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Our son will be a Senior in high school this year so 2001 is the year that counts with FAFSA for his Freshman year in college. I currently have a UGMA account containing his college funds which will become his when he turns 18 in November. 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? The gifts would not exceed $10,000 per person so as not to bring gift tax into play.

Also, my understanding is that, after the asset protection allowance, 12% of the parents liquid assets go into EFC vs. 35% for the student. Are these the correct percentages? Somewhere I think I saw 5% of the parents assets was used but I assumed it was a mistake. Now, I'm getting close enough that the real numbers matter.
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