<p>My father is self-employed and makes about ~30K a year, and my mom is a part-time associate at a department store, probably making around 8K a year.</p>
<p>I have three siblings, one of whom is in college, and I'm about to start as a new freshman at UW-Madison.</p>
<p>We live in Minnesota, so I do get in-state tuition rates, though the financial aid I'm being given doesn't cover all costs. As a result, I've had to work during my senior year in high school and throughout this summer at a retail store, making about 6-7K.</p>
<p>Clearly my financial aid will be negatively affected for the 2008-09 year, but what do I do with my excess cash? I only need to spend about 3K of my own money to cover all college costs.</p>
<p>Do I put it in my checking account? I mean, when I turn in the FAFSA, the amount of assets my families has in the bank will influence our aid offer. However, the income we made during the fiscal year will show up on our 1040 forms anyway.</p>
<p>So, what to do? Simply stow away the cash, so they assume I've spent it all? Or leave it in the checking account, because they'll already see what I made?</p>
<p>This is the same question posed in the thread "How should I keep my money hidden from financial aid inquiries?" started on 8-16-07. The answer is either spend it or honestly report it if you still have it on FAFSA day.</p>
<p>The income you earn will show up in your 1040 as you've already mentioned. I would put it into a mutual fund and generate some capital gains, dividends or interest from it.</p>
<p>If you play around with the EFC calculator on finaid.org, you'll find that they will discover that income counts more heavily in the calculation than assets.</p>
<p>For every dollar in your name when you fill out the FAFSA, you'll lose 20 cents in financial aid. Obviously, NJ113 hasn't the faintest idea how the formulas work. I've been doing income planning and asset repositioning for 28 years. Here are my recommendations:
1. Lend everything over $100 to you parents, their asset protection allowance is most likely around $45,000.<br>
2. Write an appeal letter about your income, and the school will probably waive the assessment on that as well. Did you get a maximum Pell & SEOG, and are you in or out-of-state?</p>
<p>Just curious, Reecy, your opinion of this quote:
[quote]
Some people may advise shifting assets to grandparents, non-custodial
parents (if parents are divorced) or other relatives. Even if such
asset-shifting games are financially sound, they are at best unethical,
if not fraudulent. You haven't lost control over the assets -- your
relatives cannot spend the money as they wish. When you fail to report
these assets on the FAFSA and PROFILE, you are providing false
information. Such actions are as bad morally as stealing from your
neighbors or cheating on your taxes.
<p>while it is true that one can find ways to hide money, do you really want to take a chance when the penalities for fraudulently completing the FAFSA application are $20k in fines and possible jail time? Also, it could result in being thrown out of school for violating honor codes. If you are dishonest on your federal application, how can they trust that you weren't dishonest in other areas? And how would this type of conviction look to future employers? </p>
<p>Nikkil is right..and it is not fair to other students who don't have resources available. It may seem like a small amount, but if you can contribute it to the cost of attendance, why shouldn't you?</p>
<p>Putting money into a Roth IRA may not be illegal, but doing it to hide finances is unscruptulous. Why hide money? Honestly, if you don't need the cash, and can place it into a non-liquid account, why not invest it into a better source, like your or your child's education???</p>
<p>I understand where you're coming from, Sulaymanshah; it seems unfair that they take a certain percentage from your income and then additionally take a percentage from your assets, which in this case happens to be from your income. Double-dipping! </p>
<p>Still, the percentage is relatively small, and even if you spend the 3k and have 30-40% of what's left taken out for education, that's why you made it in the first place, isn't it?</p>
<p>If that doesn't sit well with you, consider investing in certain other assets -- for example, buying a computer (or accessories such as a printer, or a nicer computer if one's already budgeted), or putting it in a non-liquid fund for retirement or such (which is a really smart use of extra cash you've got no bills to pay with). It will mean that you don't have the money on hand to count in for next year's contribution (because they will expect you to have a portion of NEXT summer's $6-7k, since you made it this year, AND part of the $3-4k you have in liquid assets), but it will also be working for you.</p>
<p>Some other knowledgable parent needs to confirm this, but I believe if you were to place the money into a 529 education account, it would only be entered on the fafsa as a parent asset. Please confirm this, someone!</p>
<p>OP- I also pm'd you a few tidbits form my son's experience.</p>