Several Questions about CSS Profile

Paying for College
21

<p>It is required by federal rules that you HAVE to pay the FAFSA EFC before you get a dime of federal money. Run the EFC estimators, and you can get an idea of what that EFC is. Vanderbilt, I believe, replaces work study awards with outside money first. Do they even give loans in their package. It’s really difficult to get big merit money anyways, so it could be a moot point. When a school replaces work study and the Direct loan amounts, you can then work in the freed up time at non Federal WS jobs and get the Direct Loan anyways, just not on a subsidized basis and those amounts can go towards your EFC instead of being part of your award. What schools do with their own awards is their own business, but they cannot give Perkins loans, SEOG, work study, subsidized Direct loans over what the FAFSA EFC is under federal law.</p>

<p>Your mother will likely be assessed about 5% or so of assets over her protection allowance, so each year she can shelter some of this, you can calculate what she’ll be saving, not just for you but for the other siblings as well. The amount against parental assets is not that big of a bite as compared to the income but you can see how it adds up over 5 years and then against 4 kids. If your mother quailifies for HSA contributions, don’t ignore those. It’s been a boon for us and now places have some investment options for those accounts. This is an old article, but it’s the best I’ve found in explaining the possiblities: <a href=“http://www.freemoneyfinance.com/2008/08/using-your-heal.html”>http://www.freemoneyfinance.com/2008/08/using-your-heal.html&lt;/a&gt; Again, you have to be eligible, as you do for IRA contributions. An accountant or whoever is helping your mom with taxes and finances should look into that. </p>

22

<p>Thank you, that looks like it could help hide at least some of it. Of course the minute I told my mom about the part she could put into her IRA, she refused because she thinks she can get more interest on her mutual fund. And she refused to pay off her farm loan, which did drop my EFC by about $1800, because she thinks she can accumulate more interest on the mutual fund than the loan would. So basically I’m down to a problem of a selfish mom, which isn’t something you guys can help me with ): </p>

<p>Vanderbilt doesn’t even give loans, no. So when you say they replace work study awards with outside money, do you mean I could keep the work study (if I get one of course) and use the outside money for something else? Or what? I get the part about them not being able to give any kind of FAFSA related award…</p>

23

<p>

</p>

<p>An IRA can be invested in all kinds of different things, including mutual funds. If your mom is really saving that $300k for retirement, the best place for it is a qualified retirement vehicle, like an IRA, Roth IRA, etc.</p>

24

<p>A lot of mutual funds offer IRAs as well, and can covert regular funds over to IRA if the customer is eligible Wouldn’t have to do much and wouldn’t change the investments in some cases. It’s not a matter of being selfish, it’s a matter of being investment savvy.</p>

<p>I don’t think paying down the farm debt will help, since the value of the farm is lowered by the debt, so when you repay it, the value just goes up correspondingly. </p>

<p>Regarding work study: If you get a work study award for $1000, all that means is that you are eligible to find a job on the work study list and make up to $1000 that school year from it. It doesn’t guarantee you the job or the amount. You get the money in the form of a paycheck as you earn it. If you get an outside scholarship that replaces that, what it means is that the time you might be spending on the work study job, you can use at a non work study job and that money would just go into your pocket towards your EFC rather than being part of the aid package. </p>

<p>If your aid package is $20K, for example, and $1K of it is work study, and you replace that with the scholarship, you can just find a job for $K (or more) and you can end up with $21K for the same amount of work. From what I know of Vanderbilt, finding outside jobs is not difficult. My kids never got work study, and it was never a problem for them to find campus jobs at a number of colleges. </p>

25

<p>Most of my retirement savings are in mutual fund. If the money are truly for retirement purpose, there is no reason not to put them in an IRA or Roth IRA account and invest in the way you want (money market, mutual fund, etc).
For 529 accounts, even they are labelled for your siblings, they are still counted as your parent’s asset.</p>

26

<p>Does your mom work (and receive a W-2)?</p>

<p>If so:
What is her annual salary?
Does her employer offer a 401k or 403b?</p>

27

<p>For FAFSA purposes, I believe the 529s owned by the siblings, not just labeled for the benefit of them and owned by the parents, are considered the siblings assets and not included in the parent’s assets. However, for PROFILE, sibling assets are included in the info. It can get tricky when the 529 account is in the student’s name, because though FAFSA will count that as a parental asset, some PROFILE schools will not, and I’ve seen some hit student assets very hard, harder than the FAFSA 20%. </p>

28

<p>My mom literally just doesn’t care about my future, so she’s not even going to try to work with her accountant and move some things. That’s what I mean by selfish. It’s a really long story that mostly has nothing to do with this, but the point is she is only going to give me 1/4 of what’s in the 529 for me for my first year. Nothing of that mutual fund is going toward my college. I talked to my counselor at school though, and she said worst case scenario, we could talk to somebody in admissions about my situation and see if that helps at all. It wouldn’t hurt, and my mom is going to use it for retirement, so maybe (very small chance of anything coming of it, I know) something can be figured out. I’ll have to cross that bridge when I come to it though. </p>

