There is no perfect plan. Make the financial decisions best for you and your son and that may be a good choice for some schools but a not so great option for one or two. Several schools on his list award merit aid. Maybe he’ll end up at one of those. I think you’ll end up qualified for simplified assets anyway.
Is there some reason why this money shouldn’t be used for college education costs? What a wonderful gift to this student to have a little nest egg to help pay for his college education!
@twoinanddone Thanks for that, I’m probably over-thinking. I hate all the unknowns. 
Run the NPC for each school to make sure it’s affordable. The private school list does look a little reach heavy but he might have a little edge at schools like Vassar. I hear they give a little extra favor to boys.
@thumper1 The money is being used for college costs, aside from some money owed to family members that helped him with big fees over the last several years that I was unable to afford and some senior year expenses. I’m not going to feel badly about asking for advice on what is proper and financially sound.
I think you are over thinking this. Don’t worry about a $5k car. Nobody will care. Look, some people do that $100k home renovation they’d been dreaming about right before they file Fafsa. IIRC, CSS asks what kind of cars you drive and whether they are owned or leased, but I don’t remember any question about when the cars were acquired. They just want to see if you have a pattern of spending way above your income level instead of spending on college. Your situation is very small potatoes.
Of course everyone wants to lessen the impact of assets on FA if legally and ethically possible.
It’s good to be informed. And it will help you and your son to end up with hopefully several affordable schools to choose from.
He has great stats so merit is a possibility.
It’s good to know this now so you can look at all your options.
Any question about cars is there because a specific school wants the information… it is not a standard Profile question.
You can run several scenarios with this EFC calculator, it gives an EFC number for federal methodology (FM, FAFSA) and institutional methodology (IM). Although CSS profile schools might follow their own formula.
The FAFSA EFC for a family of 2 in IL with $40,000 parent income and $3,000 student income, $2,700 tax paid and qualifying for means tested benefit (where parent or student assets are not considered), is around $2,200. So that would provide a Pell grant of around $3,500.
Institutional aid would depend on school and how they consider parent assets versus student assets.
Different scenarios I tried came up with different IM EFCs. I assumed here that student’s 529 account is considered parent asset and bank account student asset.
If $98,000 is all student asset the IM EFC was about $26,000
If student asset is $48,000 and parent $50,000 IM EFC was about $13,000
If student asset is $23,000 and parent asset $70,000 (-$5,000 car, son keeps $16,000 in bank account for 4x$4,000 and his $3,000 job earnings and $4,000 for other expenses) IM EFC is about $8,500
Now the CSS profile schools might have their own calculation for EFC, they might not meet full need anyway so EFC number is not all that you would pay. That’s why you should run net price calculators of all schools to see how much they individually would give in grants.
Because the $3,000 Pell grant is not going to pay for school. Your son will either need enough merit aid or institutional grants to help pay for tuition, fees, room and board.
You also don’t have to file FAFSA and CSS profile right away in October. You could wait until acceptances come in unless there is an early financial aid deadline.
That way your son has time to pay back the people for the borrowed money, pay for application fees and AP fees, buy his car and prepay insurance, etc.
Depending on the net price calculators I would probably not put more than $50,000 into a 529 account, so that he has money on hand for other things.
If he got full tuition at UA or Tulane he might need about $15,000 for room and board, books, travel.
@mommdc Wow! Thank you so much for doing that! I played around with the calculator and I’m getting a 0 EFC for the federal methodology. My income was $25,000 in 2015, so I guess that’s the difference.
The IM EFC is trickier since there are so many ways a 529 could be assessed, depending on the individual college. I have home equity, too, but not much else in assets. So far, it runs between $8,000 and 30,000 EFC. I’m going to keep looking at various scenarios. I appreciate your help!
I think it’s best to have award letters in hand at the time of acceptances. Otherwise, you’re effectively waiting on two acceptance letters from each school: first you get an academic acceptance which is in limbo until you get the affordability acceptance. I don’t think either me or my kid would have been able to stomach that. 
OP: Your son’s list is reach heavy but he’ll probably get a decent number of acceptances from it. Given that Kenyon, Grinnell, and Lawrence are on his list, maybe consider swapping out one of the bottom 6 schools with Macalester (which besides meeting full need also gives merit aid to kids in his ACT range).
Definitely keep an eye on early merit aid application deadlines, show interest, etc.
Personally, I would carefully run the numbers on cost of ownership for a car over four years and not buy a car if you or your son don’t really need it. A car isn’t necessary for many of the schools on the list and the $5000 you “save” on tuition by buying a car could end up costing you more than twice that much.
One very nice cost savings with sending your male child off to school without a car is that your auto insurance rates drop significantly.
@Otterma Thank you for suggesting Macalester. It’s a school he has looked at and liked. Not sure why it’s not on the final list. I ran their NPC and it was on the lower end, even with the majority of the money as a student asset - $13,000-ish. It didn’t list a Pell grant nor did it ask for stats, which would bring the cost lower. I’m going to mention it to him.
As far as the car, I have said absolutely not in the few months. I started getting wishy-washy today. It really is a great expense, not to mention a pain to deal with in the city.
As I’m working on NPCs, none of them are listing a Pell in their award estimate, due to the assets. Son would still get a Pell, correct?
The Pell grant will be the same at every school as it is a federal entitlement. How the ‘meets full needs’ schools deal with it is up to them. Many use it in the meeting full need calculation, and the maximum student loans, and the SEOG and so it is just one more tool the schools have to meet the need. If you have a big merit award you get to keep the Pell and use it as you please. For example, D1 football players who get a full scholarship (room, board, tuition, books) still get to keep their Pell money. Even if it is not on the award estimate on the NPC, the school might still consider it part of the need based grant, as in you’d still get $30k, but $6k would be Pell and $24k would be from the school.
It’s pretty rare to max out on scholarships and get to keep the Pell but it does happen.
I just did U Alabama’s net price calculator. It specifically asked if someone in household received federal means tested benefit.
It provided a Pell grant estimate of $3,425 (for $40,000 income, household of 2), and merit estimate.
Tulane asked about free/reduced lunch too and also provided a Pell grant and merit estimate.
If your income in 2015 was actually much lower than my estimate, and was $25,000 or less, then you could qualify for auto $0 EFC.
Ah, that makes sense. Thank you.
And yes if you indeed end up having a $0 EFC on FAFSA then I would suggest to file as soon as possible.
I was not clear on whether you planned to use this money for college. Thank you for clarifying.
Pay those other bills…the money owed to others…before you complete your financial aid forms.
Also, if you qualify for auto $0 EFC, the FAFSA won’t even ask you for asset information.
Unfortunately, there is no simplified needs test or auto zero for Profile schools. The net proce calculators there might be of some help to you.
You mention one parent income of $25,000 for 2015. Is there another parent also? I apologize if I missed this if it was already stated.
@thumper1 OPmention something about social security survivor benefits up thread, so I assume dad must have passed. That also explains the insurance payout.
@mommdc Yes, my 2015 income was just under $25,000. Sounds like we need to move quickly to open his accounts.
@thumper1 & @sensation723 Yes, my husband passed away unexpectedly and he had a second life insurance policy for my son for college. We didn’t realize the ramifications of student-owned assets way-back-when and didn’t think he would actually pass away any time soon. Lesson for those with young kids: never make a minor a beneficiary. Name the other parent or another trusted adult the trustee for your minor child beneficiary.
I’m working on those NCPs right now. Some of these numbers are scary. Most are, actually.