How do you shelter college savings?

[Riprorin]

Is there a way of sheltering college savings without it being used against you in terms of getting financial aid?

 

[DaveSimmons]

Keep it as a stack of $50s. Not honest, but effective.

 

[Riprorin]

What if you transfer college savings from your account to the kids' accounts or is it treated the same anyway?

 

[notfred]

If you have college savings, you don't need financial aid.

 

[kranky]

There are quite a few web sites out there that discuss the subject. I remember seeing one that said it's often best to have the assets in the parents' name. Parents might be expected to contribute 5% or so of their assets annually, but the student might be expected to contribute 30% or so.

 

[Mill]

Originally posted by: notfred
If you have college savings, you don't need financial aid.

 

[Riprorin]

What about transferring college savings to a grandparent?

Is there a gift tax associated with transferring large amounts?

 

[Riprorin]

Originally posted by: Millennium

Originally posted by: notfred
If you have college savings, you don't need financial aid.

I work my a$$ off and save my money, living below my means. So, my kids shouldn't get any financial aid while parents who spend their money frivolously and don't save should?

Anyway, that's off-topic and I'd prefer not to go there. Just looking for an answer to my question.

 

[FeathersMcGraw]

Originally posted by: Riprorin
What about transferring college savings to a grandparent?

Is there a gift tax associated with transferring large amounts?

Last time I checked, the tax free limit was $10K per recipient per tax year. Disclaimer: I haven't checked that recently.

 

[notfred]

Originally posted by: Riprorin
I work my a$$ off and save my money, living below my means. So, my kids shouldn't get any financial aid while parents who spend their money frivolously and don't save should?

Financial aid decisions are based on salary, not savings accounts. If you make $50k/year, you're not going to quailfy for much financial aid regardless of whether you saved $10k/year for your kids education, or spent $10k/year on sports cars and big screen TVs.

Now, if you were making $10k/year, you could probably get some financial aid, even if you had $50k in savings.

Edit: I'm wrong. At the very least, the FAFSA asks you about savings. I don't know how much it counts in thier decision, though.

 

[loup garou]

Originally posted by: notfred

Originally posted by: Riprorin
I work my a$$ off and save my money, living below my means. So, my kids shouldn't get any financial aid while parents who spend their money frivolously and don't save should?

Financial aid decisions are based on salary, not savings accounts. If you make $50k/year, you're not going to quailfy for much financial aid regardless of whether you saved $10k/year for your kids education, or spent $10k/year on sports cars and big screen TVs.

Now, if you were making $10k/year, you could probably get some financial aid, even if you had $50k in savings.

You've obviously never filled out a FAFSA before.

 

[amnesiac]

You might want to check with your finanicial consultant or accountant about the feasibility of using an educational IRA or investing in zero-coupon bonds as a savings instrument. Educational IRA = tax advantages, 0-coupon bond = growth of capital

 

[amnesiac]

Originally posted by: FeathersMcGraw

Originally posted by: Riprorin
What about transferring college savings to a grandparent?

Is there a gift tax associated with transferring large amounts?

Last time I checked, the tax free limit was $10K per recipient per tax year. Disclaimer: I haven't checked that recently.

Limit for tax-free gifting is $11,000 tax free PER parent PER child. (i.e. $22,000 per child assuming 2 parents).


Also check with a college advisor. They will be able to tell you if certain financial aid packages look at your savings / assets or if they look at your current income ability.

 

[Riprorin]

I assumed that colleges looked at parental savings, but I may be wrong. I'll check it out.

My kids are 7 and 9 and assuming they go to a state school, I have enough saved to get them through.

 

[PsychoAndy]

Originally posted by: Riprorin
I assumed that colleges looked at parental savings, but I may be wrong. I'll check it out.

My kids are 7 and 9 and assuming they go to a state school, I have enough saved to get them through.

Take a look at a FAFSA. I'm pretty sure they ask for some assets, not sure though. And if you think that's bad, hope your school doesnt use the CSS Profile. They ask you the value of your house and go into more depth than the FAFSA. You could always dump the money and throw it in a safe, but I dunno how well that would work.

