FAFSA question

[rbuzzotta]

I am filling out the FAFSA form for my DD. WE have a 529 account for all 3 DD's (we took a hit this year!! ugh!). I was wondering if I put the amount that the entire account is worth or do I divide it by 3 being it is for all 3 DD's (but only 1 going to college this year).

Thanks................this form is frustrating!!

 

[eliza61]

I am filling out the FAFSA form for my DD. WE have a 529 account for all 3 DD's (we took a hit this year!! ugh!). I was wondering if I put the amount that the entire account is worth or do I divide it by 3 being it is for all 3 DD's (but only 1 going to college this year).

Thanks................this form is frustrating!!

I believe you list the entire balance. who's name is the 529 in?

 

[rbuzzotta]

I believe it has my youngest DD's name on it. I have to re check it.

 

[gm]

delete

 

[LadyZolt]

I believe it has my youngest DD's name on it. I have to re check it.

Hmm. We have 529's for our three and I was under the impression that only one name could be on it at any one time, and that you could only change the name on it once a year, so if we wanted to take my DS22's 529 and put my DD18's name on it, we could do that but then we'd have to wait a year to change it back to DS22 if needed. (This came up because DD18 is actually enrolled in college. DS22 has not yet decided if college is right for him. LOL!) Is it possible to have more than one kid attached to a single 539 plan at a time? Anyone know?

-Dorothy (LadyZolt)

 

[barkley]

we were told all of the named (on the fafsa) assetts had to be listed for the family-then after the fact we could clarify to any colleges that we indictated to receive reports.

i called the university dh attends today about this-we have to wait a month or two until they start accepting explanitory letters (and we've got a whopper-his efc based on our 2008 mandatory fafsa reported income is in reality all the net income we will receive in 2009 and beyond till he graduates ).

 

[dzneelvr]

List the amounts of assets you have. Don't divide according to names on any accounts.

 

[rbuzzotta]

Hmm. We have 529's for our three and I was under the impression that only one name could be on it at any one time, and that you could only change the name on it once a year, so if we wanted to take my DS22's 529 and put my DD18's name on it, we could do that but then we'd have to wait a year to change it back to DS22 if needed. (This came up because DD18 is actually enrolled in college. DS22 has not yet decided if college is right for him. LOL!) Is it possible to have more than one kid attached to a single 539 plan at a time? Anyone know?

-Dorothy (LadyZolt)

You are correct Dorothy. I just looke at it again. The name on the account is my youngest daughters. So, I will still have to list that as an asset?? Yes, I know it is but it is not in DD's name that the FAFSA is for.

 

[rbuzzotta]

On another note, DH pays child support and there is a place on the FAFSA that has child support on it. He also pays 4 quarterly payments to his son's college. I can't seem to find a slot for that. Would that be something that would have to be explained later?

Thanks and sorry if I am asking stupid questions. I just want to do this right!!

 

[golfgal]

I am pretty sure that a 529 account can only be in one child's name and you can only use that funds in that account to provide educational expenses for THAT child. If your account is in your youngest child's name, you can't use it for your older children. Who set the account up that way? You can change the name that is on the account, say if you have one for an older child that doesn't go to college you can transfer that account to your younger child. I think you need to talk to whoever manages that account asap or you might be in trouble next fall if you are planning on using that money for your older child.

On a side note, a little known feature of the 529-if your child gets a scholarship you can withdraw, without penalty, funds equal to that scholarship--with proper proof.

 

[rbuzzotta]

I am pretty sure that a 529 account can only be in one child's name and you can only use that funds in that account to provide educational expenses for THAT child. If your account is in your youngest child's name, you can't use it for your older children. Who set the account up that way? You can change the name that is on the account, say if you have one for an older child that doesn't go to college you can transfer that account to your younger child. I think you need to talk to whoever manages that account asap or you might be in trouble next fall if you are planning on using that money for your older child.

On a side note, a little known feature of the 529-if your child gets a scholarship you can withdraw, without penalty, funds equal to that scholarship--with proper proof.

Thanks..........I will have to call the man who set up the accounrt. I was under the impression that I could take the money out for ANY college expenses even though it was not for the person whose name is on the fund.

 

[golfgal]

Thanks..........I will have to call the man who set up the accounrt. I was under the impression that I could take the money out for ANY college expenses even though it was not for the person whose name is on the fund.

You can't even use it for "any" college expense, only qualified college expenses-tuition, books, fees, etc. I know some people that think they can use that money to buy a car for their college student-nope. You can probably google the information when google is fixed (see the google issues post) and get what you need to know.

 

[PatsMom]

Thanks..........I will have to call the man who set up the accounrt. I was under the impression that I could take the money out for ANY college expenses even though it was not for the person whose name is on the fund.

Seconding the opinion that you can only use the account for the child named as beneficiary. It is sometimes a strategy to set up an account in the name of a single child in order to minimize fees, etc if the account is small. Some plans do charge fees, some have sales loads which might get to a breakpoint if you only had one account.

You can change the beneficiary once a year so you might want to talk to the person who set up the account. Or see advice from a financial planner.

 

[LadyZolt]

From what my broker told me and what I've read here on this board, I think you'd have to decide if you want to use the money in the 529 for your eldest DD, or if you want to leave it in the name of the youngest, or if you really want to divide it by 3 and set up accounts for each DD so that they each have one. Personally, I'd vote for that last option because it could cause rivalry later when one says that her parents didn't give her anything for college, but did provide some funds for her sister. Just my two cents as a mother of three. LOL!

