I may be making various financial decisions in the near future that could impact college financial aid for my kid. Realestate decisions, retirement planning, big purchases, etc. Anyone consult an accountant to help make those decisions? Was it helpful? Are there accountants that specialize in college-related issues? Just curious about other people’s experiences before I actually (maybe) call some accountants in my area…
We have a CPA that does our taxes and was and is willing to answer a few questions specific to our financial situation & especially about real estate. It COULD be helpful if you find a fee only CPA who is a fiduciary and doesn’t want a % of your assets every year.
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It could be helpful, but IMO relatively few CPAs know about college financial aid in enough detail to help. So before hiring anyone, ask them if they are familiar with FAFSA and CSS profile, especially with regard to your specific situation.
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Agree with @mwfan1921 . Doing a deep dive into FAFSA and CSS helped us. Some ten years ago, I found book at the library by Princeton Review. Would need to see if there is current edition.
Forbes, Kiplinger websites were helpful.
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This is the book that’s the financial aid bible that hippobirdy was probably referring to: https://www.amazon.com/Paying-College-2027-Everything-Admissions/dp/B0GJ3HVVYQ/
Beyond the federal FSA and CSS websitse, Mark Kantrowitz is a respected author/blogger about college financial aid whose articles/insights/tips might be helpful.
For retirement planning, I would recommend a financial planner, not a CPA who spends time preparing taxes (Noting that some CPAs are also financial planners.)
I agree it is important to understand how big purchases and real estate can impact one’s financial aid, but for most people, hiring someone for this isn’t necessary IMO. There are many posters on CC who have walked this path before you who would be happy to share their knowledge and experience.
Generally, you want to minimize cash on hand on the day you are completing FAFSA and CSS. So, for example, don’t file these forms until after you made the big purchase you are saving for. Similarly, don’t file them the day after you sold a property.
FAFSA and CSS rules are pretty straightforward, and there is no ‘hiding’ income or assets, so beware anyone who tells you that. With that said there can be timing issues…like when you make big purchases as noted above.
On the income side, because FAFSA and CSS use prior prior year income, any income earned from sophomore year second semester and later won’t impact undergrad financial aid (assuming kid graduates in four years.) So, one could push off income like a bonus until spring semester of soph year. But like assets, there’s not much opportunity for people with typical jobs to push income around.
In situations where parents are divorced, and kid attends a CSS Profile school that requires NCP financials, both parents have to be aware of timing issues and the like.
Paging @politeperson, @kelsmom, @belknappoint for any insights.
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Just a cautionary tale- don’t make any decisions for the sake of financial aid that you wouldn’t otherwise be making. I’ve seen situations where well meaning parents have moved stuff around/shifted/sold in order to get an extra $2K in aid- but it cost them an extra thousand dollars in taxes that year, AND had a huge opportunity cost (i.e. they lost significant growth for the long term). Or they’ve opted to move the timing of a bonus at work-- and yes, they got an extra $3K in aid. But by the time the bonus got paid, some of which was cash, some of which was stock, the overall package was worth $5K less. Ditto for forgoing overtime, delaying a promotion, etc.
It is a rare situation where opting for less income voluntarily is a good idea long term. Retirement, some benefits, etc. are based off of your income or a moving average- so the higher you can push your income, the better off you’ll be long term. Your retirement could last 35 years-- vs. a marginally higher financial aid package for 4 years. You just can’t be too short-sighted, as tempting as it is.
I have a cousin who is cursing every month as he pays down his HELOC. At the time, he was bragging about his home being his ATM. At the time, it seemed like a no-brainer- sell some stock and incur capital gains taxes, and forgo more money in the aid package? Not him. The home was shielded from any financial aid calculation so it felt like “free” money. But home values go up and down. Nobody wants to be under water, especially not when you discover that you won’t be able to downsize so easily.
So if taking the HELOC makes no sense long term (and depending on rates, how long you’ve been in the house, etc. it may not make sense), doing it so you don’t “risk” your kids financial aid package is REALLY going to make no sense.
I don’t know if many CPA’s are experienced enough with financial aid to be helpful here, other than to help you model the cash flow/tax consequences of various scenarios. But that may be enough depending on how much aid you need, and how many discretionary assets you’re dealing with.
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Great point!
I know of one family where the kid had ADHD. State law varies here, but they had doctors certify the ADHD was a great enough disability that the kid qualified for Medicaid (I’m not judging here.) If anyone in the household qualifies for Medicaid, the family doesn’t have to report assets on FAFSA.
But, when kid got to college, they had to buy the $4K college health insurance because colleges won’t accept Medicaid from another state.
