<p>My S is a sophomore and has Perkins & Stafford loans. As parents we paid remainder after scholarships/merit/grant money through a 529 and now are using some Parent Plus loans.</p>
<p>A relative wants to give him about $2000 to help with expenses. He has a job and has a couple of thousand dollars in savings for his daily expenses and saving for study abroad next year. Would it be better to just put that towards his account at school to pay for next quarter's tuition, pay that on his current Stafford loans or something else? </p>
<p>I don't want him just to hold on to it as it would probably make his bank account balances affect his FAFSA.</p>
<p>IIRC if the relative gives the money to the student, it counts as student income (" Include cash received, or any money paid on your behalf, not reported elsewhere on this form. "), and if he has it in the bank when the FAFSA is filled out, he gets a double-whammy because now it is a student asset as well.</p>
<p>I think the income exclusion for a dependent is around $3K, if the gift puts him over that it will affect his FA.</p>
<p>Better strategy might be to give it to the parents instead, or put it in the bank/wait until the spring of his junior year.</p>
<p>I am thinking a similar thing. My daughter is still a h.s. senior at this point, but lets say she gets “money from grandma” to use for college. Lets say its $5,000…and FAFSA is already done, she has a tuition deposit made already and we take this and pay her tuition with it.</p>
<p>Definitely have the generous relative give that money to the parents. What the parents do with it (on the student’s behalf, of course) after that will be mostly a matter of his/her/your own priorities.</p>
It would be reported on the next year’s FAFSA. So it will affect the next year’s FA.</p>
<p>That is why if they wait until after filling out the FAFSA during the spring of her junior year there is no penalty, because that is the last FAFSA that will apply to her.</p>
<p>It’s not reported if it’s a gift to the parents. That is, unless it’s a huge gift that changes their asset levels significantly or something. But a $2000 gift to the parents will not be reported and will not have an effect on the student’s FA.</p>
<p>ok, so what section of the FAFSA asks about “gifts” to the parents, or it doesn’t. Is that what you’re saying. Or, its the amount and because its low, it won’t make a difference.</p>
<p>There is a question on the FAFSA that asks students about any bills paid on their behalf by someone other than their parent(s). The column for the student answer is open and requires reporting. The column on the parent side is grey-ed out; not-reportable. (Or at least that was the layout on last year’s hard copy FAFSA. It may be different this year and just list that question under the student’s information, and omit it from the parents’.)</p>
<p>So if the relative put $500 in his bank account, then $1000 another time, then $500 another time, it has to be reported? I mean when he graduated high school, he got lots of gift money for graduation…at birthdays or Christmas he gets money as a gift…all that has to be reported??</p>
<p>Well, not exactly. The question is about “bills paid on your behalf” – I don’t see how a Christmas gift or a graduation gift falls under that catagory. The FAFSA instructions say to use “common sense” when reporting this; i.e., you don’t report someone buying you a hamburger, but you do report someone paying your rent. (<– This is the comparison they use, more or less.) Yeah, hamburgers vs. rent is a common sense thing, but also not too helpful as an example since it leaves out the vast grey area of things in between.</p>
<p>But a unless the Christmas gift or graduation gift is specifically a gift, for example, of “paying six months rent for you next year, honey” then I don’t see how it falls under that reporting requirement. Would be interested to hear others weigh in on this.</p>
<p>The money was for whatever he wanted-if he needed to buy a new laptop, clothing, if he wanted to go on a weekend trip, to buy textbooks-whatever expenses he has while living at college. S just wants to use some for tuition now-whether repaying some of a Stafford loan or putting it on his college account. That is why we never said it needed to come to us or to send it directly to the school.</p>
<p>the question is, if a student is given a “gift”, yes, lets say for graduation $1000 lets say. Lets say I tell my daughter, gee, you should really save that to pay for your books…and she does. That should be reported. But if Grandma says, here honey, here’s $5,000. Be Smart with it but have a little fun, realistically, not all of it is going to end up being used for school. How to deal with that as far as reporting.
