No. of Recommendations: 1
Gary,

First off, most of the replies so far don't deal with your question directly and are more about what to do with the new money totally unrelated to college so not much help.

It just so happens that I just consulted an advisor on how best to set up my finances to maximize the amount of financial aid I can get for my 4 kids the first of which starts college in 2 years.

It is a complex question and one you can't answer without knowing the full situation of your friend. What does seem obvious is that with that much cash on hand she can kiss any financial aid goodbye.

There are two types of aid, scholarships and non-scholarship (grants, loans, etc). Scholarships are real tough to get and make up a tiny percentage of aid available. Advisors have recommended that we don't even bother with the majority of scholarships. The rest of the aid available is based on the assets of the student and parent(s).

The aid formula looks at the total cost of education and subtracts "estimated family contribution" or EFC. The difference is what they will make up in some sort of aid package. To maximize the aid received you need to minimize EFC. EFC is a weighted formula based on all assets (cash, brokerage accounts, cars, house, etc.) Colleges each apply the formula differently. For example, some count the house against you others don't. There's also a whole bureacratic nightmare just to apply for aid. Aid is also effected by scores on the ACT. Submitting forms early also helps. Timing on these is critical.

The goal in aid planning is to minimize your asset base so you minimize the EFC. With 750K of cash, you would have to shelter it in some way that only a financial advisor specializing in this type of scenario could help with.

I've found that tax advisors know tax, estate planners know about death and retirement, accountants know a little about everything but none understand how to put a wholistic picture togeter that balance them all.

Your friend needs professional help in all these areas so start looking for a good advisor. There are some solid planners around that specialize and I'ld definately get one your associates recommend not someone you look in the yellow pages.

Good luck.

Cudo's to her father for providing for her in that and the grandkids in that way.

TylersDad
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