FAFSA Questions

[FloridaLaw]

On the FAFSA, it ask for your assets (amount on your portfolio, bank balance, etc.), but it doesn't ask for your debts (credit card debts, outstanding loan payment on your car, etc.

With that being said, wouldn't it be wise right before you fill out the FAFSA to liquidate all your assets into cash and paid off some debts in order to minimize your assets and thus increase aids?

Another questions I have is that for those who already in the workforce and making money, when you fill out the FAFSA, they asked for your prior year tax return and income. Is there anyway that they will consider that you will not have that income at all when school start the following year?   

Thank you in advanced. 

[IvyWoman]

Unless you have an ungodly low amount on an interest rate for your credit cards, it would be smart to do it anyway (unless you are getting a great return on your savings or investments). Besides, you really don't want to try to make credit card payments while you are in law school.

[Duner]

The FAFSA's a double edged sword...if you liquidate your assets, you have no assets. subsequently, there goes emergency money, and there goes downpayment on a house in the future. but on the other hand they're going to expect 30% of your holdings to be put towards tuition. the best way i've found around the issue is to put your money into an ira....they can't hold a retirement or pension account against you. personally i liquidated all my accounts and bought a house a couple miles from campus...they can't hold a home against you either and it gives you great tax incentives. i agree with the above post that it doesnt make much sense to hold any high interest debt if you have the capital to pay it down.

as for your previous year's income, you're screwed. i was killed for this upcoming year because it looks like my wife and i have over 100k in income...when really its only going to be in the low 30s since she's the only one working now. my university said after classes i can go to financial aid and they'll redo our income for financial aid purposes. but realistically, it's only going to help if i want to up my loan eligibility....i'm effectively sunk trying for any need based aid or grants for my first two years of school.