<p>I heard anecdotal reports that some people don't declare on their FAFSA reports that grandparents have been footing the bill for private school for years and will be picking up the differential from the financial aid award and the total cost of college for their grandkids. That is DESPICABLE. It means grandma and grandpa are getting the financial aid, not the parents and student.</p>
<p>Its dishonest, and a federal crime to underreport assets and financial resources for the student.</p>
<p>It puts the student at risk as well since they must sign the FAFSA report as an adult.</p>
<p>Ummmm -- the family is left to decide how the family responsibility is met, whether that's through the family's current income, draw down of savings, sales of assets. If the grandparents choose to give a gift and pay for the college differential between the aid award and the COA, that is neither income to the student or parents (under any US definition) nor an asset that the student's family can or should count. It may be disclosable if the sums come from a trust established with the student (or perhaps all of the grandchildren) as a beneficiary, but if Grandma and Grandpa make a decision each year as to whether or not they'll contribute, and if so, how much, it isn't income.</p>
<p>It may not seem fair to you, but it isn't illegal or immoral. </p>
<p>In the same way, some families end up paying for the portion of the COA that is supposed to be covered by income from the student's employment, so even though the student's FAFSA shows an income contribution it isn't really coming from the student. That's not a crime either.</p>
<p>Thanks. Depends on how you slice the apple I suppose. But from my vantage point, it is grossly unfair not to count the grandparents contribution OPENLY. For one thing, the college THINKS the student is in need of financial aid when in fact they are NOT. Secondly, the grandparents assets and income (which were SUBSTANTIAL..as in multiple seven figures in the case I was referring to) are not counted and it makes the student look more "worthy" presuming they are admitted need blind. Its all a crock. All it is doing is giving grandma and grandpa a discount on their contribution and making the student look poor.</p>
<p>For those of us middle class parents trying like the dickens to afford a college education for their kids and who DONT have a rich grandparent to FLEECE THE SYSTEM, its very immoral to even apply for financial aid when they dont really need it and to essentially trick the FAFSA system into thinking they are needy.</p>
<p>Its a fraud in my books.</p>
<p>Grandparents dont just pop up and surprise people with "donations" on a year to year basis. They are committed to paying..and in the case I know about, they in fact paid for private school for years and years. Nothing wrong or immoral about that (except its a gift under federal taxation laws if its over 10k a year), but in my view they need to disclose that.</p>
<p>Colleges should NOT be giving financial aid to kids whose grandparents are loaded and are in fact paying the bills. PERIOD.</p>
<p>Federal law allows gifts of up to $10,000 per year to be given by each individual to another person without tax impact. This is not considered to be income. If it's sitting in your bank account when you do the FAFSA, it is an asset, but if the gift is given to you the next day, it is not. Gifts are gifts and as pointed out above, the receiver can decide to do with them whatever they choose.</p>
<p>Since grandparents have no legal obligation to support a grandchild, nor have ever had such an obligation during the time the child was a minor, why should his or her assets be considered? My mother may have significant money available to her, but she needs it for herself! She's already raised her children. </p>
<p>If she wants to give my child a gift, that's her business. She can make that gift any way she wants, and that's her prerogative. But I'm certainly not counting on it!</p>
<p>Under your scenario, why should we stop at grandparents? Perhaps we should require the assets of all relatives - the rich uncle, the cousins, a wealthy friend who's taken an interest in the child. Oh, and of course, the parent's live-in non-spouse.</p>
<p>FAFSA considers (and rightly, IMO) only the assets of those who had the legal responsibility for raising the child during the child's minority. Anything else would be ridiculous (as well as impossible to administer).</p>
<p>friedokra, There are loopholes. Another loophole is collectibles. I suppose someone could have oil paintings, expensive antique furniture, rare stamps and coins, etc. that could be used for college bills. I think that lots of money can be hidden through these vehicles. Equity in a primary residence is not counted for Fafsa only schools either (unless the school has its own financial aid forms).</p>
<p>Friedokra, you hit the nail on the head. I do believe that these family gifts are what makes the difference of many middle class folks being able to afford a particular college, and not being able to afford attending. This is something rarely discussed, and is just kept private. Frankly, nothing can be done about it, IMO. Life just is not fair.</p>
<p>Just to add more thing. Years ago, I attended a financial aid lecture. One of the key points made was to keep grandma/pa's garden trimmed, gutters cleaned, and hope for financial gifts to pay for college in return!</p>
<p>In the thread that is right above, there is a quote from Reecy:
[quote]
After 30 years in the business, I can tell you that life in. proceeds are income tax free - period. If you're over the asset protection allowance, there are financial vehicles (including a small business if you own one) where assets can be legally repositioned and excluded from the calculations.
