<p>I have money saved for college in UTMA accounts. I recently found out that these have to be reported as student assets on the FAFSA and CSS, meaning they are assessed at 20% instead of ~5% for parent assets. I was considering having half of the money transferred to a 529 plan which would be reported as a parent asset and therefore would reduce my EFC. (?)
Unfortunately, one of my financial aid deadlines is this friday and we cannot transfer the money fast enough to meet that deadline. However, I know that the FAFSA can be updated later (but the CSS cannot?). So my questions are: Is it worth it to move the money? Will colleges think it's strange/sneaky if they see that the money is in the UTMA in the first copy of the FAFSA and then moved in the updated report? Any other comments/advice?
Thanks in advance.</p>
<p>You can’t update the asset amounts on FAFSA, only the income and tax information. So the assets are reported as of the day you file. </p>
<p>The difference between student and parent assets will add a marginal 15% to your EFC, assuming you’re above the asset protection allowance on both. You can figure out how much your EFC would change by taking 15% of the amount you’re thinking of transferring. If you’re transferring $10,000 from a UTMA to a student-owned 529, then your EFC would decrease by $1500 all other things being equal.</p>
<p>i also made the mistake of opening a UTMA account 16 years ago and have been saving for my son’s college education since. In addition to FA, there is also tax implications. i talked to a financial adviser several years ago and i decided to leave it as this. i will be sure to use UTMA before 529.</p>
<p>If the UTMA account is in the name of the child, it can only be used for the benefit of the child. It is illegal to take it and put it in an account in parents name.</p>
<p>Hence the importance of placing it in a student owned 529, which is treated at the parent asset rate for FAFSA purposes. Sadly vballmom is right, you can’t update assets, only income and tax info. Good news is there is no rush now for this year, you have some time to plan ahead for future years, kids, etc.
Warning on using UTMA before 529 to lower EFC in future years, my experience is I think typical. Through using up student assets first year of college, and lowering income (that wasn’t my choice) we managed to reduce D’s EFC from $19000 to #15000 but college changed not the financial aid, other than increasing the Stafford loan amount, which happens anyway. Next year as a senior her brother starting college drives her EFC to $9000, but I fully expect no change in her financial aid. School makes no claim to meet need, anyone else have insight whether this is typical. I also wonder what they would have done had the EFC gone up as much.
Bottom line, be careful that what you do to manipulate your EFC isn’t penny wise and pound foolish, it’s not worth it if you put it into a 529 that doesn’t have the investment goals you need.</p>