Hello, I’m a high school student and have a few hundred dollars in my checking account under my name. I know I have to report this but does $400/$500 lower my chances of financial aid? TIA!
Generally, student-owned assets reported on FAFSA will reduce need-based financial aid that uses FAFSA information to determine the amount to distribute.
Student assets are assessed at about 20% of their value.
So $500 would add about $100 to your Fafsa EFC.
Unless your parents qualify for automatic 0 EFC, in which case your assets would not count.
Or they qualify for Simplified Needs Test.
I would reimburse your parents for expenses before you file the FAFSA so you have no assets unless you are eligible for Simplified needs or Auto Zero EFC because the money sitting in your parents accounts would only be hit up about 6%.
Or buy some things now that you need. Then it’s assessed nothing
Or plan to contribute $100 of your $500 savings towards your college costs. That’s not an awful thing to do.
It’s too small an amount to fret over. For an extra $100 in costs, your parents may absorb it. I’m not aware of kids getting billed separately. It’s between you and your parents.
But colleges that can afford good fin aid will have a separate expectation of the “Student Contribution” from your own earnings, summer jobs, and often campus work study. (Some treat his differently, but call it 5k+.) Will you be ready for that?
Thank you guys for all of your helpful responses !!
I was working in an area where even $100 is a lot of money for a student to have to pay. I knew kids who worked and saved money for colleges, and basically lost hundreds in PELL money because they had savings sitting in their accounts that were hit at 20%. Simply paying up something so that said student can report a zero in assets makes that difference. Why give up free money.
A friend of mine was in the situation where her kids were entitled to a little federal money which amounted to some interest subsidy on the Direct loans they were taking. They were on the verge of getting that benefit the one year all three were in college. Two got it. The third did not because she had money in her account that got assessed at 20% towards EFC.
I really believe that there should be an allowance in assets for students but that is not the case. I recommend students to repay their parents for expenses or buy some things early so they have a zero balance to report as assets on the FAFSA
[sarcasm]Yes, spending $100 on something you probably don’t need in order to get $20 more in federal grant money for college always makes sense.[/sarcasm]
Most of us can stock up on something we may need in the near future.
It’s also not $100 to be spent. It’s $500 in order to get a possible $100 PELl money or loan interest deferral. There were times in my life that the extra $100 would have been very useful to me.
Definitely no point on spending the money on things you don’t need, but I can see looking ahead and saying “ok, I have car insurance due next month, might as well pay that early”, or “I’m going to need a laptop or other school supplies for college, let’s get that now”.
Although, I would think when it comes to most of those where $100 is really a big deal, they probably qualify for simplified needs test anyhow.
Yes, this is good advice, and I have done the same thing by paying a property tax bill a bit ahead of when I would otherwise need to. If you are searching for something to spend the money on so it’s not in your bank account on FAFSA day, that’s a problem.
My kids had a lot of money in their accounts from summer job. We were close at one point to maybe qualifying for some financial aid with multiples in college, and expensive private schools in the mix. For them to choose to reimburse us for the money we spent on them during the year would have been a magnanimous and wise move as some PROFILE schools hit the student assets hard.
I agree that $500 in assets Which adds $100 to EFC is not huge, but what about $5000? What if PROFILE is involved or the school has additional criteria for dispensing their own money? Where to draw the line? I think that in many cases, it’s better for the student to Legitimately zero out the account as long as it’s not for frivolous reasons.
Parents also should plan the day they submit FAFSA. Payday might not be the best day. If you have a large earmarked amount in the account, you might want to prepay or hold off, though 6% isn’t quite the hit that 20% is. Even if you it’s money sitting there that you can likely get exempted, it can be a pain having to explain and asking for prof judgement.
OP can simply take out the $500, complete the Fafsa, and a few days later re-deposit the money, no? The colleges don’t come down and ask how you specifically spent that money. Yes, one could be verified. But assuming everything else lines up, is honest, this is a very small amount. An important amount, yes. But not 5k.
We don’t even know what colleges this is about, their policies or generosity. I think sometimes we make some of this very complicated. Right now, for this OP, we’re talking about a possible $100 impact. Again, yes, to some that’s big. But not on the level of a high student salary, a trust, other assets.
There are other questions OP should be asking- how to select colleges likely to give the most aid, true aid, not just loans.
@lookingforward, no, just no. If you have the money, whether it is in an account, in your back pocket, in a dresser drawer, it’s still your money, and if you have it the day you complete FAFSA, it needs to be listed as an asset. Otherwise, a counts can be closed temporarily and all money can be so hidden.
It is perfectly legitimate to give your parents the money to pay for past or future expenses. If you have bills pending, you can pay them a bit early, perhaps. Buy those school supplies or other things on your list, early Christmas shopping, perhaps. But, to just transfer the money for the day you file FAFSA and then take it right back, can show an intent of fraud. Whether it’s done often is not the issue here; we do not give that sort of advice on the forum here that smacks of ill intent and can be so interpreted.
Pay your senior dues, senior pictures if you are looking to spend down the money
NO. Unless the OP gives the withdrawn money away or buys things with it, the money is still theirs, even if it’s stuffed in their winter boots in the closet.
Just removing it from the bank account doesn’t matter if they still own that money!
I understand and apologize for the confusion. More than anything, I was reacting to how complex this was getting for a hs kid to follow. What OP needs is advice on the right colleges more likely to fund at the right levels.
Btw, I was always painfully honest with the forms. Lol, worse stress than waiting for admits.