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Financial Planning / Paying For College


Subject:  Re: Parent vs Child Assets Date:  8/9/2001  12:17 PM
Author:  elambeth Number:  4174 of 8558

Reading back through this entire thread, I realize that we have become somewhat sidetracked and no one has really given an honest and direct answer to Gary11112's original question, which was this: Since FAFSA uses a much higher percentage of the student's assets when computing EFC, is there anything illegal about him gifting money to his parents and/or grandparents in December to reduce his year-end assets?

And the answer, Gary, is that no, there is absolutely nothing illegal about this whatsoever. It will significantly increase both your chance of receiving aid, and the quantity of aid granted if any is forthcoming. Of course, if you do that, you may have to put up with the sneering derision of NellieD and her moral majority cohorts, who don't think you deserve any help. (But I have found that receiving large sums of money tends to ameliorate the hurt feelings caused by the words of others, don't you agree?)

As an aside, transferring to the grandparents is probably a better idea for aid purposes, since their assets are not reportable at all, while a portion of yours still are, albeit at a rate preferable to the assets of your child. On the other hand, financial aid is not the sole consideration. How much do you trust the grandparents to pay it back when asked? Also, if they have a large estate and expire while holding the cash, it may be taxable to you as inheritance... or, heavens, they might even leave it to someone else! Sorry, there's no nice way to say this, but the decision of transferring it to the grandparents hinges on A) How much you trust them and B) Whether or not you think they'll expire while your child is in college.

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