As part our College Q & A guide, we decided to ask your questions to the the experts. Here are their answers.
Bill Pruden, Head of Upper School, College Counselor. Ravenscroft School
While one can try and position their assets in ways that might appear advantageous, most schools look at the full range of a family’s assets so that a disproportionate amount in one place rather than another is apt raise questions, but yield little value. The system does not seek to prevent younger siblings from having a future, nor do colleges expect parents to spend their retirements in old age versions of Depression era “Hoovervilles” because they spent their last dime on their children’s education. However, they do want to see evidence of a commitment to a child’s education, something that shows that it means more to the family than an extra week of a resort based vacation. Consequently, while you can try to manage, mask and massage your assets, the breadth of information that is generally sought and the way it is reviewed makes it hard to mask your true financial situation to any appreciable degree.
Todd Weaver, Senior Advisor, Strategies for College, Inc.
The answer is, it depends. Some families will not qualify for need-based financial aid and have no reason to reposition assets and income to receive a better award. Families in that situation may simply be paying a so-called “financial advisor” a nice commission on something that really won’t help them in planning for college. I recommend that a family run some calculations first and find out what will be expected of them (Expected Family Contribution) from the colleges, then determine what their “flex points” are. Students with significant assets should consider moving those funds and you could argue that it is the parents’ fiduciary duty to make sure money is being assessed at the lower of two possible rates in the financial aid calcuations. Bottom line – make sure you run the numbers first, then determine if you can reap any benefit by “repositioning” assets and income.
Nina Berler, Founder, unCommon Apps
There are a variety of ways families can reposition their assets and income in order to receive a more favorable financial award, but they should not make those decisions without detailed knowledge. I have found the Wall Street Journal article “Financial Aid 101: How to Get More” most helpful as I have had to learn more about this as a parent and adviser. For example, I remember hearing about families saving in the student’s name in the past, but this is not recommended; students’ assets are weighed more heavily than parents’ in the determination of need-based aid. At the same time, families might choose to accelerate purchases and reduce savings balances for the years which will be scrutinized. In this economy, there are unfortunate circumstances which may happen after the deadlines for aid have passed. In this case, families should check in with the financial aid office at a student’s college for help.
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