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How to "hide" money so colleges can't see it

DETSAznDETSAzn Posts: 132Registered User Junior Member
I think many people will agree that junior year is by far the toughest year of high school. There's just so many decisions to make in addition to working up an impressive GPA.

Recently, my parents attended a financial aid seminar where a company did a presentation on "secret" tips to getting a better financial aid package. (like "hiding" your money in bank accounts so that colleges can't see them.) Ever since then, I haven't heard the end of "we need to see that financial aid guy soon."

My family is considered upper middle class, and my stats are exceptional (3.98 GPA, several extracurriculars, and many awards/honors). I have applied to many scholarships, and have been lucky enough to win a few thousand dollars.

I was wondering whether we really should see the consultant (for about $800) and how much he would actually help my family. Can someone please give advice on the situation? Also, if there are any "secret tips" on how to lower your EFC legally, that would be greatly appreciated too.

Thanks,
DETSAzn
Post edited by DETSAzn on
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Replies to: How to "hide" money so colleges can't see it

  • jamimomjamimom Posts: 3,278Registered User Senior Member
    One of the "F"s in FAFSA stands for Federal. Not a good idea to "hide" money. Hopefully the seminar was not giving illegal advice. There are no secret tips that I know of as to how to lower your EFC legally. The best way for you and your family to best figure out how to configure your finances is to read the rules on college financial aid methodology and work through the FAFSA getting to know it line for line. Picking up an easy to read Financial Aid book will give you some good ideas as well. Since the EFC is made up primarily of income and asset percentages, the biggest difference in need is quite simply income. You make less, you have a smaller EFC. You have less, you have a smaller EFC. The student's assets are assessed more than the parents, so he should spend those down before the parents kick in for things. If you are applying to schools that use FAFSA only, your home equity does not count. Those using Profile usually have some home equity component and would be wise to pay off other loans with a home equity loan reducing that. Not a problem just rearranging assets. Hiding assets is illegal.
  • thumper1thumper1 Posts: 36,154Registered User Senior Member
    First of all, I would be suspect of anyone who says they can "maximize" your finaid award by charging you $800. The reality is that finaid is largely based on income and assets. Income is something you really can't "hide"...it's on your taxes. You can (and should) move any large monies in YOUR name to accounts with your parent's names because YOUR charge is about 35% of your savings while your parents is 5%. The notion that any savings your parents have can be "hidden" is not particularly accurate unless they plan to stuff their mattress. Also, keep in mind that your tax returns for two years are required by some colleges. If you had significant savings there will be interest on those returns. If that HUGE savings suddenly disappears, one would think it could be questioned (this came from a finaid officer at a university near here). SO...just what did this $800 person promise your family?
  • worried_momworried_mom Posts: 2,205Registered User Senior Member
    If your family is "upper middle class" as you say, that means you have a relatively large income and/or assets, and you should not be trying to "hide" them in order to qualify for more financial aid, because:
    (1) With "exceptional stats" you would be eligible for merit scholarships at many colleges. Family resources are not considered when these are awarded, so there is no need to hide your assets.
    (2) All other financial aid is need-based and "hiding" your assets distorts your true need; therefore, it is dishonest and probably illegal.

    I would forget about the consultant and save the $800. Just buy a $20 book on financing college (or better yet, just carefully study the FAFSA material since it's free). Some of the previous posters have listed some steps you can take to perhaps better position your assets, but don't expect a major pay-off in terms of getting much more need-based aid that way.
  • DETSAznDETSAzn Posts: 132Registered User Junior Member
    Wow! I'm glad I asked about the consultant. Thank you jamimom, thumper1, and worried_mom for your advice.
  • momofthreemomofthree Posts: 1,486Registered User Senior Member
    I would also like to add the caution that when you sign the FAFSA, as will your parent, you are pledging that the information is accurate and honest. If it is found not to be honest, major penalities can be called into play, like $10,000 fines, if my feeble memory serves. Best to be honest and open.
  • boxmaker1917boxmaker1917 Posts: 228Registered User Junior Member
    It is a well-known sales technique for "financial consultants" to present seminars on saving for college to HS students and families -- often at schools, which lends more credibility. It actually takes years to build the kind of wealth that would be necessary to "ensure" adequate funding for a college education. When meeting for additional cosultation about the kid, the "advisor" will gain enough info to determine whether the parents are prime candidates for retirement planning. (Now we're talking about 15-20 years into the future.) This is a type of "bait and switch" sales technique -- the "advisor" really is interested in retirement planning from the outset.
  • vtoodlervtoodler Posts: 2,111Registered User Senior Member
    DETSAzn,

    I hate to be mean, but I think that you are being greedy. You said that your parents are upper middle class. This indicates that they could probably pay for a lot of your college education. You also said that you've won a lot of merit money. I understand that you don't want to have to pay for college, but I think that you are being unfair to others. There are many disadvantaged students out there who need federal and institutional aid a lot more than you do. By trying to be decietful, do you know that you are actually helping to take funds away from these kids? Tell me, how do you think they feel?

