<p>Dear senior parents:
What financial moves are you making now to prepare for CSS and FAFSA for 2008?
I'm trying to make decisions and seeking others' ideas. I'm not talking about hiding money, but am talking about making the right moves that will help next year. Some of you probably have already done calculations because of ED.</p>
<p>Examples:
1. Are you buying a car?
2. Are you making early contributions to religious institutions for next year?
3. Are you buying a computer? Small fridge? Plenty of personal clothing for the student? Camera? Computer?
4. Continuing contributions or stopping to 529 or Coverdell account?
5. Changing medical insurance coverage on the student?</p>
<p>Specific example:
Hypothetical family has a war chest set aside for college. The family also drives very old cars. Should they buy a car? Initial calculations show "no" -- spending $20,000 now would only qualify said family for $1,000 or $1,500 more on finaid per year, and if the total price is very high, taking higher loans later would nullify any benefit, plus complicate things if the student doesn't really NEED a car.</p>
<p>Another: hypothetical family could change medical insurance on the student to get a cheaper, easier-to-get-out-of plan and prepare to sign up for medical coverage through a college later. But how many of those college medical plans cover semester breaks? Is this a wise move?</p>
<p>Your experience may vary. I'm seeking ideas that can be as small as making sure the kid has semi-formal wear, interview wear, good boots, etc....</p>
<p>Earlier in the year, I did increase the amount that gets put into retirement by 2%…not much but that was the best I could do.</p>
<p>However, I just started a new job and have not been able to enroll in their retirement plan yet. I will make sure that I enroll ASAP. Mostly for retirement purposes but also for CSS/FAFSA calculations.</p>
<p>I am filling out CSS right now for EA to BC. It is due on Thursday.</p>
<p>I’d love to hear what other people may be doing.</p>
<p>Just remember that you have to add back in retirement contributions as other non-taxable income. Colleges will assume that the $ you are contributing to retirement could be diverted to college costs</p>
<p>Be very careful about health insurance. Some have $1 million cap for out of plan treatment. If there is any kind of serious illness, you will want the best treatment for your kid and $1 million won’t last very long!</p>
<p>We did increase this year to maximum contributions(matchable) to retirement account, but that leaves us too little to live on ( I am in school), so next year we will have to reduce that.</p>
<p>I have questions about two possibilities. Any advice would be most appreciated.</p>
<ol>
<li><p>What about using funds to pay down home equity loan? Would that help in PROFILE?</p></li>
<li><p>Would it be good for financial aid to move funds in child’s name to funds in parents’ name?</p></li>
</ol>
<p>I am as we speak entering data into 2007 preliminary tax forms using last years and best estimates. We are kicking DS off our insurance which is the last dependency that he has with us. He will be done with all forms of college, Dec 20. Relief and a sigh.</p>
<p>Many of the financial things you do today for 2008 students should have been done in 2005. I found that out too late.</p>
<p>As for 529; We continued to fund a 529 thoughout college since our state gives a 9% tax break. We should have forced DS to fund a 529 during his college so that he can get a like 9% tax break. After the 529 contribution, we turned around and asked for the 529 people to make a payment to his school. We rarely left money in this account for more 30 days.</p>
<p>momfromme- you usually can’t move funds from kid’s name (I assume UTMA account) to yours. There are other things you can do to achieve the same purpose (consult professional advisor).</p>
<p>I think you can spend down money in the child’s name by doing such things as paying for lessons (music, etc.), braces, clothes, enrichment programs, SAT courses, computer, etc.
Paying down a home equity loan depends on individual circumstances. Some schools cap home equity in various ways that may or may not be helped by paying down the debt. Also, a minimum amount of financial assets are sheltered, so where your financial assets are vis a vis your particular minimum might be a factor. Short answer is “it depends”.</p>
<ol>
<li>Would it be good for financial aid to move funds in child’s name to funds in parents’ name?
My kid is very proud of her own bank account, through her own earnings, even though I tell her schools will likely want most of it. Encouraging her to shop for stuff now that she’ll need in college – computer, camera, basic clothing – seems to be getting through her head.</li>
</ol>
<p>I have acted with impunity in that case, with my daughter’s okay. I think UTMA accounts are a different story.
Every school is different, even in how they define “capping home equity”.
