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Fafsa Funds

lifehouse88lifehouse88 Registered User Posts: 5 New Member
Is withdrawing some money ($3,500) from my account, in order to get more aid illegal? Will they check my bank account statements? Is that worth the risk or what? Hope you guys answer my question.
Post edited by lifehouse88 on

Replies to: Fafsa Funds

  • cptofthehousecptofthehouse Registered User Posts: 26,432 Senior Member
    Withdrawing money for a legitimate expense is fine. Sticking in under the mattress is not. Yes, they can check your bank account statements. It is not worth fooling around with this because doing so is wrong. Also illegal. FAFSA is a federal entity and you can get blackballed so that you do not get aid for a very long time, if you get caught.
  • lifehouse88lifehouse88 Registered User Posts: 5 New Member
    thanks. Well, then that means I won't be eligible for aid. I am going to community college which is less than $8,000. My dad's income is about $45,000. The reason why I ended up with that kind of saving is because I only spend a small part of my financial aid, and I received some money from my relatives, and I am so dumb not to spend it.

    But could I still be eligible for Cal Grant as long as I have a good GPA?
  • latetoschoollatetoschool Registered User Posts: 3,143 Senior Member
    Lifehouse I believe any withdrawal in excess of $3,000 triggers a Rule Log - reporting or at least logging the event under the either the Bank Secrecy Act or the Anti-Drug Abuse Act (sorry, I know it's one of these but for the life of me cannot remember which). Not an issue if you're using the money for legitimate purposes.

    Bottom line, keep your transactions above board.

    I am sorry but I do not know the answer to your question re the Cal Grant, I'm hopeful someone who knows will come along and post that the answer is yes. :)
  • lifehouse88lifehouse88 Registered User Posts: 5 New Member
    So, how about withdrawing half of it?
    So, I could at least get some aid.
    Like I withdraw 500 now, then another 500 next week.
    Then another 500? Is that oK? Is that still unethical?
  • standrewsstandrews Registered User Posts: 1,365 Senior Member
    FAFSA requires you to report your cash as well as checking and savings. While it would be completely ethical to convert funds in a checking account to cash, it would be unethical not to report that cash on the FAFSA.
  • thumper1thumper1 Registered User Posts: 63,988 Senior Member
    They don't need to check...if your college requires all tax documents, you will be sending your 1099 (interest statement) for that account. However, as noted, you absolutely can spend that money on things you need. BUT if you spend it, you also won't have it for college expenses.
  • PearlPearl Registered User Posts: 754 Member
    I think the bank reporting is on higher sums (I heard $10,000) - but you might inquire at your bank - it's your right (as is all citizens) to know how your government is spying on you.

    If you were going to pull the money out for whatever reason, I'd do it way in advance.

    Do you need anything at the moment? Buy that computer or used car. Or ask your parents if they could use the money for bills/household repairs and then they could owe you the cash later, maybe.

    Odd how the system doesn't reward responsible people who save.
  • dt123dt123 Registered User Posts: 1,178 Senior Member
    It's not that complicated. Since the FAFSA requires a snapshot of your assets as of the microsecond you submit it, it is perfectly legitimate to spend your accounts down and immediately afterwards submit the FAFSA. Remember, personal possessions are not reportable; cash, checking, savings and investments are.

    We always shoot for student checking balances and cash in the wallet to be less than $100 as of FAFSA submittal. Sometimes that means the student paying rent earlier than usual, stocking up on groceries, filling the gas tank, buying new shoes, etc.

    In the case of a sizable balance to dispose of, there could be some tough decisions to make. New computer, upgraded transportation, airline tickets you know you will need, paid up car insurance, come to mind as reasonable ways of dealing the with the problem. But if you will need that money for monthly living expenses, you are kind of stuck. But FAFSA is meant to fill the gap if you did not have that money, so the justification for reducing aid based on that asset balance is understandable.
  • hsmomstefhsmomstef Registered User Posts: 3,579 Senior Member
    do you have any bills/expenses that you can pay on? for instance -- I paid my rent 2 months ahead of time, thus lowering my savings (basically to zero). You can pay for car insurance, get a gas card worth a couple hundred, etc. None of the money would be wasted, it would all be legit and would decrease the amount you put down on FAFSA.

    Of course -- this won't work if you have thousands in assets and a great income -- but for those of us at the lower end of the FA scale, this can help and is easy and legit to do.
  • evelyn_roseevelyn_rose Registered User Posts: 369 Member
    The bank does report if you withdraw 10,000 or more.
  • cptofthehousecptofthehouse Registered User Posts: 26,432 Senior Member
    The bank is not going to report to the colleges, and it is not an ominous thing to have on one's record to withdraw those amounts. It's just on record, But really, everything is on record. Where you have the issue is if you are audited by the school, randomly or by a flag on your app, and you have this sudden $3000 withdrawal right before you file FAFSA. Don't you think someone auditing that is going to ask some questions, like what did you do with the money? THe flag could be interest reported on tax return with no asset to link it at the end of the year. I would think financial aid officers are very experienced with every trick in the book, as most of us are just now encountering the forms. Not a smart idea to try to pull a fast one at the last minute. if you want to minimize assets and do other things to get maximum aid, you need to start the process several years earlier not the month your financial aid apps are due.
  • swimcatsmomswimcatsmom Registered User Posts: 15,701 Senior Member
    If assets were withdrawn and put into the kids 529 account would that be a legitimate way to approach this? The money would still be going to pay for college but it would minimise the EFC hit which may help if the family needs financial aid. Would financial aid officers consider it a no no?
  • janesmom1janesmom1 Registered User Posts: 258 Junior Member
    D took out money to go on a school trip. We had processed the PROFILE back in late Oct. She took out the money in DEC to pay the last installments.

    Will colleges ask--because on the FAFSA I reported the current amount in her account.
This discussion has been closed.