I haven't had to fill out the FAFSA because one kid joined the military and the other two are using a state scholarship that anyone who graduates from a high school in the state can use and those monies combined with what they have in their 529's has met all their expenses (the two in college live at home, so don't even pay for a dorm, but I know the 529 can be used to pay for an on-campus dorm). You might want to call your DD's high school counselor because my kids' high school counselors were real experts at all the forms and tests kids have to do for college. I think he/she will be able to answer a lot of your questions. Good luck!

-Dorothy (LadyZolt)

 

[golfgal]

From what my broker told me and what I've read here on this board, I think you'd have to decide if you want to use the money in the 529 for your eldest DD, or if you want to leave it in the name of the youngest, or if you really want to divide it by 3 and set up accounts for each DD so that they each have one. Personally, I'd vote for that last option because it could cause rivalry later when one says that her parents didn't give her anything for college, but did provide some funds for her sister. Just my two cents as a mother of three. LOL!

I haven't had to fill out the FAFSA because one kid joined the military and the other two are using a state scholarship that anyone who graduates from a high school in the state can use and those monies combined with what they have in their 529's has met all their expenses (the two in college live at home, so don't even pay for a dorm, but I know the 529 can be used to pay for an on-campus dorm). You might want to call your DD's high school counselor because my kids' high school counselors were real experts at all the forms and tests kids have to do for college. I think he/she will be able to answer a lot of your questions. Good luck!

-Dorothy (LadyZolt)

Actually it would be better to leave it as one account as the larger balance will compound with bigger gains and you can start the money with DD#1, if she doesn't use all of her part, the rest can be passed to #2 and so on since technically you can only use it for college expenses--not that you can't draw the funds out at age 59 1/2 and pay a penalty but you still have the non-taxable gains to use for retirement, etc. but it is really there to use for college.

 

[LadyZolt]

Actually it would be better to leave it as one account as the larger balance will compound with bigger gains and you can start the money with DD#1, if she doesn't use all of her part, the rest can be passed to #2 and so on since technically you can only use it for college expenses--

I respectfully disagree. The OP has three DD's, one of whom is ready for college now. Putting a 529 fund in her name for immediate use is wise, and because funds are needed soon, this account will be handled in a conservative way so that capital is available for immediate use.

DD's #2 and #3 however could be years away from college. Funds in their names should be set up and allowed to be handled more aggressively because there is more time for them to grow.

Example: We put in the same amount for all three kids when we set them up, but made the eldest one more conservative as he was going to draw from them soon (he didn't, but we thought he was going to). The middle child was a medium-type plan, and the youngest was more aggressive. This third account grew by more than $10,000 in five years. Granted, the market today is not what it was during this time period, but the eldest son's account grew less than half that amount. What the plan's manager will do depends on how quickly one needs to access the money. If the manager knows it's "safe" to invest for several years, he can put it into higher yield stuff. For example, a 90-day Certificate of Deposit does not have as high a yield as a 2-year one.

Just my two cents -- something the OP should talk over with her financial professional.

-Dorothy (LadyZolt)

 

[golfgal]

I respectfully disagree. The OP has three DD's, one of whom is ready for college now. Putting a 529 fund in her name for immediate use is wise, and because funds are needed soon, this account will be handled in a conservative way so that capital is available for immediate use.

DD's #2 and #3 however could be years away from college. Funds in their names should be set up and allowed to be handled more aggressively because there is more time for them to grow.

Example: We put in the same amount for all three kids when we set them up, but made the eldest one more conservative as he was going to draw from them soon (he didn't, but we thought he was going to). The middle child was a medium-type plan, and the youngest was more aggressive. This third account grew by more than $10,000 in five years. Granted, the market today is not what it was during this time period, but the eldest son's account grew less than half that amount. What the plan's manager will do depends on how quickly one needs to access the money. If the manager knows it's "safe" to invest for several years, he can put it into higher yield stuff. For example, a 90-day Certificate of Deposit does not have as high a yield as a 2-year one.

Just my two cents -- something the OP should talk over with her financial professional.

-Dorothy (LadyZolt)

Unless the time horizon for the other 2 is more then 10 years or so, they should also be in progressively less aggressive funds. Our oldest is a junior but our next 2 are in 8th grade, their accounts would NOT be in aggressive modes now (we don't have 529's but other accounts for them so it is moot but the time horizon is still minimal).

 

[LadyZolt]

Unless the time horizon for the other 2 is more then 10 years or so, they should also be in progressively less aggressive funds.

Yes, this is what I was saying about mine -- eldest was conservative, middle child was at a medium level, last one was most aggressive (but still not as *that* aggressive as I am not a risk taker in finances -- LOL! No "gold mines in Africa" for me, or Ponzi schemes -- I like bonds, CD's, and diversified stock portfolios). Even two years is enough to do some interest-generating revenue, though -- you know you can't use the funds for two years. You could put them in a CD and earn more interest than you would in a regular savings plan. That's what I'm saying. Divide the funds and put a third of them to work at the highest generating interest rates that you can for the longest time period that you can.

-Dorothy (LadyZolt)