[/quote]
</p>
<p>Just another way that assets are hidden by some people.</p>
<p>Worksheet B asked for money received, or paid on your behalf, not reported elsewhere. You could get by the first year, if it hasn't been paid on your behalf yet, but in subsequent years, I think it's pretty self-evident that grandma's contributions, officially, would go here.</p>
<p>In answer to some of those who oppose a search of relatives' assets, that is not what friedokra is asking for, for grandma or anyone else. Not her assets, just her contributions. And my reading of Worksheet B asks for them (though I'm guessing that's pretty universally overlooked.)</p>
<p>I don't feel strongly about that, but I did want to point out that the question is there.</p>
<p>grandparents paying tuition for grandkid is exempt from the annual federal gift tax as long as check is made out directly to the college. It's a well-known method to esape the inheritance-death tax. Of course, I'm ignoring impact on need-based aid, which is the OP's point.</p>
<p>I know a girl from a wonderful family who qualifies for financial aid. Even with the aid, her parents could never afford to pay the balance, and she gets help from her grandparents. These are not rich, moneybags grandaprents, but they are helping in the measure then can to help close the gap. Good heavens, I sure hope no one gets in and starts messing with a family's ability to help each other. The grandparents are helping because the girl really needs the help, and their help is limited. I'm not sure why anyone would want to make it harder on kids like her just because some other kids are lucky enough to have wealthy grandparents. Life isn't fair in a million ways, but I'd rather see a policy that erred on the side of helping the students.</p>
<p>Thank you all. Let me clarify. I am NOT saying it is unethical or illegal for Grandma and Grandpa to help out. Indeed, it is wonderful. I only ask that it be disclosed. In the anecdotal case I was referring to, it has been done by the grandparents, IN EXCESS OF THE FEDERAL GIFT TAXES, for years...and then they applied for financial aid to an Ivy League college and GOT LOADS OF IT, because the Ivy League college is unaware that Grandma and Grandpa are footing the bill...and mom and dad look poor.....in my opinion, it falsely represents to the school that there is a need, when in fact there is not....Grandma and Grandpa (in this case) are loaded. Its an ethical issue and to underscore what Garland said above, worksheet B seems to inquire about "other resources" not included in annual income of the parents and student, and it sure seems like Grandma fits in there.</p>
<p>Its a loophole. No, you cant compel grandparents to pay the tab. But if they do, you need to disclose it.</p>
<p>Or rather, the student who really doesnt need the financial aid, shouldnt apply for it.....they are just giving RICH grandparents a break.</p>
<p>Well, I deserve the same break they do frankly.</p>
<p>I have heard many people --parents, high school counselors, finance people, etc-- say the best thing grandparents can do to help in these situations is to let the kid apply for financial aid, and take the package, including the loans. The grandparents then can give the kid the money as a gift after they graduate to pay back the loans. </p>
<p>With a slight variation, it's exactly the same thing that's bugging you, friedokra, but it leaves off any issue of whether or not it should be reported. So, rather than get in and do anymore regulating of the money of non-custodial parties, I think it's best to just leave it be. The grandparents who are giving the money now, would just give the money later anyway. It's not worth getting bothered about. People with money have it easier than people without it. I wish my kids had grandparents who could help, but they don't... so it's just not my business how other people deal with this stuff. Or at least that's how I see it, otherwise I'd be all up in a fret about it. Not worth it.</p>
<p>SoOreMom: Well said, and I agree. A good policy all around not to worry about what others are doing because it really will make you crazy.</p>
<p>friedokra: I get why this bugs you. But we can just torture ourselves worrying about inequities. The financial aid system is pretty bizarre and some people are shafted by it and others benefitted by it. But thus it is with everything.</p>
<p>Yes, for Need Aid, but no one is going to tell you what that number is.
No, for Merit Aid and again no one is going to tell you what that number is.
Because answer is a function the of you, school, availability of money, congress, ...</p>
<p>I know someone who every year "gifted" money to grandparents on both sides of the family with the "understanding" that this money would be still belong to their children. We. on the other hand, set up a college savings account when our kids were born that we faithfully contributed to. People have told us that we are foolish because this money prevents us from getting financial aid, whereas this other couple's child does get need-based aid, on top of their money that has been hidden by the grandparents. There seem to be so many scams going on, and it is a shame that students who are truly needy are not the only ones getting need-based aid. The thing that bothers me the most is when the cheaters brag about their kids going to highly pretigeous, expensive schools with huge scholarships. Sometimes I think that the word "scholarship" should ONLY be used for merit aid, and that all other aid be referred to as "need-based aid"--it would be a truer reflection of what is actually going on.</p>
<p>It is not the responsibility of grandparents to pay for their grandkids' educations. As the grandparents get older, they will most likely have higher and more frequent medical expenses. Their savings should be used for their own needs.</p>
<p>If the example person is going to a profile school, then they would have been asked about that money- it may be that the impression the family is giving the public is not accurate- just like all the people you will meet who tell you they got a full ride scholarship at an Ivy, doesn't happen, it's full fin aid, not full ride scholarship (implying merit) but that's what they say.</p>
<p>Fried: people do not always tell other the truth, the situation could be vastly different...OR they could be commiting out & out fraud. I seem to recall Profile questions in years apst about help from other family members. In either case it is not a FAFSA loophole, the person is either giving you a false impression or committing fraud.</p>
<p>Actually, I specifically called and asked the financial aid department at my daughter's school whether, if her grandfather contributed to help meet EFC in year #1, it would negatively impact financial aid in year #2. They said it would not. That may just be their policy -- but the reason they gave goes back to arabrab's post #2. And before you get all hot & bothered worrying about the terrible unfairness that there is a grandparent sending money my way.... my daughter's 100% need award is calculated based on my ex-husband's income as well as my own. The ex hasn't given me or my kids a dime in years. So my personal idea was simply to ask my own father to help me make up the part of the costs that my ex won't. </p>
<p>Grandparents on both sides of the family have a lot of money on paper, but live very frugally. That's because they've sold their homes and moved into small apartments at independent living complexes where they pay a hefty chunk for rent. They are retired or in the process of retiring & need to be careful how they allocate money. So just because they have a lot on paper doesn't mean that they are all that wealthy.</p>
<p>As someone else said, this is like a parent's live in partner (I have one). Most grandparents, some non-married partners, other family members -- they have no legal obligation to support the child. If they promise money and then don't give it, the student has no recourse, because there's no legal relationship, etc. As a result, that other money is not normally included in the assets of the family or child. As it was explained to me, "If the person could leave or die tomorrow without obligation to your child, that contribution is treated differently than those of someone with a legal connection to the child."</p>