<p>My mom works a little in the winter, but she isn’t salaried and only ended up with about $14,500 last year. I don’t think she has the option to get a 401k through her work unfortunately. I looked into self-employed IRA’s, but apparently you can only put money into those that came from your self-employment, not inheritance or anything else. </p>

29

<p>^ For the 529 I purchased for my 2 daughters, they are labelled for them individually. However, the recipient can be changed any time. That’s why they are considered my own asset. This is the case for both FAFSA and CSS Profile filing. It makes more sense to count it as parent’s asset rather than the student’s asset anyway unless the money are distributed among many siblings.</p>

<p><a href=“Five Things to Know About 529s and Financial Aid”>http://www.savingforcollege.com/articles/five-things-to-know-about-529s-and-financial-aid&lt;/a&gt;&lt;/p&gt;

<p>According to the link below, even if the 529 is owned by the student, it is still considered parent’s asset if the student is considered a dependent of that parent.</p>

<p><a href=“Account Ownership: In Whose Name to Save? - Finaid”>Your Guide for College Financial Aid - Finaid;

30

<p>Though you can only put money into the IRA that is earned, the self employed IRA when it’s income from self employ, it’s not like you have to have a trail directly from those paychecks. It’s just that the amount one can put away is based on that income You can borrow the money and put it in there, take it out of savings, anything. Doesn’t matter where you actually get the money. </p>

<p>You certainly can give it a go with explanations. I really don’t think so, however, from what I’ve seen.</p>

<p>Yes, Billsho, for FAFSA purposes the 529 owned by the student is still counted as the parent’s asse if the student is a dependent. But for some PROFILE schools, it is possible that they do not look at it that way. Schools are not stuck by FAFSA rules when it comes to their own money. They don’t have to stick with the 20% figure, they can count qualified plan assets towards contribution, and yes, they can count student owned 529s as a student asset. That’s why OP should ask the fin aid office of schools on list directly. It doesn’t matter if it’s sibling or parent held, i that they are often both assessed the same way , but there is a crucial differnce whether it is the student who is applying who owns an asset or the parent. Parent can divert the funds at any time if owning the asset, not the case if it is student owns it without student making that change. </p>

31

<p>You feel your mom is being selfish because she won’t use her retirement money to fund your school costs, and she doesn’t have a 401K? Really?</p>

32

<p>

</p>

<p>I took it to mean that OP thinks mom is being selfish because she won’t consider restructuring her assets to make for a more compelling financial aid picture; i.e. move some of the $300k designated for retirement from straight mutual funds into a qualified retirement account that will shelter at least some funds from less favorable financial aid treatment (which would also benefit mom, by the way).</p>

33

<p>@"Erin’s Dad"‌ No no no, it’s just one little thing in a bigger scheme of things. I’ve basically raised myself, and she’s just been there to yell at me when I screw up. She doesn’t have any interest in anything I or my siblings do, and only does stuff for us when she benefits significantly from it. I don’t get to do anything at all outside of school. She has no interest in any of this college stuff except “Oh you’re doing that now? Have fun.” I only get to see my dad half of what I’m supposed to, because she’d rather have all of us working for her than let us go spend the weekend with him. She has other retirement money in an actual IRA definitely, just not necessarily enough for 15-20 years at the moment living on that alone. She had a 401K, but rolled it over into her IRA a few years ago.</p>

<p>But anyway, I’m mainly just hoping they account for that fact that my mom has x amount in a 529, but that I have 4 other siblings that need to go to college at some point too. </p>

34

<p>

</p>

<p>Each 529 account can only have one beneficiary. If your mom has any non-custodial 529 accounts, where did the money in the account(s) come from? If the money came from your mother, than I don’t completely buy the argument that she thinks only of herself.</p>

35

<p>If your mother has income and $300k in assets that weren’t contributed to an IRA or other protected retirement account before this tax year, it is unlikely you are going to get much in FA. How about your father? Can you spend more of the year before filing the FAFSA? Then he would the parent whose financial info is used.</p>

<p>If that can be done, your mother might be agreeable since then her finances won’t be considered for FAFSA only schools.</p>

36

<p>@twoinanddone‌ I wish I could do that. But I only get two or three days a month with him as of late, so that’s not going to happen ): It’s a real mess…</p>

<p>@MiddKid86 By one beneficiary do you mean they wouldn’t be able to take what’s designated for my siblings and not me? </p>

37

<p>

</p>

<p>No. You said that your mom has money in “a” 529 account, meaning that she has just one such account, but you have four other siblings. If your mom really only has one 529 account, than at most only one of her children at one time could be a beneficiary of that account. (The owner of a non-custodial 529 account can change the beneficiary at any time.)</p>

<p>And even if your mom has multiple 529 accounts for different beneficiaries, no school will “take” from the accounts that may list a sibling as a beneficiary. Depending on the school, however, sibling accounts may be taken into account when the amount of financial aid that you are eligible for is calculated.</p>

