<p>You will be expected to contribute about 35% of your assets to your college costs. You may or may not be better off buying the car -- if you need the car, you will be better off buying it now. But if you are going to have to pay your own maintenance costs and insurance, you may find that the cost of vehicle ownership wipes out any savings you think you will get by avoiding reporting the cash.</p>
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<blockquote> <p>I took it out because I want to buy a car, but I'm currently holding onto the funds because the car I want isn't on sale?>></p> </blockquote>
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<p>Assets are assets. You should be reporting them whether they are between your mattress or in your bank account. What you did is fraud. </p>
<p>Why can't folks understand that college finaid funds are for students who do NOT have the resources for college expenses....not for students (and families) who find every loophole under the sun to get need based aid? I'm not thrilled about having to pay for the college expenses of my kids, but the bottom line is that I CAN do it and am grateful that is the case. I'm not trying to hide my assets so that the kids get need based aid that truthfully should go to someone else.</p>
<p>Amen, Thumper.</p>
<p>We can take a lesson here from the Supreme Court considering income tax. It is no fault of any citizen to minimize the amount of taxes they pay through the legally established rules of the tax system.</p>
<p>There is nothing wrong with minimizing what you want to pay for college. But for crying out loud, there are so many legal ways to do it; why on earth do you want to try to break the law?</p>
<p>There is nothing noble about paying more money than you have to. Likewise, there is nothing moral about ignoring the rules as they are written.</p>
<p>kinglin:</p>
<p>If you sold stocks and stashed the cash in your home & did not include it in your assets, that is cheating. If you sold stocks and bought a car before filing the FAFSA, that is not cheating....why? Because those are the FAFSA rules, like the tax code, they don't always make total sense, but they are the rules.</p>
<p>As Scotta says, it is not unethical to read the rules and attempt to show the best profile to the finaid counselors, afterall, who would have thought that cars, boats, planes, jewelry, art, and collectibles don't count as assets?? But, in your case, the FAFSA is supposed to reflect your situation on the day you file and, as I understand it, you are not supposed to change the asset declarations when you adjust the income info, so you have now cheated and announced it on an online forum.</p>
<p>You have not mentioned an amount, but if it is a few hundred dollars, it may be viewed differently than thousands of dollars. You may want to act on the car purchase immediately and through yourself on the mercy of the finaid people, if it comes up.</p>
<p>It is one thing to misunderstand....I was buying the car, just had to pick it up next week (you could have waited to file the FAFSA) vs. I can say I was buying a car, but in fact you never did so!</p>
<p>I think finaid counselors are somewhat sympathetic or at least understanding of the mistakes people make, but they do make the corrections, so chances are, if this comes to light, the money will be added back onto your FAFSA..........if you are selected for verification and your stock sales and earnings show, then they may very well ask you where they went?!</p>
<p>Thank you, Thumper1 for bringing a reality check to this thread. I wish i had alot of cash so I could worry about how to hide it to get financial aid for my child. Financial aid is for people who really don't have any assets, though they work hard all their lives, and have children who also must work hard to get a college education. At least I'll have a clear conscience when applying for financial aid for my child, because I have nothing to hide.</p>
<p>kinglin:</p>
<p>one other point -- your broker (whoever you use to trade with), will send you a 1099 brokerage statement January 2007 (assuming your stock sales clears this week). Thus, you will have reportable income next year in the amount of your trades less costs basis. So, you actually have a double hit: assets reportable today, and income reportable next year.</p>
<p>The item on the fafsa reads "cash, savings and checking". So...even if you have money buried in your backyard, it is reportable on the FAFSA. The only legal way to divest yourself of money is to spend it on things the student needs or wants (yes this can include a car or a trip to Hawaii). But then...if you NEED the money for college expenses you won't have it. And as noted...if you cash out things like stocks and bonds, you will have reportable income...a 1099 that will clearly state the value of what you withdrew.</p>
<p>I was about to write about the double whammy of income AND assets, but BB beat me to it. </p>
<p>In addition, it does seem like Kinglin must have sold his stock last year -since he already has the cash hidden in his home. Unless he also hid the stock certificates, we can safely assume he did use a broker for his trades. Hence, he will receive the tax report in a few days. </p>
<p>From here on, he will face a number of hurdles:</p>
<ol>
<li>File a correct FAFSA and CSS that shows the income for 2005 and accounts for the use of cash</li>
<li>File a correct tax return for 2005 by April 15, 2006</li>
</ol>
<p>From my vantage point, the attempt to selling the stocks and trying to hide the proceeds on the FAFSA/CSS has already backfired. </p>
<p>What do they say about poetic justice? Obviously, the proverbial grains of salt can also be found in the suburbs of St Louis. :)</p>
<p>I think by now kinglin has realized that they have hoisted themselves on their own petard. I really don't know how much more we can help them. It's time for a mea culpa and an immediate correction by kinglin. That appears to be the only way out. Let's remember that this is a student, not a sophisticated parent . I don't think we've reached the "piling on " stage and I would hope we don't.</p>
<p>The FAFSA does allow for amending a filed form. Since anyone submitting the FAFSA now would be doing it as a "will file" using estimates, that person would have to make changes anyway once the tax forms are done. So...all assets and income can and probably will need to be adjusted when the 2005 taxes are complete. The colleges receiving these forms know they are estimates. So...if someone made an adjustment that isn't quite right, they will simply change the amount(s) when the time comes. The good thing is that folks are asking these types of questions now when completing FAFSA with estimates. I personally think some of these issues would be different with a completed tax return and completed filing status. Although, from what I understand, the FAFSA can always be amended and will be resubmitted to the colleges.</p>
<p>Now correct me on this if I'm wrong, but from what I understand is that they can't touch your retirement funds. Thus if I put my money in a roth IRA, they wouldn't be able to touch it.</p>
<p>sometimes I have amended the FAFSA three or four times-
One year I did it with rough numbers-before I did my taxes- then I did it again, when I got my statements and forms, then I had to do it again, when I received forms that were late!</p>
<p>... on a related topic ... is a younger child's private secondary school tuition/B&R considered in calculating the older child's college EFC. (It may mean the difference between no need-based aid and some need-based aid.) I've been told the answer is "no" in federal EFC methodology, and "maybe" in institutional EFC methodolgy.