thanks.</p>
<p>Well, if grandma gives her $5000 and she’s not spending most of it on school, and has it saved in an account, then it will get reported as an asset.</p>
<p>My daughter got $2000 a couple years ago. $1000 was a prize for winning a speech contest. This got reported as untaxed income on her tax return, so was included in her AGI for the purposes of FAFSA reporting. The other $1000 was a graduation gift from a relative. It was sitting in her bank account with the first $1000 while she earned enough at her part-time job to buy a professional level musical instrument that she was saving up for.</p>
<p>She bought the instrument (draining her savings) a couple months before we had to file a FAFSA for the first time. Because of that she had no savings (assets) left to report. There was no need to report the $1000 gift, and the $1000 prize was included with her AGI.</p>
<p>So, Looony2nz, I think how your daughter spends her gift money is up to her and doesn’t have any reporting requirement for FAFSA. Grandma did not “pay her bills” in that sense. However, any of it she has on hand (in the bank) at the time of filing the FAFSA would have to be reported as an asset.</p>
<p>Cash it and use it for daily miscellaneous expenses at school (food outside of your paid food program, pizza, seeing movies). You spend that money anyway, and it’s NOT included in your COA, so this could surely go to those expenses and not be any different than $50 in your birthday card, or $30/week allowance. Who reports those amounts as “cash on hand”? I mean, is there a dollar amount “cut off”? I have 47 cents in my wallet and I don’t include that when I’m asked what’s in my checking account as cash. I don’t fish through my pockets. No…$2000 is not “pocket change”, but … is $10 that dear old gradma presses in your hand when you leave after a visit? What about the things I mentioned above? If you save money for college, and make an account for that, and your $30 week allowance becomes $500…THAT must be “reported”. But, if you just got another $30 that week and spent it on the movies? Ya know? Complicated/confusing.</p>
<p>I hate how they have to make it so confusing. We have the same situation and aren’t sure how to report it. My son received $5000 from a grandparent after graduation, plus several hundred from other relatives - to be used for whatever he might need, whether it be tuition, food, books, any outside expenses, or in the case that something happened and he couldn’t go to school but needed it for something else. It was up to him. Of course he was going to use some for tuition, but he also used a good amount for a new laptop (a bit pricey but he needed it), expenses to prepare, etc… The tuition money he/we have taken out as needed and transferred to our own account, as we pay the tuition from our account. So is all of this graduation money reportable? If so, he won’t get any aid at all.</p>
<p>I have been putting off the FAFSA because I don’t even want to wade through it (priority deadline is somewhat generous, fortunately). WHY must it be so complicated??? Ugh!</p>
<p>No, I don’t think it’s expected your son would report the gift. The portion of it you have banked will be reportable as a parent asset (although this should have little to no effect on his aid).</p>
<p>Okay, I’ve read the previous comments, but I’m sitting here staring at this FAFSA and not sure what to do. Do we or do we not report the cash graduation gifts given to son by grandparents and others? </p>
<p>Gifts to be used for whatever he wished, intent was for school and “fun stuff”, computer, etc… Not much left of it now.</p>
<p>If anyone has finished the FAFSA with this situation, what did you end up doing?</p>
<p>I can’t figure out how he can avoid reporting it as untaxed income, along with all those other smaller cash graduation gifts. Are we missing something? </p>
<p>Everything I’ve read states cash gifts reported as untaxed income (regardless of if it was transferred to parent account, etc., as son’s was, but it was already in an account which also has a parent name on it, too), but comments here make sense, too. What is left of it is in an account with my son’s and spouse’s names on it. With the next tuition payment due in a few days, most if it will be gone as a portion is transferred to our account (only parents’ name on that account) to then make the online payment.</p>
<p>(This year we’ll know better and make sure any granny gift check is made out to us, although technically these first cash graduation gifts did go into the account which also has my spouse’s name on it, too.). Too complicated! And we don’t want to lie on the form…</p>