<p>My brother is a freshman in college right now. I had him pull up his FAFSA account and open the Student Aid Report. This is what it says:</p>
<p>"Based on the information we have on record for you, your EFC is 008873. You are not eligible for a Federal Pell Grant but you may be eligible for other aid.
Your school will use your EFC to determine your financial aid eligibility for other federal grants, loans, and work-study, and possible funding from your state and
school."</p>
<p>Does this mean his EFC is $8,873?</p>
<p>I am going to be a freshman in college next year. My brother will be a sophomore. Will this cut the EFC in half having two of us in school? If so, would we be eligible for a pell grant next year? My family's income will be about the same.</p>
<p>I will also matter if either your brother or you have personal assets or earnings. Your EFC could be higher or lower than your brother’s. I have two kids and while theirs are close, they are not exactly the same.</p>
<p>Not sure what all you said yes to, so I’ll number them. :-B </p>
<ol>
<li><p>Does having two students in college cut the EFC in half? Assuming with similar income this year, we would each have an EFC of about $4,400?</p></li>
<li><p>The following year, my sister will be entering school. So my brother will be a junior, I will be a sophomore, and my sister will be a freshman. My EFC would be very low that year. Is there any limit to where they stop splitting it?</p></li>
<li><p>Assuming my EFC were to be about $4,400, that does indeed qualify for me a small Pell, yes?</p></li>
</ol>
<p>What is considered an asset? My brother made $5,778 that year. My earnings will only be about $700 since I JUST started my job and the wages will only include November and December for 2014. How much does that affect it?</p>
<p>1.) Essentially, yes.
2.) I don’t know. There should not be a limit.
3.) Yes, you would qualify for a Pell (as your brother did this year with a higher EFC).</p>
<ol>
<li>My brother did not get a Pell this year. It specifically said “You are not eligible for a Federal Pell Grant but you may be eligible for other aid.”</li>
</ol>
<p>If you were in college the same year as your brother and did not have a student EFC that bumped your family EFC over the threshhold, yes, you would have been eligible for PELL, and yes, your brother would have likely also been if his student part of the EFC were not too high…</p>
<p>The EFC per student is comprised of the parental EFC + the student EFC to be that student’s FAMILY EFC. Your brother’s was too high for PELL, but if the parental poriton of it were halved, he might have been under the threshhold. Only the parental part of the EFC is halved per student and each student has his/her own EFC based on the students earnings (1/2 of income over about $6K + 20% of assets student has on day FAFSA is filed), With three kids in college at the same time, the parental EFC for each student is divided by three, but each student has his/her personal EFC as well to be added to it. </p>
<p>It is wise to repay your parents for your expense for the year, and have them open a joint account with each student with parent name and ssn first for those monies to be stashed as parents have an asset protection allowance which students do not, and parents are hit up 5.6% of assets to the EFC whereas students are hit up at 20%. Your siblings’ personal EFCs do not affect yours or other siblings. You each have your own and you share your parents.</p>
<p>I have to disagree with this. Doing as suggested would be outright fraud. A much better (and completely ethical) way of accomplishing the goal of having student assets treated in the same manner as parent assets would be to use the student earnings to fund a student-owned 529 account.</p>
<p>I disgree that this is fraud. A student can reimburse parent for expenses, and parents can use the money to help the kid through the next school year. The arrangement can work ethically. If you get caught taking it out, stashing it somewhere and putting it right back, and it so shows on verification, you can be suspected of playing games and be disallowed for fraud. Parent-child back and forth financial transactions tend to be looked upon benevolently. Putting money in a student owned 529 account takes more work IMO and it’s not as easy to access the money, and most importantly, for PROFILE schools such accounts are still considered student assets. </p>
<p>Colleges out and out tell student to get those assets out of their name by spending it down, which is another option, but few kids don’t have expenses accrued that parents took No rule in the world about giving the money away to anyone including the parents. </p>
<p>The post I quoted said nothing about reimbursing a parent for expenses. It simply said to put the student’s earnings in a parent’s name.</p>
<p>I know that you have frequently suggested this tactic of “reimbursing” a parent for expenses, and I feel that even this is unethical. If qualifying for more financial aid was not a consideration, would you still suggest that this be done? The answer is very likely “no.”</p>
<p>
</p>
<ol>
<li><p>Establishing and contributing to a 529 account is a very straightforward process.</p></li>
<li><p>Accessing money in a 529 account is not difficult. In any case, for both this point and the one above, “more work” and “not as easy to access” are not valid reasons to act in an ethically dubious manner.</p></li>
<li><p>For some Profile schools, 529 accounts are considered student vice parent assets, but OP is only mentioning FAFSA, not Profile.</p></li>
</ol>
<p>
</p>
<p>Clearly, “spending it down” is a very different thing than putting it in a parent’s name. Giving the money away is certainly another option, as long as it’s a legitimate gift, which means that the gift giver has no expectation of getting the money back and expects to receive nothing in return. A “gift” given with a wink and a nod is not a gift in the eyes of the law.</p>
<p>My kids had bank accounts held jointly by us (the parents). These accounts were actually opened when they were little tykes. Because we were the primary account holders, any earnings they had were treated as our assets. And actually one kid still has one of those accounts! We get the interest statement for that account (well…maybe LACK of interest statement would be a better way to describe it).</p>
<p>Was this fraud? I only ask because two schools asked for our bank statements to verify the asset amounts. Neither said a peep about this arrangement. Sample of two.</p>
<p>It sounds like some of the assets in each account belonged to the child and some belonged to the parent/s. Just because the interest was reported solely under a parent’s SSN doesn’t mean the student’s share of the account assets couldn’t have been reported as such for FA purposes. That is what I would have done in such a situation.</p>
<p>I have accounts joint with my mother and did with my late MIL and other such arrangement that had nothing to do with fin aid. All perfectly legitimate. If the student wanted to give away the money the day before filing FAFSA, that’s fine too. I see no fraud there or anything unethical. what if a student earned money over the year and gave it to parents who put it away in such an account for college? Perfectly fine. It makes me cringe when I see well intending families have $s in kids savings, sometimes in the $10, 20K range, scraped together with a family income that is low, or grandma gifts the money, and the kid has 20% hit up for EFC when they would otherwise be PELL eligible. FOr the most part, it doesn’t make that much difference since most FAFSA only schools do not meet full need for most students, but for those who are at the lowest income levels and PELL eligible, that money, free money is most needed. Upper income families savvy and with financial advice right there, often no better and you had better believe they clear out the kids’ account ahead of time because even with PROFILE there is a differential. And yes, many PROFILE school will count 529 funds owned by student as student assets. </p>
<p>I also think it’s more difficult to open and work with a 529 fund. It’s limiting. Unless there is good tax advantage, I don’t advise it for kids, in general. Just get that money out of kids name. Playing patty cake with it, or hiding it a box under the bed or lending it and not reporting it is Fraud. Giving it away is not. There is the risk when giving it away, the parent can do as s/he pleases with it. It’s not freebie, risk free move, but the least risky and perfectly legitimate. Ask a fin aid officer if it’s legitimate. </p>
<p>I have heard varying opinions from FA officers on this topic. I actually had one tell me once that if the student’s savings was ear-marked for something (let’s say an upcoming wedding) to not bother reporting it on the FAFSA since the student wouldn’t have that money during the rest of the year. </p>