(1) How can one find out the answer to this question for financial aid at a particular college?
(2) If considered, does private secondary school tuition decrease the college EFC to the same extent that a second college tuition would?
(3) What is the formula - is there a "standard deduction" or do you use the actual private secondary school tuition amount? I cannot seem to find a web-based EFC calculator that I can play around with that takes private secondary school tuition into account.</p>
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<blockquote> <p>Now correct me on this if I'm wrong, but from what I understand is that they can't touch your retirement funds. Thus if I put my money in a roth IRA, they wouldn't be able to touch it.>></p> </blockquote>
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<p>Money that is IN a retirement account is not counted as an asset when computing EFC. HOWEVER, money earned and contributed to that account for the tax year (in this case 2005) IS considered as part of your income. SO...what you put into that retirement account cannot be used NEXT year as an asset. BUT what you earned (via your withdrawals) in 2005 IS considered as income.</p>
<p>
[quote]
Is private secondary school tuition counted in calculating college EFC
... on a related topic ... is a younger child's private secondary school tuition/B&R considered in calculating the older child's college EFC. (It may mean the difference between no need-based aid and some need-based aid.) I've been told the answer is "no" in federal EFC methodology, and "maybe" in institutional EFC methodolgy.
(1) How can one find out the answer to this question for financial aid at a particular college?
(2) If considered, does private secondary school tuition decrease the college EFC to the same extent that a second college tuition would?
(3) What is the formula - is there a "standard deduction" or do you use the actual private secondary school tuition amount? I cannot seem to find a web-based EFC calculator that I can play around with that takes private secondary school tuition into account.
[/quote]
</p>
<p>Justaparent, the "I've been told the answer is "no" in federal EFC methodology, and "maybe" in institutional EFC methodolgy." seems to be a correct answer, although I believe that it is commonly used in the IM. </p>
<p>I would encourage you to read -and post on- the weblog of the financial aid guru at MIT. Just google "moneyman" or "barkowitz" and it should come up. He does have a series of post that describe most scenarios. The answer will show how the CA works. For other schools, the best bet is to email them directly.</p>
<p>As far as the second tuition working like a second college tuition, the answer should be negative. A second college tuition does divide your EFC by a bit less than two (more or less same EFC for two kids, with a bit less of adjustments for children at home.) Private school tuition probably reduces the amount of the AAI.</p>
<p>PS Link is <a href="http://daniel.mitblogs.com%5B/url%5D">http://daniel.mitblogs.com</a></p>
<p>thumper is right about the Roth IRA, but the trick of the rules is to have the assets in place BEFORE completing the FAFSA. You could put that money into a Roth (if you have that amount of income to offset) and it would not be considered an asset.</p>
<p>On redoing the FAFSA, for what it is worth, everything I have read says you declare your assets on the day you first file and you do not change those numbers when you make other corrections. Several years ago I even called the FAFSA people to be certain how I should be doing it and that was their answer.</p>
<p>I think you are supposed to declare your assets in the first filing and not change it.....though I am not sure what happens if you win the lottery over the summer?! You can update estimated tax return numbers to real numbers, but your assets should have been real numbers from day 1.</p>
<p>It makes sense, otherwise you would be changing things every month, more money on payday, less at the end of the month, etc, and when would it end?</p>
<p>Keep in mind, you have to have earned income to contribute to a Roth or any IRA. Assuming this is a student, there's no guarantee he can do this.</p>
<p>Roth contributions really don't have any impact one way or the other. Since Roth contributions are not deductible, there is nothing to add back into the equation.</p>
<p>As well there are the limitations on all IRA contributions. No more than what is earned income up to... is it $4,000 dollars this year?</p>
<p>
[quote]
On redoing the FAFSA, for what it is worth, everything I have read says you declare your assets on the day you first file and you do not change those numbers when you make other corrections.
[/quote]
That makes sense for an accurate declaration, since the assets are going to fluctuate somewhat in any case. But I think if you make a mistake by inadvertantly failing to report an asset or providing incorrect numbers -- and then you become aware of your mistake -- you would be expected to correct it. </p>
<p>Kinglin's situation represents a deliberate omission, but an accidental omission or miscalculation is possible, too. It's also possible to simply make a mistake in addition and only realize it after the final FAFSA is printed out. Of course, I'm sure if Kinglin were to immediately file a corrected FAFSA with the correct amounts, no one is going to question whether his first omisssion was deliberate or accidental.</p>
<p>Calmom, makes sense to me that one could correct an error, so, Kinglin could refile and add those "hidden" assets to the number, but Could he buy the car and be okay leaving the numbers alone?</p>
<p>I don't know? Maybe if the car transfer were dated within a day or so of filing, that could happen in real life....for instance, when determining your bank account value, it is the value less outstanding checks, not with everything that has cleared, so you might show your online stmt plus a copy of your check register to account for the difference...maybe a day or two difference in recording the car purchase would be okay??</p>