Oh, and state school? Pfft. That's nothing! Tuition at any florida state school, like FSU or UF (the only ones worth going to, imo) is only 3 grand a year. You pay more for room and board than you do for the actual school. I'm going private, and if it wasn't for financial aid, i'd be in the hole 40 grand a year.

 

[TheBoyBlunder]

Shoving it under your matress?

 

[nunnyabiznickz]

The $11,000 per year tax free gift limit is OVER AND ABOVE a $1,000,000 (which changes to $1.5MM next year), lifetime tax free gift limit. In other words, most people will never have to worry about taxable gifts.

529 plans seem to make the most college savings sense these days.

Some of the transferring of wealth to grandparents, etc. in order to hide money, is generally illeagal. Most anything you can think of whose sole purpose is to avoid paying taxes in illegal under IRS rules.

 

[Riprorin]

The intent isn't to avoid paying taxes, although the grandparents would be in a lower tax bracket. I just don't want to be penalized for being diligent and saving for my kids education.

I'm surprised that no one here knows how financial aid is determined.

 

[nunnyabiznickz]

P.S. Private colleges are allowed to use any financial aid criteria they want to determine their gift to you. When I applied for Georgetown I was 27 years old and had been completely independant since I was 21. On top of that I had a highly contentious relationship with both of my parents, who both refused to provide me with dime one for college. Despite this, Georgetown demended and required both of my parent's tax records for the past 2 years at the time. Needless to say, they offered me a meager financial plan and a job in the school bookstore. They determined that my parents should contribute $22,000/year towards my education. They offered no merit based scholarships to me despite my 4.0 GPA and valadictorian status in community college. But hey, that had a great basketball team!

 

[wyvrn]

There ARE questions about value of savings and checking accounts. Anyone who has filled out a FAFSA form knows this.


I had no money for college and opted to get a job to help pay. As soon as I did that, I was not eligible for any grants or free money, only student loans. The kids that had their college paid for by their parents got the pell grants and such. That really pissed me off. My lone parent could not contribute because she was disabled, and this stupid policy put me at a huge disadvantage in college. See kids with parents who pay and don't have to get jobs have more time to study and get better grades, which translates into better jobs at graduation. If you also give them all the free money, then the system is really against people who are already borderline being able to afford college at all. The financial aid system is royally screwed. I hope you find a way to shelter your money from FAFSA.

Originally posted by: notfred

Originally posted by: Riprorin
I work my a$$ off and save my money, living below my means. So, my kids shouldn't get any financial aid while parents who spend their money frivolously and don't save should?

Financial aid decisions are based on salary, not savings accounts. If you make $50k/year, you're not going to quailfy for much financial aid regardless of whether you saved $10k/year for your kids education, or spent $10k/year on sports cars and big screen TVs.

Now, if you were making $10k/year, you could probably get some financial aid, even if you had $50k in savings.

 

[lchyi]

Just say you're not going to pay for them. And then? Pay for them while the government has it's back turned muahahahaha.

 

[BruinEd03]

Originally posted by: notfred

Originally posted by: Riprorin
I work my a$$ off and save my money, living below my means. So, my kids shouldn't get any financial aid while parents who spend their money frivolously and don't save should?

Financial aid decisions are based on salary, not savings accounts. If you make $50k/year, you're not going to quailfy for much financial aid regardless of whether you saved $10k/year for your kids education, or spent $10k/year on sports cars and big screen TVs.

Now, if you were making $10k/year, you could probably get some financial aid, even if you had $50k in savings.

W-R-O-N-G. Whatever you have saved up they expect you to use regardless of what your income state is if you're a student. If you're a parent they take into account everything, house, stocks, etc.

-Ed

 

[Mill]

So the question is, is it ethical to force the state to pay for your child's college even though you CAN afford it? To me it isn't ethical. If you don't qualify for financial aid, you don't qualify. I didn't so tough for me.

 

[Riprorin]

Is it fair to penalize parents and students who are thrifty?

If you want fairness, scrap the whole financial aid process and just lower the sticker price.

 

[Imported]

What's stupid about financial aid is you can't claim independant status until you're 25.. :|