<p>Scribbulus, I think that yes, the income he has this year is expected to go toward his 2013/14 school year (if it ends up being over whatever the school’s exclusion amount is). But is there any reason to think he can’t earn as much next summer? I think I’d go ahead and let him use it to take out fewer unsub loans. I asked the same question as you about paying off existing loans versus taking out fewer new ones <a href=“http://talk.collegeconfidential.com/financial-aid-scholarships/1364645-pay-off-existing-unsub-loans-take-fewer-new-loans.html[/url]”>http://talk.collegeconfidential.com/financial-aid-scholarships/1364645-pay-off-existing-unsub-loans-take-fewer-new-loans.html</a> and it turns out that it’s slightly better to take out fewer new ones, because there is an origination fee on the new ones that you can avoid paying by not taking them. He might as well take any subsidized loans he is eligible for, but avoid the unsub ones (and possibly pay off existing unsub ones if he can). </p>
<p>If he does want to bank some of it for next year, open a 529 account that you own with him as a beneficiary. Then have him contribute money toward the household expenses from his income, while you then contribute an equal amount to the 529 account for his future education. There might even be some tax benefit to you to making the contribution. That will count as your asset and will impact his EFC for the next year a lot less than if it were in his bank account.</p>