<p>Hello,
I just have a question about student income from work as it is assessed thru the fafsa.
The student makes a certain amount of money thru his/her job during the tax year and then fills out the fafsa and fills in the amount earned. Then the student saves some of that money that he/she earned in a savings account.
If the student doesn’t qualify for ‘simplified needs’ will they have to report the income and have it assessed as both income earned and then the portion they saved as “SAVINGS” on the part of the FAFSA that asks for student investments?<br>
I know they will report income earned, but wouldn’t that be reporting it twice if they also have to report what they saved from income earned in a “Savings Account” again, in the “Student Investment” part of the Fafsa? I know they assess income earned at 50% but if they assess it again at 20% for the portion of income saved, that doesn’t seem logical. Thank you.</p>
<p>I think this happens to parents, too.</p>
<p>IF you earn $100k last year and put $75k into savings, it does kind of get counted twice.</p>
<p>Yes, it always happens. The problem is that it’s assessed at 3x the parents assessment for the students. The student’s earnings are also hit harder.</p>
<p>Well, sort of…you’re correct that it gets reported twice, but it may not get assessed on both counts. Dependent students have an income protection allowance, after allowances for taxes, of $4500 (for 10/11 FAFSA). So, if you earned less than that, you would only actually be assessed on the savings portion. Btw, one alternative may be to spend the savings first before you file FAFSA (ie. buy a new computer, if you’re going to need one anyway, or pay for your summer classes, etc.). Or you could save the money you’re going to use for college in a 529 account as they are not reported for FAFSA.</p>
<p>We have used the student’s savings to pay for 2nd semester expenses so that it will be near zero when filling out FAFSA.</p>
<p>529 accounts are reported on FAFSA, whether owned by the parent or by the student. They’re assessed at the parent rate of 5.6% rather than the student rate of 20%, regardless of who owns the account, so they’re advantaged in that sense.</p>
<p>Thank you so much. I will have to look into the 529 savings plan. </p>
<p>So if the student doesn’t actually spend the money from a job that they have, they have to report the savings again and have it assessed a second time but at 20% After the $4,500 cushion. </p>
<p>We are savers by nature,but maybe I’ll have him pay
for the car we let him drive for free.</p>
<p>You could offer to match any funds that he raises himself, so he can spend down the money that he makes while still having “savings” for college.</p>
<p>Thank you. That would be a better idea to match funds to purchase the car, so he is rewarded instead of penalized for working and savings.</p>