Quick college financing question for those who probably know more than I do!

[Livvie]

Money paid directly to the school is generally not included as income to the student.

it is if it's a scholarship or grant-

every scholarship dd receives is required to be directly paid by the issuer to the university which the university then uses to determine her 'student need' amount. any grants she's eligible to go directly to the university as well and get deducted from the need amount before the final calculation is done that determines her eligibility to any other need based programs (including loans).

What barkley said.

 

[supersnoop]

it is if it's a scholarship or grant-

every scholarship dd receives is required to be directly paid by the issuer to the university which the university then uses to determine her 'student need' amount. any grants she's eligible to go directly to the university as well and get deducted from the need amount before the final calculation is done that determines her eligibility to any other need based programs (including loans).

What barkley said.

You may be right. I was basing my statement on my knowledge of gift tax exclusions. It seems if the payment is made directly to the school as "cash support," the financial aid impact would be half that of "resource" support.

 

[rockawaybeachgirl]

My son will be starting college in the fall.

I'm guessing we should hit the credit union sometime pretty soon and look into this?

Has your son made his final decision about where to attend? Has he received his FA package (if applicable) and are you prepared to pay the difference? If so, then yes, you should compare to what you can pay OOP with savings/current income etc. and move forward quickly on your options for filling the gap. Ideally, this should be done PRIOR to application (by running the Net Price Calculators on each schools' website) but you are where you are, so I would move forward quickly.

 

[rockawaybeachgirl]

There was some other tax consideration that I don't recall that tipped things in favor of a Parent loan.
I did laugh, I have never considered defaulting on a loan, when selecting a loan. But I am at a point in my life that I hope to never have to get a loan again for anything.

The only other tax consideration I can think of is that you did not have enough deductions to itemize (vs taking the standard deduction), so the tax deductibility of the HELOC was not a benefit to you. (FWIW, I am also a CPA).

And I really don't think the majority of people take out loans thinking "I can't wait to default on this baby - suckers!". But, you asked me, generally, why HELOCs might be better than PP loans, so I was listing out the reasons. IF one does default, the PP loans can follow you through the rest of your life. I wasn't saying you specifically made the wrong decision. 11 years ago the PP rate was probably competitive with a HELOC, but that's certainly not the case today.

 

[Sadie22]

Money paid directly to the school is generally not included as income to the student.

It seems to depend on what the funds are used for.

http://www.fastweb.com/financial-aid/articles/should-i-claim-scholarships-and-other-awards-on-taxes

 

[tvguy]

The only other tax consideration I can think of is that you did not have enough deductions to itemize (vs taking the standard deduction), so the tax deductibility of the HELOC was not a benefit to you. (FWIW, I am also a CPA).
.

That probably was it.

 

[barkley]

It seems to depend on what the funds are used for.

http://www.fastweb.com/financial-aid/articles/should-i-claim-scholarships-and-other-awards-on-taxes

this article talks to how the irs views it not nesc. colleges (totally different). colleges have entirely different rules about what is considered 'available' income/resources to their students-often not be based in any reality (like with efc amounts). to the credit of the irs they only look at income actually received by/on behalf of someone-colleges base everything on fafsa assumptions ("we know your middle class parents can no way pay that $20,000 efc but that's what fafsa says they can, and the feds says we have to run with").

 

[TheRustyScupper]

. . . I think Kiwanis here expects all the students they consider for scholarships, loans and grants expects the applicants to have considered all financial options, including parent loans before they make an award.

1) Sometimes.
2) However, we make decisions based upon several factors.
3) They are fluid and flexible, and not rigid nor static.

 

[TheRustyScupper]

Money paid directly to the school is generally not included as income to the student.

1) We established Ohio "529" college plans for both granddaughters.
2) Both kids had their ENTIRE undergrad college costs guaranteed (tuition, fees, books, room/board, periodic transportation to/from home).
3) If they would have requested additional funds for some reason, the "529" proceeds would have been considered.