<p>I have a significant amount of savings from my part time job but I want to put it towards renting an apartment and living on my own in college. I have been told not to report everything I have to colleges because they'll just give me that much less in financial aid. I've also been told to empty my bank account and put everything in a safety deposit box to hide it from colleges. Are any of these things necessary? I don't want to be dishonest, but I don't want to lose what I've worked hard for. I also kind of don't want to be arrested or anything for fraud... Any thoughts?</p>
<p>Your instincts are good. Lying about your assets in order to increase your FA award would be fraud.</p>
<p>The system kind of rewards kids who don’t work and takes away from those who do… It’s grant aid I’m losing not loans. Just a gripe- I think it’s unfair.</p>
<p>What do you consider significant, and it may not matter depending on assets and income of parents. You can most easily shelter large student savings from FAFSA by putting those assets in a student owned 529, then it is assessed at parent rates. Of course then it needs to be used for qualified educational expenses, which include room and board as well as tuition. Trust me, having savings is way better than not having savings.</p>
<p>Parents’ income is a little less than $50K, they don’t have much of anything in savings, not sure what else qualifies as an asset? My savings is $12K and I have a year to go, I save everything I make so I’m betting on having around $15K by the time February and financial aid deadlines come around. With a 529, could I take it out to pay OFF CAMPUS room and board? I’m saving so I can support myself in an apartment. Thanks!</p>
<p>Yes, off campus room and board is a qualified 529 expense, as long as you are at least a half-time student.</p>
<p>Look, you can’t lie about the existence of the assets, but you can transfer them to your parents. That’s what would happen if they opened a 529 for you. You give the $12k to them and they open the 529. They don’t have to open a 529, though. You can just give the money to them. It becomes their asset. Problem solved. And they help pay your expenses next year.</p>
<p>As for withdrawing funds from the 529, even to use for an unqualified expense - yes, of course you can do that. No one’s going to stop you.The only impact would be that you’d have to pay tax on any interest that had accrued on those funds. If you deposit the funds tomorrow and withdraw them in a year, the accrued interest (and resulting tax) would be insignificant.</p>
<p>There’s no reason to give the savings to the parents to open a 529. 529 funds owned by a student are given the same FAFSA treatment as if they were a parental asset.</p>
<p>Besides paying tax, there’s also a 10% penalty on 529 earnings that are not used for a qualified purpose.</p>
<p>My oversight . . . but a 10% penalty on the earnings from that sum of money, if it were invested today, is just not going to be significant, even if the entire amount were spent on unqualified expenses.</p>
<p>Google EFC Formula 2014, and you will get the link to the current FAFSA formula. Print out the PDF, and work through it on paper with your parents. Try out different scenarios for who has the money. That way you will know how this will affect your access to federal aid.</p>
<p>Once you have done that, run the numbers several different ways with the Net Price Calculators on the websites of the colleges and universities on your list.</p>
<p>Setting up a 529 may be worth it to you. Putting your savings into an account where one of your parents is the first name on that account (so the value and interest are reported to that parent’s SSN) may make sense. Buying a good computer, good used car, and specific supplies you know you will need may make sense. However, you can’t make those decisions until you and your parents really look at the numbers.</p>
<p>Good luck!</p>
<p>Giving the summer savings to the parents with the expectation that it will be used for the benefit of the student will not then make the money a parental asset. Pretending otherwise would be fraud. For a gift to really be a gift, the giver must give up complete dominion over it. There can be no expectation that the gift will be used for the benefit of the giver.</p>
<p>What about putting the savings in a joint account with the parent as Primary? I understood that would be counted as a parental asset.</p>
<p>What about putting the savings in a joint account with the parent as Primary? I understood that would be counted as a parental asset.</p>
<p>Who does the money belong to, the student or the parent? If it was as easy as you suggest, every student with significant funds would be shielding assets like that. Maybe some people are doing this, but in my opinion it’s not ethical.</p>
<p>MiddKid86 -</p>
<p>There is nothing wrong with the child helping to cover his/her own living expenses while still at home - especially if the parents are low income! If the parents have lower every-day expenses, there is nothing wrong with them choosing to put some money aside for the child’s future college expenses. </p>
<p>To my mind, the biggest risk in putting the money into a parent’s name would be that parent deciding to use it for something other than the child’s college expenses.</p>
<p>I never said anything was wrong with the child helping to cover his/her own living expenses while still at home. I’m saying that trying to turn a student asset into a parent asset without making an unequivocal gift (i.e. no strings attached, zero expectation that the money given by the student to the parents will be used for the benefit of the student) for the purpose of getting better treatment under financial aid formulas is fraud.</p>
<p>How much would they take were the money in a 529? I’m a little shocked to find out I’ll be offered less grant aid because I’ve worked harder during high school…</p>
<p>
What are the numbers?</p>
<p>If you have $15,000 saved in a 529, it will add $840 to your EFC per the FAFSA formula. If you have $15,000 saved in a checking account, it will add $3000 to your EFC.</p>
<p>I’m a little shocked to find out I’ll be offered less grant aid because I’ve worked harder during high school…</p>
<p>You’re still way better off than someone who didn’t work. Let’s say all other things being equal, Lazy Lou didn’t work at all while you were hard at work building savings of $15,000 during high school. Lazy Lou will have an EFC that’s $3,000 less than your EFC, but you’ll have $12,000 in the bank after your first year of college and Lazy Lou will have nothing, assuming that you make up the EFC difference from your savings.</p>
<p>As you’ve been told here, putting some or all of your savings into a 529 plan will significantly reduce the amount that FAFSA says is available for college expenses.</p>
<p>Thanks vballmom and middkid. Where do those numbers come from?</p>