38

<p>The way a 529 works is that someone OWNS the account, and it’s designated as for the benefit of a person. I can contribute money to anyone’s 529 account and anyone can contribute to mine. But only the named owner can take money out of the account. Not only can the owner take the money out of the account, but s/he can change who the benefiiciary is for the money at any time. </p>

<p>So if your mother owns a 529 account that is designated for you, she can in a instant change that designation to your sibling, to herself, to the kid down the street, anyone, and “poof”, you have no 529 money just like that with no control or say in the matter. That can happen if she gets mad at you and decides not to let you have the money, if she needs the money for other things and decides to take the penalties assessed and take out the money for other uses, or if she decides someone else could better use the money. The schools do not “take” any money from the accounts. They just "take’ the information about the accounts and include them assets in whatever formula they use for them.</p>

<p>FAFSA is the form that is used for federal money that most all schools require. FAFSA rules say that a parent gets an asset protection allowance defined by age of the parent and number of dependents. Any asset the parent has over that amount (with certain things protected like qualified plans and primary home ownership) is assessed at 5.6% or towards the parental EFC. Sibling assets are not included in FAFSA formulas. The student has NO asset protection allowance and is assessed a full 20% of any assets owned the day the file is completed and filed, with the exception of some protected assets, and the 529 which is reported as a PARENTAL asset even if OWNED by the student. That exeption means that regardless of whether the 529 is owned by YOU or owned by your parent, it is included as a parental asset rather than your and is not hit so hard in the calculation of the FAFSA EFC.</p>

<p>But when you are talking about schools like Vanderbilt,that tend to be very expensive and that say they meet full need, they do not use the FAFSA EFC to define need. They have their own definitions of need and though they may sort of follow FAFSA rules, they often depart from them. There is NO rhyme or reason to what their own rules are as they can do pretty much what they please. Student assets can be hit up at 30, not just 20%. They can take that initial asset value reported by a student and keep it as a constant for all 4 years and refer to it in formula, oh, yes they can and do. I’ve seen all of this personally. And they can take a 529 owned by YOU and include it in student assets instead of as a parental asset and hit it up with the student % which I’ve always seen as much more than the parental hit. They absolutely can. They can use qualified plan assets in their formulas too–there is a reason why they ask for that number and FAFSA does not . They don’t always, but they can and sometimes do. ALso, most PROFILE schools hit up sibling assets as parental ones because some parents will divert assets in a younger sibling’s names so that they are not included in a financial aid assessment, oh, yes, I’ve seen that. If baby sister owns the $300K mutual fund–it’s in her name as primary, not mom’s the FAFSA assessment of it is zip. If it’s in mom’s name it adds about $17K to the EFC, if it’s in your name it adds $60K to your EFC. You can see what a difference that can make whose name is on the money. But PROFILE schools hone in more to these things. They won’t let parents divert assets that way to other children, but they aren’t so strict about allowing the student to divert assets to the parents and many out and out advise it because the student hit is just way high. Any financial advising article, consultant will tell a student who has substantial assets in his/her name to spend it down or repay a parent for expenses so that the those assets are not sitting ducks for the student hit. </p>

<p>But back to the the 529, yes, if it’s YOURS, you own it, not just titled as yours but can be changed by the owner, there is a risk that a PROFILE school treats it as a student asset, not as a parental asset. My guess is that the asset is for your benefit, and is so set up, but is owned by your mother who can divert the amounts if she so pleases. That puts it in a vaguer category, and I don’t know how Vanderbilt or any :PROFILE school would handle this. Would they differentiate between a parent owned 520 that is set up for your benefit but can be diverted without your say, and one that is set up for a sibling’s benefit, but the funds can be diverted to you without the sibling’s say if the parent/owner so pleased? Gotta ask How a the school, and one has to find the aid officer that can know what the heck you are talking about, the aides are not likely to know. Also depends upon how the questions are asked about ownership==I haven’t filled out a PROFILE in years, so I don’t remember. Maybe someone here who has recently with 529 plans in their portfolio can help.</p>

39

<p>

</p>

<p>A beneficiary change can only be made to a family member (fairly broadly defined) of the original beneficiary, unless the account owner is willing to pay applicable taxes and penalties on any account earnings.</p>

40

<p>Actually the owner of a 529 can dissolve the account and go to the Bahamas on a cruise with the money if s/he pays the taxes and penalties. A real blow to one of my friends, that hurts her to this day is that her ex used their kids’ 529 and Unified Gift funds. He was the owner of the funds, and she never thought he’d do this and did not have that contingency covered in the divorce settlements. And he did. </p>

<p>But in this case, the pressing matter is how the schools on OP’s list will count 529 assets depending on whose name they are in on the PROFILE. Maybe they’ll do like the FAFSA and it makes no difference, in which case all is cool. But if not, it might behoove the OP to have the designations on the accounts changed. </p>