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Author Topic: Reducing assets prior to FAFSA, NeedAccess, etc...  (Read 2444 times)

zer0vector

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Reducing assets prior to FAFSA, NeedAccess, etc...
« on: January 26, 2008, 06:29:05 PM »
I'm trying to reduce some savings (~40K) prior to filing my FAFSA and other aid applications.  Is there anything wrong with giving chunks of the money away to three trusted people, keeping it under 12K each for tax reasons?  As long as they don't return the money for 3 years it shouldn't have any effect on my need status, right? 

siski

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Re: Reducing assets prior to FAFSA, NeedAccess, etc...
« Reply #1 on: January 26, 2008, 09:50:11 PM »
Problem: it's unethical. You are falsely presenting yourself as poorer than you actually are.

I am Penny Lane

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Re: Reducing assets prior to FAFSA, NeedAccess, etc...
« Reply #2 on: January 27, 2008, 12:58:04 AM »
WHAT? 40K? Seriously.... totally unethical. Suck it up and pay for school.
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Bananas, Melonas, Yeah

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Re: Reducing assets prior to FAFSA, NeedAccess, etc...
« Reply #3 on: January 27, 2008, 08:06:33 PM »
I'm in a similar situation, and am curious about this.  I owe about $7K to my parents for helping me pay something off ahead of schedule.  I've been paying a few hundred a month, but I think it's wise to just unload my bank account toward that debt before filing for finaid. 

I am Penny Lane

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Re: Reducing assets prior to FAFSA, NeedAccess, etc...
« Reply #4 on: January 27, 2008, 08:26:44 PM »
In that situation I say go for it. You'll feel better having it out of the way anyway.
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Shark Week

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Re: Reducing assets prior to FAFSA, NeedAccess, etc...
« Reply #5 on: January 27, 2008, 08:35:13 PM »
I hope they keep your money.
Michigan '11

hbb

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Re: Reducing assets prior to FAFSA, NeedAccess, etc...
« Reply #6 on: February 09, 2008, 01:02:36 AM »
Retirement accounts are generally not considered assets for financial aid purposes.Contribution limits for Roth IRA's are $5000 this year, and contributions (not earnings) can be withdrawn at any time, for any reason. I may be mistaken, but I believe the contribution deadline is the same as your tax filing deadline, meaning you could make a prior year contribution in the amount of $4000 (lower limit in 2007) and a contribution this year in the amount of $5000, removing $9000 from consideration as assets eligible for your law school expenses. Your primary residence is also exempt in most cases - if you own your home, you could easily reduce your current assets as considered on the FAFSA to $0.

$40,000 of savings will most likely make you ineligible for Subsidized Stafford Loans as well as Perkins Loans. Several EFC calculators can be found on the web, should you wish to see the effect these proposed changes may have on your eligibility.

edit: I've not yet looked over the NeedAccesss forms in any detail; my post refers mainly to the FAFSA.
   

techpers0n

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Re: Reducing assets prior to FAFSA, NeedAccess, etc...
« Reply #7 on: February 21, 2008, 05:21:44 PM »
I'm trying to reduce some savings (~40K) prior to filing my FAFSA and other aid applications.  Is there anything wrong with giving chunks of the money away to three trusted people, keeping it under 12K each for tax reasons?  As long as they don't return the money for 3 years it shouldn't have any effect on my need status, right? 

Call a tax professional/lawyer. They can tell you if this is legal or not. If it is legal then do it. If not then don't. Why would what we think matter?