filling out FAFSA, if you have no need, then it’s not going to make a difference. You’re still going to get a $5500 unsub loan no matter how high your EFC is or becomes.</p>
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<p>Oh gosh, no. Boy, is that wrong.</p>
<p>529s are investment instruments just like any other bond or stock portfolio and there is risk.</p>
<p>One can lose money (as we did) very, very easily.</p>
<p>The safest places to save are actually FDIC insured accounts or CDs, not 529s.</p>
<p>529s have other possible advantages. But “safety” is not one of them.</p>
<p>This is a huge pet peeve with me. I’ve attended several 529 “seminars.” Investment “experts” (salesmen) sing the praises left and right about them. In their presentations, not one has ever mentioned the risk aspect … until I ask about it … and then they say “Uh, yeah, true, yes, you’re right, there is risk.”</p>
<p>As BobWallace says, there are scenarios where having that money in a student account can result in them being counted toward EFC when the events turn so that the family becomes eligible for financial aid. Since assets are listed on the day FAFSA is filed, it is important that your student understands that any assets in his/her name will be assessed at 20% towards EFC with no allowance. So in such a situation, it might behoove said student to reimburse the parents for some expenses before completing the aid forms. The student should be aware of how FAFSA works because this is a main issue for him/her, and something that may important later in life.</p>
<p>There are risks to just about anything. It may not be that easy right now to transfer funds over to the 529 and the student might not want that money tied up for educational use only. Also depending on some of the investment vehicles used, there can be risks that way. It also hinders easy access to the money which can be a plus, but also can be a pain.</p>
<p>My son keeps his money in his own accounts in the same situation the OP has. He uses his money year round for all sorts of things, not just educational. We pay the bulk of his billed college expenses and he pays what’s left and all of his living and discretionary expenses, as well as unbilled college costs such as books, materials, and some transportation. He also spends his money for none college related things. He wants easy access to the money. He had considered taking a term off to travel and would not have wanted the bulk of his money tied up somewhere, and he also wants to spend his money without involving us.</p>
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<p>You are sadly misinformed. There are 529’s that allow money market and bank CD funds, so that allows both kinds of safety - my original intent, safety from financial aid reduction, and your concern, safety from market forces.</p>
<p>[College</a> Savings: Are You Ready For A Major Market Decline? - Forbes](<a href=“http://www.forbes.com/sites/troyonink/2012/08/20/is-your-college-savings-ready-for-a-major-market-decline/]College”>College Savings: Are You Ready For A Major Market Decline?)</p>
<p>This article suggests “…Utah’s 529 plan puts 100% of the age-based account money in FDIC insured accounts while the student is in college. That’s a good thing in this risk environment…”</p>
<p>Yes, you are misinformed about 529’s. Our oldest’s 529 has most of his money in a FDIC insured account. Only a little bit is in stocks anymore because of his age. However that said, the OP might not want to do that. Her child might want to use the money as spending money and not qualified educational expenses.</p>
<p>Oh I meant to add that the kids have 2 529’s one with Utah that changes as they age. The other one is guaranteed and always has been. It is an option with MOST. It is a guaranteed option. Now it hasn’t earned nearly as much as the Utah, but it didn’t fall with the crash in 2008 (but the Utah one has bounced back and is now more than it was again).</p>
<p>Several CSS/Profile colleges assume a student contribution of a few thousand dollars (3-4K), the amount one could expect to earn from a summer job. So the OP’s “a few thousand” may make no difference at all. If your EFC is at or above the COA, you won’t be given more grant aid if you are able to “hide” the student money; you’ll just be told to take out more loans to make up the difference.</p>
<p>Personally I think the benefits of your D having her own account and managing her own money far outweigh any minor (and unlikely) benefits of hiding her money within yours. This is assuming the amount is a minor figure (i.e. not 20K).</p>
<p>To those so-called “informed experts:”</p>
<p>Yes, age-based plans lower the risk as the child approaches college age. However, there is no guarantee that the “safer” percentage (or even total risk-free investments) during the last few years will necessarily make up the money that was lost previously during stock market downturns.</p>
<p>My children’s accounts are just now getting to the level back to the original amount that was put in.
That means the net gain = zero.<br>
That time is completely lost and can never get gotten back no matter how the money is invested now.</p>
<p>Also, my other main point is that the element of risk is never brought up by the financial “planners” (salesmen) who shout about 529s in so-called “seminars” and “workshops.”</p>
<p>Stating that 529s are the “safest place to save” is IMHO simplistic and misleading.</p>
<p>As always, YMMV. Everyone is free to do with their money however they wish.</p>
<p>By the way, the FDIC plans in Virginia are under the “College Wealth” moniker. That is a relatively recent program that was not around when our 529 accounts were created.</p>
<p>You seem to have difficulty separating two independent risk factors, even after they’ve been explained to you. Furthermore, you are ignoring or failing to understand the context of certain statements.</p>
<p>My statement was: “IF the savings are definitely for college, then a 529 is the safest.”, meaning the safest for financial aid. The statement has nothing to do with the risks of possible investments/funds/CDs/whatever used within the 529. That is an independent risk that has nothing to do with being in a 529 or not. Equity risks are the same whether undertaken in a 529 or not.</p>
<p>And whether you accept it or not, it is a fact that 529s can use the safest possible investments in addition to the riskier investments you seem to think are synonymous with the plans.</p>