college assets - FAFSA - parent vs student

Financial Planning - Financial planning in general. (Moderated) 

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Subject Author Date college assets - FAFSA - parent vs student P.Schuman 01-15-2007  Re: college assets - FAFSA - parent vs student zxcvbob 01-15-2007  Re: college assets - FAFSA - parent vs student Mark Bole 01-15-2007
Posted by P.Schuman on January 15, 2007, 12:31 pm We recently went to our high school's presentation on financial aid considerations for college. One of the initial planning items discussed was how the assets were tabulated by the FAFSA for the student & parent on the forms. Here is what I recall - but can't find it mentioned on the web ? Student Parent Assets = 20% Assets = 6% Income = 50% Income = 47% Another discussion was related to "base year", and basically (like income taxes), you wanted to reduce the amount of income you would show in the year prior to filing the FAFSA, which would normally be your junior year. Posted by zxcvbob on January 15, 2007, 2:04 pm P.Schuman wrote: > We recently went to our high school's presentation on financial aid > considerations for college. > > One of the initial planning items discussed was how the assets were > tabulated by the FAFSA for the student & parent on the forms. > > Here is what I recall - but can't find it mentioned on the web > Student Parent > Assets = 20% Assets = 6% > Income = 50% Income = 47% > > Another discussion was related to "base year", and basically (like > income taxes), you wanted to reduce the amount of income you would > show in the year prior to filing the FAFSA, which would normally be > your junior year. My daughter is a junior this year. I'm maxing out everything that I can with pre-tax payroll deductions -- 401(k), Healthcare Savings Account, etc. -- and I'm planning to take $3000 in capital losses from losers in my portfolio (any more than that and I'd have to carry it over to the next year.) I want my adjusted gross income to look really pitiful in 2007. I don't know how much it will help, but it can't hurt anything. How are student assets in a retirement account (like an IRA) counted? Best regards, Bob Posted by Mark Bole on January 15, 2007, 6:44 pm zxcvbob wrote: > P.Schuman wrote: [...] >> Here is what I recall - but can't find it mentioned on the web >> Student Parent >> Assets = 20% Assets = 6% >> Income = 50% Income = 47% I learned this the hard way after the first or second year (been filing FAFSA's going on six years now... two or three more years to go!) I've even read nationally syndicated columnists talk about "sheltering" the parents' assets from FAFSA calculation, but as your numbers show (and I think the 47% for parental income is a little high, but not much), the parents' current income has a much higher impact -- so if they are still in peak earning years, the likelihood of need-based financial aid will be between zero and none, regardless of their assets. They won't show you the EFC (expected family contribution) until AFTER you have submitted your numbers, so do-it-yourself "what-if" is not possible, unlike with tax planning. >> Another discussion was related to "base year", and basically (like >> income taxes), you wanted to reduce the amount of income you would >> show in the year prior to filing the FAFSA, which would normally be >> your junior year. The FAFSA you file now (Jan-Mar 2007, typically) for the upcoming school year (Jul 2007- Jun 2008) will ask you for tax year 2006 info. You're right, your actually income during the school year in question doesn't count retroactively. > I want my adjusted gross income to look really pitiful in 2007. I don't > know how much it will help, but it can't hurt anything. There are FAFSA planners who for a fee will help you "game" the system, but I've never used one. Unfortunately FAFSA formula takes into account a lot more than just your taxable (let alone adjusted gross) income. Here, FWIW, is a listing of the FAFSA amounts you must report and how they relate to your taxable income. I posted this a year ago to misc.taxes.moderated but with moderator's indulgence will re-post here. My characterization of the three worksheets is as follows: worksheet A: government welfare payments to you worksheet B: untaxed regular income worksheet C: attaboy's (income already going to education) ============ Worksheet A         Earned Income Credit         Additional Child Tax Credit         Welfare Benefits         Untaxed Social Security Benefits          Worksheet B         Payments to Tax-Deferred Pensions & Savings         Deductible IRA/Keogh Payments         Child Support Received         Tax Exempt Interest Income         Foreign Income Exclusion         Untaxed Portions of IRA Distributions         Untaxed Portions of Pensions         Credit for Federal Tax on Special Fuels         Housing, Food, & Living Allowances         Veterans’ Noneducation Benefits         Other Untaxed Income or Benefits         Money Received (not reported elsewhere) Worksheet C         Education Credits         Child Support Paid         Taxable Work-Study Earnings         Grant and Scholarship Aid (reported in AGI) -Mark Bole Similar Threads Posted Investments for a young college student February 8, 2008, 5:30 pm Purchasing Non-US Exchange Traded Assets December 15, 2006, 4:59 am determine assets at time of death February 27, 2008, 5:25 am how to protect retirement assets during bear markets April 16, 2007, 8:34 am Student loan default October 18, 2006, 11:35 am Pay off student loans or invest or both? 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