Learn How College Savings May Affect Your Eligibility for Financial Aid
If you are a college student, you will probably need all the help with your tuition fees. Generous friends or family members can give you money to help you pay the bill. But this money must be listed on your FAFSA, and as the Wall Street Journal explains, it can affect your eligibility for assistance.
While at school, most students apply for a scholarship and complete the Free Federal Student Aid Application (FAFSA). Of course, property will affect the student’s eligibility to participate, and donations from family members will count.
In their letter to the WSJ, one grandparents explains how they plan to get around this. They want to give their grandchildren money to go to college right before they start, so as not to affect the student’s scholarship and financial aid options. But writer Brian Hershberg explains why that won’t work:
According to PJ Walsh, a certified financial planner who runs his own firm in Chicago, the $ 5,000 issued to a student must be listed on Fafsa as “money received or paid on behalf of the student.” “The first $ 5,000 will not affect his first year of high school,” says Mr. Walsh, “but should be listed as income in the form of Fafsa for the next year, which will affect his expected contribution in his second year of college.”
One backdoor option that some experts suggest is to wait until a student’s first year to make a donation after they have completed the FAFSA in their final college year.
Read the rest of the Wall Street Journal post; link below.
Financial aid ploy won’t work | Wall Street Magazine