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The information given here is excellent. I suspect that if your situation requires more information than what is provided above, you probably won’t qualify for need based aid, anyway.
I don’t have any experience with this but if I recall, you have an ex spouse, so they’re going to factor in too.
I don’t know if there’s a way to magically minimize income (which is in the past already) or assets for aid, but if there is, make sure both partners are party to the plan so you don’t do a lot of adjusting for nothing.
I would think (and I know you have), you could play around in the NPCs to see how things might work - which really at this point might be an adjustment of assets and cash on hand. But don’t forget, IDOC will validate what you say - at each school (if required).
What you pay for an advisor might eat up or exceed what you actually save.
This is a time that I think - people should just find that under budget school - which I know for you is OSU (but doesn’t seem like it fits the student) and for me, I wish you’d look at Humboldt with the WUE 
or maybe WWU. But I know, I’m not you. So at least you have a floor if your financial re engineering doesn’t pay off as hoped.
Good luck.
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Thanks for all your responses. As many shared, there can be unintended — and sometimes steep — financial consequences and I bet it can cut both ways, where deliberate action sometimes backfires and deliberate inaction sometimes results in unforeseen consequences. As a general philosophy I agree that overall you don’t want to over-engineer your life for a small difference in financial aid. But, as @Mwfan1921 pointed out, timing can be important if you’re selling a house or getting a big bonus or, say, getting married. I can probably work everything out on a spreadsheet myself but I wonder if a pro can do it faster and with greater accuracy and fewer mistakes.
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I would advise that neither you nor your ex get remarried until you are done with filing financial aid forms!
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Where I think an accountant might be helpful is in clarifying for you how these potential transactions would be expressed on your tax return and flow through to your AGI. If you have a complicated financial situation it’s possible they might help you with identifying a good faith basis for some of the numbers requested by the various forms.
Beyond that I agree with @Mwfan1921 that a financial planner might be more up to speed on college FA planning than an accountant, although I think the vast majority would not add any value if you’re looking at schools providing institutional need-based aid.
You might start with some questions here, kept general enough to maintain anonymity, to see if the replies clarify things for you.
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Just moving in together can have consequences, as your house goes from primary home to a rental or a sale, which then results in income or assets, which has both tax and fin aid consequences.
That could happen, so have your significant other move into your place with you if you own it (vs you moving in to your SO’s place.) Then, there will be no sale and no rental income on financial aid forms. Unmarried live in partner/significant other income and assets are not included on fafsa or CSS profile.
Call your insurance agent first! You do NOT want to discover that you are no longer insured if the primary homeowner is not living in the house. Several people in LA (both Palisades and Altadena) learned this the hard way. House burns to the ground- insurer says you were only insured for an owner- occupied residence. Can you sue? Of course. Can you rebuild without your insurance money? That’s usually a big no.
This is my point about NOT doing stuff without evaluating the long term/big picture!
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To be clear, I meant have the significant other move into OP’s home. I will edit, since you were confused.
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See? Lots of complications can arise.
Marriage → possible big hit on FA.
Move in together → whosever home is no longer primary residence has important tax & insurance consequences. Rental income could be taxed and the clock starts to tick on the capital gains tax benefit (if you think you’ll eventually sell it).
Yep, that’s why it’s important to familiarize yourself with FAFSA and CSS Profile. The average CPA has a limited understanding of financial aid. I agree with politeperson that a financial planner could be more helpful. But, likely even more expensive.
More than possible…highly likely, assuming new spouse has income and assets. In some cases, both divorced parents are remarried and CSS Profile contains income and assets for four parents/step-parents.
Yes, but again, if you don’t get married, and the SO moves into your place, there is no impact on FAFSA or CSS Profile from SO’s residence sale or rental. Does that make sense?
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That’s why you should simply find an affordable school - and move on. There are affordable LACs that hit your budget - whether SOU or Truman State or MCLA or U Maine Farmington and I’m sure more. There are many WUE schools. UC Merced/Humboldt/WWU/Adams State and lots of schools in more conservative states (Idaho, Montana, N and S Dakota) Utah, Wyoming
I get you want impactful CS but at the same time one doesn’t know what will happen next week, or next year. Some things can’t really be planned for.
Or find a private that will assure need all four years at the first year level - I don’t think there’s many but some.
But I think when you are introducing a million variables and talking about changing - like what if I get a rental house in year two - it’s over complicating something that shouldn’t be that complicated.
Just my opinion.
Yes. But then SO has to do some calculations about what to do w their place, and that has tax and insurance consequences.
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