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Financial Planning / Paying For College

URL:  https://boards.fool.com/my-only-problem-with-this-is-that-once-you-are-in-15441005.aspx

Subject:  Re: Parent vs Child Assets Date:  7/25/2001  12:56 PM
Author:  NellieD Number:  4087 of 8558

My only problem with this is that once you are in the university you have obviously lost most of your bargaining power with the financial aid office.

What "bargaining power" do you believe you have with the financial aid office? The FAFSA determines your eligibilty based on a Federal methodology. Financial aid officers are bound to uphold the financial aid laws. The way an EFC is calculated is not determined by the financial aid office at all.

If your child "gifts" money to their grandparents, if the grandparents give the money back to your child to pay for their education, the money will have to be reported as "other income" to your child on the FAFSA. I believe $10,000 in "other income" will be treated much more harshly on the FAFSA than the same $10K in assets. Additionally, if your child "gifts" $10K to you, you will have to report the $10k as part of your assets on the FAFSA.

Additionally, your idea is totally unethical. If this is your child's money, it should be reported as such. Your child will be eligible for federal loans regardless of the EFC. If you choose to spend the government's loan money while you already have sufficient money set aside for education, then you don't truly have "unmet need" and you should be paying interest on government loans. Financial aid is intended for people who can not afford education -- not for people who have money and are trying to hide it.

The amount of financial aid available is not worth rearranging your finances in order to become eligible. You'd be much better off by maximizing your earnings so that you can truly afford to pay for college.

NellieD
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