    Why don't you instead try getting some merit money? If your stats are so good, then you should get A LOT of it. Try fastweb.com or ****
  • hoedownhoedown Posts: 3,751Registered User Senior Member
    Also keep in mind that even if this fellow comes up with a magic way to 'hide' money from FAFSA calculations, it might not help you if the college uses Profile.
  • raven001raven001 Posts: 877Registered User Member
    Three words: Swiss Bank Account.





    (I kid, I kid...) :)
  • 1moremom1moremom Posts: 3,833Registered User Senior Member
    "You can (and should) move any large monies in YOUR name to accounts with your parent's names because YOUR charge is about 35% of your savings while your parents is 5%."

    I think you need to be very careful with this one. If the money is in a UTMA account, it is possible to spend it down for a child's legitimate expenses. Simply moving it out of the accoun to improve your finaid situation is something else entirely.

    http://www.fairmark.com/custacct/regret1.hty
  • jpsijpsi Posts: 402Registered User Member
    Assume that you have the money to pay for a college, but you would like rather to buy better car, go to holidays for a longer time etc.

    Other people do not have enough money to pay for a college, and then they will have to go to state univ, or will not study at all...

    Your lower contribution creates unequal distribution of goods/happiness, which eventually is very likely to decrease the total amount of happiness. The thing that you plan is not only dangerous but unethical. Poor child might invent a thing that will serve the whole world - if only could graduate from a college. I could substantiate neurobiologically why it is highly possible in some cases.

    Just my 3 cents...
  • irishforeveririshforever Posts: 817Registered User Member
    The truth of the matter is that there are not that many merit scholarships available for the many well-qualified students that deserve them. Even using the web sites yields just a few that are not ridiculously competitive, and/or time-consuming, to pursue. National Merit pays very little and is usually tied to a parent's job with a sponsoring corporation, although there are some schools that will pay very generously to attract National Merit Scholars. When you are talking about the Ivies, or the other prestigious schools (who do not give any money for National Merit Scholars, since they attract so many) you are usually talking about 4 year costs of about $170,000. If you multiply that by 2 or 3 (or more) children in a family, that is an astronomical amount of money for any family. For anyone to think that someone "is greedy" when they are trying to figure out a way to be considered "in need" when faced with these amounts is ridiculous. There are many families out there who are not given any financial aid, but truly have to struggle to provide several children with the college education that they have worked hard to achieve. At the same time you have to make sure that there is money for retirement, and the possibility of needing to take care of elderly parents at some point, or some other difficult financial issue. Those of us who are paying all, or almost, full cost, are actually paying for others to be able to go--somehow that doesn't seem fair either. We have not tried to explore any avenues that would help us "hide" money or cheat the system, but people need to be sensitive to the fact that all of us would like to be able to reduce the amount of money that is spent on a child's college education these days!
  • ElinochkaElinochka Posts: 22Registered User New Member
    Everyone just thinks that if a family is considered upper middle class that means that they can afford to pay for college. That is definitely not so. 40k a year is TONS even in an upper middle class family.
  • emeraldkity4emeraldkity4 Posts: 32,970Registered User Senior Member
    from what I have seen the EFC is often about 1/4 to 1/5 of before tax income- doesn't matter what you make.
    However- considering that for a family of 4 in a typically expensive urban area- you are going to need about at least$50,000 before taxes to even attempt to meet basic living expenses- Am i right?
    So the family of 4 that makes 4x $50,000 is still going to have a much higher standard of living after basic needs are met.
    no matter who you are 1/4 of income is a lot- & people with money often don't like to spend it- that must be why so many students from families that make over $200K that I personally know, encourage their kids to not only attend public school- but they are attending instate public schools.
  • jpsijpsi Posts: 402Registered User Member
    DETSAzn - I know where you can hide money.
    I can hide it so deeply that you would never see it ;).
    You have to make one wired bank transfer... ;)

    jkjk
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