New here..seeking advice

vballmom
Fri, 15 May 2009 18:18:19 +0000

I would suggest a few things if they’re applicable to your situation:


Plan when to realize capital gains. If you have investments that have accumulated unrealized gains over the years, take those gains the year before your FAFSA base year so that they’re not included in your AGI for your base year. This includes gains in both your joint accounts and any accounts owned by your child. If your student will start school in 2012, then your base year will be 2011.
Move any student-owned funds that are targeted towards paying for college into a student-owned 529 account. For example, if your student has a savings account for spending money and a UGMA for college savings, convert the UGMA into a student-owned 529. No need to convert the savings account ahead of time: this can be done immediately before filing FAFSA, if it would make a difference. Student-owned 529 accounts are assessed at the parent rate of 5.6% for FAFSA, rather than the student rate of 20%.
If grandparents or other relatives plan to give you money as part of their estate planning, have them open a 529 with the student as a beneficiary instead. Grandparent-owned 529s are not included in the FAFSA calculation.
Save as much money as you can; having the funds to pay for college is much better than the alternatives.