<p>OP here. Thanks again for all this great advice. For others who are following this thread due to similar situations, do what I did today (and was advised to do by several posters) – run the calculator on the finaid.org site!</p>
<p>Investing my son’s UTMA account funds in a 529 makes a lot of financial sense; in fact, it reduced the EFC by nearly $10,000 for the first year of college. Unfortunately, to invest all of the $50,000 means liquidating the account (529s must be funded with cash). That’s a big step and I’m feeling pretty cautious about it. I would be more comfortable selling a portion of the UTMA. Also, liquidating the account would assign my son a substantial capital gain as this account is 18 years old.</p>
<p>There are many unknowns, of course. He could earn a merit scholarship – at several of the schools he’s considering, he’s a very good candidate for this. Conversely, a school could look at our EFT and offer loans instead of grants. It would be unfortunate to sell off income-generating stock, pay capital gains tax, and then be offered a loan. (Not eligible for Pell, never was.)</p>
<p>What about using the UTMA funds to purchase a car? I think we’ll revisit that idea in a couple of years. </p>
<p>One unexpected surprise in running the calculator was discovering that the family size makes such a difference. Also living under my roof is a recent college grad (son’s sibling) who is doing an unpaid internship and also working part-time. When I add this young adult to family size, it reduced the EFC by almost $2,000. I hope this college grad “launches” before I do the FAFSA, but if I continue to support this young adult as I am now, I can add one dependent to family size. (Must provide 50 percent of support to do this.)</p>
<p>A question – if we use 529 funds for the first year of college, is that amount reported as unearned income for the student in the subsequent year’s FAFSA?</p>
<p>Thanks again to all who have spent time on this thread!</p>