Hello there,
I’m in a situation where I keep my FA money in the bank to pay for school. But does this money count towards EFC if it becomes too much? You see I’m moving to a different school that has a significantly higher tuition.
I heard FA money in bank does not count towards EFC but you need to prove that it is 100% FA money (e.g. only FA money coming in that account). The thing is, I’ve mixed up some money and I didn’t know of this. Since I’m moving school, should I create a new account specifically for FA money?
During an audit, will they ask of the previous schools’ FA money or just the new schools’ FA money?
It’s been a long time since I’ve received FA money at the previous school. But now that I’m moving to a new school, it’s a different story. Please let me know if the information I’m holding is accurate or I need to look into this more. Would like some input so I know what’s going on…
Surely you have records of the amounts you have received in financial aid money awarded that you did NOT already spend on college costs. In other words…you need to know how much of your financial aid money you did NOT use to pay your college costs up to now. Between your financial aid award and bills, that should be easy to prove.
You would subtract the unused portion of your financial aid savings from your whole account.
But IIRc, this is what you can’t do…you can’t just say that ALL of your financial aid money was not used for college costs if indeed, the amount awarded WAS used for college costs. Does that make sense?
Are you the parent? Did you take out a big loan and just not spend it all? Yeah, I think if it’s been earmarked for your child’s education, it should be reported. Commingling it with other funds was probably not a good idea, but, it’s not too late. A good accountant could probably untangle it for you.
What would this information give me? The amount of raw financial aid money I have? But I’d like to ask too if FA money that was received into bank counts towards the EFC. Would you know?
Yes. But I’m still in college. Should I set up a separate banking specifically for FA then?
Thanks.
Additionally, what if your EFC is like 0?
It’s not a loan but pure FA money that doesn’t need to be repaid. Could you elaborate on the reporting part?
In addition to that, I heard that strictly FA money in bank does not count towards the EFC. Would you know anything regarding that?
Thanks.
Additionally, what if your EFC is like 0?
Wait, what college hands out grant money in the form of a check? Was this for books and room and board?
I’ve never heard of an audit where the student wasn’t allowed to exclude the FA money because it was co-mingled, but I can’t tell you it never happened.
I had no issue with excluding the amount in D’s account that was left over from FA (in her case it was loan money carried over from year to year). It was in her regular checking account and was less than the total amount received.
What you can’t do (or aren’t supposed to do) is spend all the FA money you’ve saved and then ‘replace’ it. If you have $10k in excess FA and at some point your account is reduced to $5k but then you save some other money (income, gift, lottery winnings), THAT money is not excess FA. If your FA savings goes down to $5k, that’s the amount you can exclude as FA.
If you can look at your account records and see that $10k came from the school/outside scholarship on Sept 1 and the balance never goes below $10k, you shouldn’t have a problem showing that $10k is all FA and can be excluded.
It was years ago, but I used to get leftover Pell grant money issued to me in a check.
Banking money. That’s how you received the FA money.
What do you mean you can’t tell me it never happened?
What if I spend the money and never replace it? What if like I gave my money to someone and never replaced that money? What happens then??? What happens if I spend all the co-mingled money and the only money left is FA money? That will be easily excluded? And what does it mean for FA money to be excluded? It means it won’t count towards EFC?
Thanks!
Money in the bank that can be attributed to financial aid is not reportable on the FAFSA. For example, let’s say you got a refund of $1,000 from your loans in September. You will be using it to pay for December rent. You complete the FAFSA for the next year in October, and the money is still in your account on the day you file. You do not have to declare the $1,000. “How would they know?” is a silly question - as with many things associated with financial aid, the expectation is that people will tell the truth, since they sign something that says they are telling the truth.
Are you just now filing the FAFSA for the new school? Because assets are reported as of the day you file FAFSA.
You should have old statements that say how much FA refund you received and can match that up with the deposit amount in your account.
Yeah, but, the OP says they are about to attend a different college, implying that his or her previous college has already closed its books. Furthermore, they are implying that no money is owed, that there are no outstanding bills. This does not appear to have been a loan. For whatever reason, what they are calling, “FA money” never got spent on College #1. The question is, why wouldn’t that money - whatever its source - now be available as a family asset?
No. A financial aid refund is a financial aid refund. Per the FAFSA, money in the bank that is attributed to a financial aid refund is not reportable. It doesn’t matter where the student attends school next.
Okay, I had to go on the internet just to get some background here because the question was making my head spin. I’d provide the website, but, I’m not sure whether that would be a TOS violation (but, feel free to PM me.)
In any event, FA refunds are apparently a real thing. The most common scenario occurs when the college, out of an abundance of caution over estimates the actual cost of attendance after grants and scholarships have been applied. Maybe, the meal plan chosen was cheaper. Maybe, the chosen dorm was not as expensive. Whatever.
Since loans (both subsidized and unsubsidized) are in a fixed amount and are the last component to be applied to the semester’s bill, there is often money left over.
For whatever reason, the excess money is sent to the student and not to the bank. So yes, @kelsmom is correct. It wouldn’t make sense for that money to be considered a real asset. Even though the OP is free to spend it, they still owe it to the bank. And beware, under the scenario desscribed by the OP, it is accumulating interest.
There are also situations where grants and scholarship money may exceed COA. TBH. I don’t understand how a $7000 Pell grant doesn’t get completely devoured (maybe at the community college level?), but, apparently these situations do happen. However, given the preponderance of the comments, both here on CC and what I was able to find on the internet, it sounds as though the OP is on safe ground not declaring the excess funds as part of his or her EFC.
So, ordered [sound of Judge Judy pounding her gavel]
Community college in my district is less than $100/credit. Students will get Pell refunds, and they are free to use them to pay for other educational costs: Books and supplies, housing, meals, transportation. If they live at home, buy used books online, and otherwise watch their budget carefully, they can have money in the bank remaining when all is said & done. Saving it to help pay for future educational costs is wise.
By the way, colleges ESTIMATE the components of cost of attendance. Estimates will be high for some, low for others, and maybe once in a while, they will be spot-on. Aid is awarded based on COA, and those who are frugal will have expenses that are less than others … and some majors will have expenses that are less than others. So it’s entirely possible for a student to have leftover money.
Both my kids got excess funds from FA paid to the most semesters. One had full financial aid to cover tuition/fees/meals, but took the subsidized loans to pay for her rent. The other didn’t get much but did get a few hundred dollars she used for books, room and board. It was NEVER in her account when it came time to file a new FAFSA.
The one that took the loans didn’t use the money. She banked it to use if needed (wasn’t) so she used it for her initial expenses when she graduated (car, rent, deposits). Some of it is still in her savings account.
If you spend it all, it’s not there to report. I don’t see the problem. You report what is in your account on the day your file FAFSA. It is isn’t there, it isnt there.
If you say have $5000 in excess funds and co-mingle it with $2000 you already had in the account, you can exclude $5000 of that when reporting. If you spent $5000 and still have $2000 left, you can claim that it is all FA money (you spent $2000 of saved money and $3000 of FA money). If on the day you file FAFSA you have $4000 in that same account, only $2000 is FA money. The other $2000 is ‘replaced’ money and you can’t claim it was from the original $5000 FA money. That’s what I meant by ‘replaced.’
My daughter wasn’t asked how much money was FA money she had saved. On the FAFSA form, it asked for amount of cash assets. She subtracted out the FA money and just entered the balance. She was never asked to provide bank statements or prove the balance was from FA. It’s an honesty thing. She was never question. Can I tell you that no student EVER hasn’t been asked to verify the source of their funds? No, but it isn’t asked on the FAFSA.