I’m currently a first year at State University, and I’m trying to find ways to lower my EFC to make next year affordable.
When I applied for colleges last year, I had a few thousand dollars saved from part-time work in high school, so my individual contribution was not calculated to be that high. My parents are divorced (and my dad is retired) and don’t make a lot of money, so my chosen parent’s contribution was not calculated to be all that high either, and through scholarships, grants, and aid, I managed to get a full ride for my first year here.
But there is a part of Social Security that allows a retired parent to receive around $1000-$1500 (changes yearly, and I can’t remember the exact number) for each child that they have that is currently in high school and 18 every month until they graduate or turn 19. My dad started receiving this money right after we finished FAFSA, so it was not counted. My dad also did not expect to get this money, so he just decided to let me have the money since he doesn’t really need or want it. However, I realize now that money kept in a student’s name is assessed at a much higher rate (20%) than money kept in a parent’s name. I have around $9000 in the bank now, but the vast majority of this would not be assessed if my dad had just kept the money (since I file FAFSA under my mom).
If I just give the money back to my dad, would that be considered “hiding” the money, and thus put be illegal? Or would it be safe to hand it back to him? This isn’t money that I earned myself, so it’s not like I’m hiding money that I got through work or something.
If the money started coming in right after you first filed FAFSA and you graduated from high school in 2015, at most you received six months of this benefit, correct?
So you have $9000 in the bank. 20% of that will be added to your family contribution for college. That is about $1800. Is there a problem with you contributing that money towards your college education? It is SS money that your dad got for,you…and gave to you.
I can’t imagine why you wouldn’t be willing to use that move towards your college education.
Pay the $1800 or use the money to pay part of your current EFC, in other words pay some of the costs that your family or you have for this year out of that account. That is fair … and not hiding the money. You can then pay less money every year since the account will dwindle.
This is a one year payment …
How would using this money sitting in a bank account for tuition or whatever make college less affordable ?
@BelknapPoint This is a benefit that was paid to the parent, but my dad gave it to me anyways. And yes I received 6 months of it. EDIT: perhaps my understanding was wrong. I was told by my dad that this money was for him, but he just redirected it to my bank account.
The reason I don’t want to have to use it is not that I can’t, or that I’m trying to hide it some way, it’s just that if my dad hadn’t bothered giving it to me, then I wouldn’t have had to use it at all. Because he was nice, he decided to give it to me, but now I’d have to pay the price. I understand the value of funding your own education, but why should I have to use the money on it if I wouldn’t have had to before?
I’m not trying to scapegoat or break the law, but if I don’t have to use the money on it, then I would rather not.
@PickOne1 It makes college less affordable because I lose some grant money in exchange for my own money.
Actually, you ARE trying not to spend this money. You spicifically asked if there were ways to place this money so you would not have to spend it on college.
Here is the reality. You HAVE the money. You can spend it on college costs.that would be n excellent use for,this money.
As Madison suggested, you can place it into a 529 account. But remember that money in a 529 must be used for qualified educational expenses.
@thumper1 You are correct in that I am trying to not spend the money, since that is exactly what I said. I’m not sure why you disagree with the idea of wanting to save money; that is all I am trying to do. If the solutions are illegal, then I obviously won’t do them, but I wanted to know if there were legal ways to avoid spending the money. It just kind of sucks that I would have to spend $2000 just because it is in one person’s name and not another. EDIT: I can understand how you’re interpreting what I’m saying as being fishy, but really I am not trying to do anything fishy. I don’t really even consider this to be my own money, as I didn’t do anything to earn it. It just feels wasteful to spend it when I don’t have to.
I was not familiar with 529 accounts though, could somebody explain what “qualified educational expenses” are, and if I would make this myself or if my parents would have to be involved?
Also, back to the original question: would it be illegal to give the money back to my dad and not count it as part of the FAFSA?
That’s the point. You have to use the money for qualified educational expenses. If you don’t, there is a withdrawal penalty, I believe.
I’m still not sure what the issue is with using $1800 this year to pay towards your college costs. I know you woild rather have the money for something else…but you HAVE the money…and your education is an investment.
[Quote]
Withdrawals from 529 plans are tax-free only if they are used to pay for so-called qualified higher-education expenses, as defined by the Internal Revenue Service. These include tuition and other fees required by the university, as well as room and board for students enrolled at least half time.
Good news…you can use 529 money for any college related expenses…tuition, room, board, books, fees.
But if you put your $9000 in that account…you need to plan to use it for those costs…and if you don’t want to spend $1800 this year…I can’t imagine you want to spend the whole $9000.
@Kaponator, this is a child benefit of retirees for children under 18.
Count your blessings, you have this $9000 to spend on your education and other things.
Last year you had a full ride, this year you pay maybe $1,800.
Is your custodial parent low income? EFC is mostly income driven.
If you had a full ride last year, don’t forget to file a tax return and include any scholarship or grant amount that exceeded tuition, fees and books in your taxable income.
@Thumper1 True, but there is probably a balance that could be found then where some is in the 529 account and some is not, but I am not sure what that is.
However, I really would appreciate a response to my original question. If giving my dad’s money to my dad and using my mom’s finances to do the FAFSA is not something that you want to consider, would giving it to my mom and having it count as her money (and having it count at their percentage) be illegal?
Your argument is like a transgender male-to-female complaining about why he needs to wear a bra now, when before his/her breast implant he didn’t need to wear one.