ISO advice on whether to fill out the FAFSA form - 529 in grandparent's name FBO the grandchildren

[Anonymous]

Anonymous wrote:JFC, $450k HHI and grandma pays for Kid 1's tuition and OP is still hoping to game financial aid for Kid 2 by hiding the 529 funds because she has NO OTHER ASSETS besides retirement and home equity. Yes OP, go right ahead and find a way to scam the system to avoid paying full freight. My heart aches for your suffering.

OP here. I am definitely not trying to "game financial aid" or "scam the system." I'm not sure where you get that from my posts.

Trust me, we want to use that money in the 529s that my mom has set up in her name (FBO her grandchildren), and NOT apply for financial aid (as there is plenty of money in the 529s to pay for tuition/room/board). And of course, it goes without saying that we would disclose it if asked. And of course if it is used one year, we'd have to disclose it the next year.

I have not filled out the FAFSA before, and so I was just not sure if I need to disclose it on the initial FAFSA that we'd do in conjunction with the admissions process.

I do not have access to the 529 account, and am dependent on my mom's decision as to whether she will pay out of the account, which is again in her name. If she decided that she needed the 529 money for her own living expenses, then it seems like we should at least fill out the FAFSA (honestly of course). Sounds like we might not get FA anyway. But maybe we'd get a little discount. Who knows, maybe it's not worth even bothering with the FAFSA.

[Anonymous]

Anonymous wrote:My family is not big on talking about money either. My parents did set up a 529 for my kids and they send me the annual statement so we know what is in it. We don't have to have a big discussion about it but we know the status. That doesn't help you if your Mom decided to repurpose the money but maybe just asking her to send you the statement will make her feel less awkward.

OP here. Thank you for your suggestion. I could ask my mom for the statement, but it might seem presumptuous of me. She has not told me the balance in the account for my oldest child who's currently in college, even though we have talked about that 529 several times in the past year (when tuition was due).

[Anonymous]

Your 1st son is a great student.

You have a huge income and should have saved in your own 529 or you should pay out of pocket and not take your mom's money. You sound really greedy.

[Anonymous]

Anonymous wrote:That money is not just scot free.

My understanding is that it is in their name you have to declare it. That is why it is better for parents to set it up instead of grandparents (i.e. parental assets are treated more favorably than child assets in the family contribution calculation). So, I would not say that your mom was THAT savvy about how to set things up. Though she sounds very generous.

OR you will have to declare it as a gift the following year.

You can't just use it and pretend you do not have it.

Come on.

OP here. I am definitely not trying to use it and pretend we do not have it. I definitely did not say that.

If we use it, it will get reported. Period. As someone who has not filled out a FAFSA, I was just curious if I need to disclose this during the admissions process. If we got any FA at all, it would presumably mean that my mom did not help us at all.

Trust me, I do not want to take valuable FA money that could otherwise go to kids with a financial need.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My family is not big on talking about money either. My parents did set up a 529 for my kids and they send me the annual statement so we know what is in it. We don't have to have a big discussion about it but we know the status. That doesn't help you if your Mom decided to repurpose the money but maybe just asking her to send you the statement will make her feel less awkward.

OP here. Thank you for your suggestion. I could ask my mom for the statement, but it might seem presumptuous of me. She has not told me the balance in the account for my oldest child who's currently in college, even though we have talked about that 529 several times in the past year (when tuition was due).

She doesn't want to give you the money. This is why we didn't rely on parents to help as mine promise and never follow through. We have our own 529. With three kids, they need to go to state schools and you can comfortably pay out of pocket on your income.

[Anonymous]

Anonymous wrote:

Anonymous wrote:JFC, $450k HHI and grandma pays for Kid 1's tuition and OP is still hoping to game financial aid for Kid 2 by hiding the 529 funds because she has NO OTHER ASSETS besides retirement and home equity. Yes OP, go right ahead and find a way to scam the system to avoid paying full freight. My heart aches for your suffering.

OP here. I am definitely not trying to "game financial aid" or "scam the system." I'm not sure where you get that from my posts.

Trust me, we want to use that money in the 529s that my mom has set up in her name (FBO her grandchildren), and NOT apply for financial aid (as there is plenty of money in the 529s to pay for tuition/room/board). And of course, it goes without saying that we would disclose it if asked. And of course if it is used one year, we'd have to disclose it the next year.

I have not filled out the FAFSA before, and so I was just not sure if I need to disclose it on the initial FAFSA that we'd do in conjunction with the admissions process.

I do not have access to the 529 account, and am dependent on my mom's decision as to whether she will pay out of the account, which is again in her name. If she decided that she needed the 529 money for her own living expenses, then it seems like we should at least fill out the FAFSA (honestly of course). Sounds like we might not get FA anyway. But maybe we'd get a little discount. Who knows, maybe it's not worth even bothering with the FAFSA.

You make $450K a year. You should not get any aid.

[Anonymous]

Anonymous wrote:OP here. Thanks to all for these incredibly helpful comments, especially 12:13. These comments are giving me insights that I did not consider previously.

And as for lessons learned, we hope to be able to provide college tuition for our (future) grandchildren. We'll make sure not to over-promise and under-deliver, and will communicate regularly (rather than once at birth, and then basically waiting 18 years to bring it up again).

(Having said that, I do believe my mom will follow through (even insist) on providing college tuition/room/board for 4 years for all 3 of her grandchildren (e.g. my kids). (If DH and I refuse it (not ideal at this point for DH and me as we had thought that the 529s for our kids were voluntarily fully funded), she may even balk at our refusal.)