Then there is Princeton. Princeton does not figure in home equity at all, and treats money in the child’s name the same as in the parents’ name. But that is financial need nirvana!</p>
<p>And here:
[FinAid</a> | Financial Aid Applications | Maximizing Your Aid Eligibility<a href=“This%20part%20cracks%20me%20up:%20%22When%20you%20have%20children,%20space%20them%20closer%20together.%22%20Obviously,%20that%20advice%20is%20intended%20for%20people%20planning%20much%20earlier.”>/url</a></p>
<p>More clear info. on savings bonds:
[FinAid</a> | Saving for College | Section 529 Plans](<a href=“Your Guide for College Financial Aid - Finaid”>Section 529 Plans - Finaid)
“Series EE and I US Savings Bonds issued after December 31, 1989 may be redeemed tax-free in order to contribute the proceeds to a section 529 plan or Coverdell Education Savings Account.” </p>
<p>Someone earlier said, “Consult a financial adviser.” All this web surfing is good, but the idea of getting professional advice seems very wise. (Whether I actually get it done is another issue…) This stuff gets mighty murky. Seems that any fee associated with that consultation should be tax deductible.</p>
The fuzziness has been cleared up with new rules passed in September. 529 accounts are reported as parent assets fore dependent students, student assets for independent students. The loophole where some were not reported has supposedly been closed.</p>
<p>
</p>
<p>Check the rules very carefully - unless it has changed in the last few months the bonds have to have been purchased in the name of someone aged over 24 to be redeemable tax free for education purposes. So, for example, bonds we purchased for my son (now 21) cannot be redeemed tax free. Bonds in our own names can be.</p>
<p>
Make sure it is one that specialises in financial aid matters. The rules are very different for financial aid than for, say, tax savings. For instance people have posted here that thay have been advised to do thinks like putting money in trusts which does not protect the money from financial aid calculations.</p>
<p>I have found finaid.org to be one of the most accurate and up to date sources of information for financial aid. Several new financial aid things were passed in Septamber and, as far as I can find, these are not updated anywhere on the web yet. The source (h.r. 2669) is a little hard to follow so hopefully someone will put in ordinary English soon.</p>
<p>Does anyone know happens to your FAFSA reported income when a parent retires? The primary breadwinner of my family was in the military for 26 years, but retired this November and had his income cut almost in half. What does this mean in terms of financial aid?</p>
<p>You will have to report his actual income for the year on FAFSA. Then ask the financial aid department for a special circumstances adjustmant based on loss of income. This is at the discretion of the financial aid officer. Our experience (at a flagship State U) was that they were very willing to make adjustments once we provided the supporting documentation. Once they decide an adjustmment is appropriate they go into your FAFSA and adjust the input figures - for instance they reduced our AGI to reflect loss of income and high medical costs. This resulted in our D’s EFC dropping considerably which really helped her financial aid wise.</p>
<p>We are a military family and all of our 2006 and part of our 2007 income falls under combat zone exclusion and is not reported. The school our son has applied to for ealy acceptance wants a css report yesterday and there are no provisions on how to deal with this income, leaving us confused and unable to accurately fill out the report. The fin aid officer is unsure how we deal with this and how this is dealt with has a huge impact on how much aid my son will recieve. Any others with this experience? Ideas?</p>
<p>I would be wary of college medical insurance. Especially if your student is covered under a good family plan with good dependent coverage. I am aware of situations where a student had to take medical leave and could only remain on the university plan by paying COBRA premiums. Or it could get worse: Washington University says “Any student granted a medical leave of absence within the first 30 days of school will not be eligible to remain on the student health insurance plan, unless the student was on the insurance plan the prior semester. Students should determine their insurance status and seek other insurance coverage.”
[Student</a> Health Services - Washington University in St. Louis](<a href=“WashU Student Health Center”>WashU Student Health Center)</p>
<p>That’s just one example. I would not select university health insurance if there was another good alternative. Even if it cost more, it might be more portable…the student could enroll in another university or junior college to meet full-time student requirements of dependent coverage. </p>
<p>…spending $20,000 now would only qualify said family for $1,000 or $1,500 more on finaid per year, and if the total price is very high, taking higher loans later would nullify any benefit, plus complicate things if the student doesn’t really NEED a car.</p>
<p>I have a question about our family car - not a car for the student. If we buy a car and take out a 15-20k car loan before applying for FA, does that affect financial need–> aid at all?</p>
<p>How would I declare some cash out of a home refi we are doing now, which will be used very shortly, but not necessarily before we do the PROFILE and FAFSA. And, we are refinancing now to pay for a roof, do some other home fixes, and pay off some consumer debt. </p>
<p>should we do the projects before applying for FA and so that there are piles of cash around?</p>
<p>Please comment from the both methodolgies point of view, Institution (PROFILE) and Federal (FAFSA)</p>
<p>I am only responding from a FAFSA point of view because I do not know about profile
No. Consumer debt is not taken into account in FAFSA. The only debt that is taken into account is debt directly against an asset which reduces the value of that asset (for instance a second home the value is the net value ie house value less mortgage)</p>
<p>
</p>
<p>Bad move to have the cash in hand when you do FAFSA. If you have the cash in hand you have to declare it as an asset on FAFSA. DO the projects before you fill out FAFSa - do not have piles of cash lying around.</p>