Student Aid and Assets

One of the big positives of me getting my college finances in order at an early age is that I hopefully won't need to worry about college aid and that entire aid process. Unfortunately, there are a lot of people who didn't start saving early so they will need to get college financing aid. One of the ways that families try to maximize the aid for the student going to college is to shift assets so they aren't counted toward the financial aid formula. There is nothing wrong with this and moving assets can make a significant difference in the amount of aid that may be available, but you need to be careful not to go overboard when doing this as this article indicates:

But sorting out the best moves is not easy: In general, there are no hard and fast rules. And while there is nothing wrong with rearranging your finances to increase the chances of getting aid, parents who try too hard to game the system risk being charged with a crime.

“I have seen people lie about assets that they have,” said Ray Loewe, founder of College Money, a New Jersey advisory firm that specializes in college finances. “Basically, if you have an asset and you don’t disclose it, it’s fraud.”

The article goes on to give quality advice on how to move the assets which even my uncle would endorse as a good personal finance move. Cash and other investments are counted in the formula which can reduce the amount of financial aid available. If you take the cash or sell the assets to pay down credit card debt or mortgage debt, they will no longer be counted in the formula.

Of course, the best strategy is to start saving early so that the financial aid isn't a necessity in the first place, but it is worthwhile learning more about how to leverage the system to your advantage if you're in the position of needing financial aid.