Tell her the cost is $15K a year, and you pay the balance.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here. Thanks to all for these incredibly helpful comments, especially 12:13. These comments are giving me insights that I did not consider previously.

And as for lessons learned, we hope to be able to provide college tuition for our (future) grandchildren. We'll make sure not to over-promise and under-deliver, and will communicate regularly (rather than once at birth, and then basically waiting 18 years to bring it up again).

(Having said that, I do believe my mom will follow through (even insist) on providing college tuition/room/board for 4 years for all 3 of her grandchildren (e.g. my kids). (If DH and I refuse it (not ideal at this point for DH and me as we had thought that the 529s for our kids were voluntarily fully funded), she may even balk at our refusal.)

Tell her the cost is $15K a year, and you pay the balance.

This. Split the cost with your mom. That is still a huge saving for you

[Anonymous]

Back to whether or not to fill out the FAFSA - people with more expertise should weigh in....I don't know why it would hurt your child's application to fill it out - because I can't imagine you will get any aide money (merit maybe).

[Anonymous]

Anonymous wrote:Back to whether or not to fill out the FAFSA - people with more expertise should weigh in....I don't know why it would hurt your child's application to fill it out - because I can't imagine you will get any aide money (merit maybe).

She can always fill it out but at that income there is no excuse for not saving and they can easily pay 3 kids at once.

[Anonymous]

So here's the thing...

You said you had this high income for a long time and you said your mom funded the 529s when the kids were little. So two factors have changed: she offered this to you when you were in a very different place economically - and there's no way she could have imagined college would cost so much.

You will not get financial aid. Additionally, most schools do not *increase* aid substantially on an existing student. Those 'tuition discounts' are usually given as (ahem) scholarships for freshman year.

https://www.usnews.com/best-colleges/rankings/most-merit-aid

Is there a reason you need financial aid? I mean, you make enough to pay out of current earnings. You said you have quite a bit saved for retirement in 401k/ TSP and you have substantial home equity. If anything, have kiddos contribute at least for their spending money: they could summer jobs and maybe jobs on campus, become RAs, take a small student loan per year ($5k) and you could ask mom for a token amount (the $15k up top sounds about right) and you pay the difference.

I think you should be thankful that mom thought ahead but, in light of your current income, you should tell her you don't need it now but "Thanks for being such a wonderful mother and grandmother that you had a Plan B for me. I appreciate how you had our back so the kids could attend college but put it away for yourself, in case you need it later on."

Just so you know, senior care can be $10k/ month.

[Anonymous]

Anonymous wrote:So here's the thing...

You said you had this high income for a long time and you said your mom funded the 529s when the kids were little. So two factors have changed: she offered this to you when you were in a very different place economically - and there's no way she could have imagined college would cost so much.

You will not get financial aid. Additionally, most schools do not *increase* aid substantially on an existing student. Those 'tuition discounts' are usually given as (ahem) scholarships for freshman year.

https://www.usnews.com/best-colleges/rankings/most-merit-aid

Is there a reason you need financial aid? I mean, you make enough to pay out of current earnings. You said you have quite a bit saved for retirement in 401k/ TSP and you have substantial home equity. If anything, have kiddos contribute at least for their spending money: they could summer jobs and maybe jobs on campus, become RAs, take a small student loan per year ($5k) and you could ask mom for a token amount (the $15k up top sounds about right) and you pay the difference.

I think you should be thankful that mom thought ahead but, in light of your current income, you should tell her you don't need it now but "Thanks for being such a wonderful mother and grandmother that you had a Plan B for me. I appreciate how you had our back so the kids could attend college but put it away for yourself, in case you need it later on."

Just so you know, senior care can be $10k/ month.

OP, any updates?

[Anonymous]

Anonymous wrote:

Anonymous wrote:1. You do not have to disclose the grandma's 529 on FAFSA. As you said, she is in control and can change the beneficiary or close the account at any time, so it's not your kids money until she actually pays.
2. It used to be that grandparents paying tuition will come bite you back in terms of financial aid next year. The rules have recently changed, but I don't remember when the new rules go into effect, may be 2023-24.
3. If your HHI is $450K, you will not get any FA from FAFSA. You will most likely not get anything from schools who use CSS or their own form either.

OP here. Thank you for this feedback. I did an online expected price calculator for one private college to which my daughter plans to apply. It made it seem like we'd get a discount of $20,000 per year off of tuition. (Total cost would otherwise be $80,000 per year.) Do you think that the online expected price calculator is not reliable, as it does not have all the facts?

Some colleges give discounts for families with two or more kids in college at same time. My family has two kids in private colleges this year and a similar income level, and we were not eligible for any money in the past when we only had one kid in college. We got a discount of $20K at one school and $15k at another school, and these discounts were almost identical to the estimates from the online net price calculators for the schools. To get the discounts, we had to fill out the FAFSA and CSS profiles for both schools. We had never filled these forms before before and won't in the future. Because we filled out the FAFSA, my kids were also eligible for 3K of subsidized loans this years (no interest during college years). The FAFSA is really simple (maybe 20 minutes to prepare) and basically asks for information from your taxes and your savings/529 plans. The CSS is more detailed and varies by school (maybe 1-1.5 hours to prepare). For example, every school asked for information about family businesses and investments, while the schools also asked for various different information, such as the purchase price of your home, mortgage payments, health expenses, 401K savings, etc. For the CSS, you also need to submit W2 for the last couple of years.

By the way, I was repeatedly encouraged by various schools to apply for financial aid and that it would not effect admissions. You can look up need aware schools and see who considers a students finances (For example, https://prepexpert.com/need-aware-colleges/), but even these schools admit need blind until their finances are exhausted, so just apply early if your are asking for financial aid.