Are we expected to cash in EE savings bonds before they reach maturity dates to help pay for college for our kids? Bonds we have were issued when son was born, and are due to mature in 2021 and beyond. He's looking at starting college in 2009.
You just calculate the current value & use that figure when determining assets for the student. Here is the website to get current value: Calculate the Value of Your Paper Savings Bond(s). The current value is what you put on the FAFSA/Profile.
You do not have to cash them in but they will have to be reported as assets on FAFSA and may affect the EFC. Whether you sell them to meet the EFC or come up with the money some other way is up to you.
If they are in the parents names then how they affect the FAFSA EFC will depend on how much the total value of assets the parent's report. Parents have a certain amount of asset protection (depending on the number of parents and the age of the older parent). If the assets are under the protected amount they will not affect the EFC.
Student's have no asset protection. If they are in the student's name the EFC will increase by 20% of the value of the bonds.
If they are in the parents names then selling them to pay for school may make the sale tax free. Unfortunately this does not apply if they are in the student's name. Which seems remarkably stupid.
Kelsmom, thanks for the help. I'm trying to help the wife get thru the staggering amount of info we have to digest, and some stuff just doesn't seem to come up in the various searches I'v tried here.
Swimcatsmom, I appreciate your response. The (bleep) EFC is really going to be a bit of a headache for us, as we have been put in a position where little of our savings was able to be put into "retirement" savings. The job market for the last eight or ten years has left us leery of putting what we did manage to save anyplace we couldn't get it back out of w/out penalties.
^^^^ you still have time to make IRA contributions for 2008 & 2009 before reporting assets on the FAFSA. It might lower your federal taxes too if you do a regular IRA (vs a Roth )
I have just realized (and I'll be doing my 3rd fafsa in 2009) that I can get my AGI below 50K by making a 2k IRA contribution and NOT itemizing my deductions. My tax refund will be lower by a few hundred, but my EFC will exclude my assets and that means it will be 3K lower than last year (which I know doesn't guarantee more aid, but if I can keep my son getting that perkins loan I'll be happy)
