<p>Hi. We are savers with no real estate or business assets. We have heard you can shield savings by pre-paying your mortgage. Because we don't own a home, can we pre-pay our rent or credit card? I realize this is sketchy, but I'm not sure why buying big TVs, cars or other big-ticket items is ok but this is not. Do they ask balances on credit cards etc? Thanks and please be gentle!</p>
<p>Yes, you can. If possible you’d like your assets (bank balances) to be as low as possible. But for FAFSA parental assets are “only” assessed at 5.6%. Is it worth the gyrations to prepay rent, etc?</p>
<p>Maybe not a things like the credit card bill, but I always make sure the winter/spring tuition check is cashed by the college before the first of the year!</p>
<p>CSS profile does ask for credit card balances. You can try to prepay - but most cc companies (at least the cards that I have) will not allow you to pay more than the balance on the card. You can always contribute the max to a Roth IRA to reduce your cash on hand amount. Timing your cash on hand is not sketchy, it’s perfectly within the rules. If I had any extra cash (not this year unfortunately) I would do the same.</p>
<p>College time…the need based calculations are HEAVILY weighted towards INCOME, not assets. You would have to have assets in excess of about $50,000 (parents get an asset protection based on the age of the oldest parent) to make a difference at all. And after that, it’s 5.6% of assets for the FAFSA calculation. </p>
<p>Also, unless your kiddo is applying to a school that meets full need, you could be doing these financial gymnastics for NO net gain in aid. In addition, if your income is at a certain level, you might find you don’t qualify for need based aid, or much of it, anyway.</p>
<p>If you had $100,000 in a bank account ABOVE your asset protection allowance, it would add $5600 to your family contribution. It would not mean your entire savings would be tapped in ONE year.</p>
<p>I’ve been thinking along the same lines. Another idea to consider is making charitable donations up front. We pledged to our church’s capital campaign and may pay that prior to filing FAFSA rather than making payments throughout the year.</p>