<p>I am receiving a 10k-ish gift from a relative. We have agreed that the fund will not be used for college- it’s to be put away and used later down the road (post age 24).</p>
<p>Where is the optimal place to put this money? I’m a dependent going into my first year of college. Our current EFC is around 11K and we’ve taken out just enough in loans to cover that for 4 years. My parents were just going to throw it into some savings account for me but we weren’t sure if that would have a serious impact on our FAFSA next year or something. Any advice would be appreciated!</p>
<p>You’ll report the additional $10K as a student asset on next year’s FAFSA. It will add $2000 to your EFC. Where you put it doesn’t matter if you don’t plan on using it for college. It’s still a reportable asset. </p>
<p>Is there a reason why you wouldn’t use it for college to replace some of the loans you and your parents are taking out? What is the interest rate on the loans? Right now you can’t “throw it into some savings account” and have that earn nearly as much as what you’d pay in interest on education loans. You can throw it into a 529 account, in which case it will only add $560 to your EFC, but the catch is that you’ll have to use the funds for qualified higher education expenses. Do the math and see if that wouldn’t be a better option for you.</p>
<p>If it was just added to my parents savings account, it would have a lesser impact on the EFC, no?
I was told elsewhere that 50% of the 10k would be added to the EFC. I’m glad to hear, if it comes to that, it would only be 2000 each year.</p>
<p>They asked us specifically to not spend it on college. Intended for further downthe line. I really don’t understand why, maybe that’s something we can discuss. We’ve already refinanced the house to get a loan for my 4 years of college payments though. Very fair interest rate.</p>
<p>If the gift goes to the student, doesn’t he/she need to report it as income (cash received) on the FAFSA as well? I think it would be best if the relative held onto it until the student graduated. Failing that, giving it to the parents to give to the student upon graduation would be better from a finaid standpoint than giving it directly to the student, I believe.</p>
<p>unreal, you have Wall St bankers looting the country for trillions, a US Treasury Secretary who doesn’t pay lawful taxes on a nanny, and here are you people planning on paying taxes on 10K as income and such. For cripes sakes just have relative transfer in small sub 2K amounts over a few months as cash and put it in a bank safety deposit box (no interest on savings anyway). Then don’t report anything to anyone.</p>
<p>Do the right thing. Doesn’t matter what the “elite” class is doing. I always tell my children “my soul is worth more than <fill in=”" the=“” blank=“”> dollars" whether it’s tax money I owe, too much change given to me at a cash register, or anything else. You have to live with yourself and your decisions. Don’t cheat.</fill></p>
<p>I’m wondering, for those who say “fraud, or don’t cheat”… tell me do you report out of state purchases on your annual state income taxes so that you can then pay the state sales tax on those item which were not taxed? If you don’t that’s fraud.</p>
<p>It is not taxable income, so the IRS won’t care about it. However if money is given directly to the student, it is reportable on the FAFSA if I understand correctly. There’s a special line for that.</p>
<p>The smartest decision is to put it in an account in your parents’ names. It will impact your EFC, but only by about 5% of the balance.</p>
<p>Is this a family member spending down their assets in order to qualify for Medicaid? Even if that is not the reason, the state might want it back if this family member needs nursing care any time in the next 5 years, and he/she requires Medicaid (which you would be surprised how frequently that happens, even in the middle class).</p>