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As a college student, tuition costs can be overwhelming, and support from friends or family can be a big help. However, any financial gifts you receive must be reported on your FAFSA form. According to the Wall Street Journal, this can influence your eligibility for financial aid.
Many students apply for scholarships and fill out the Free Application for Federal Student Aid (FAFSA) while attending school. Naturally, your assets play a role in determining your eligibility, and any contributions from family members are considered.
In a letter to the WSJ, one grandparent shares their plan to give their grandchild money for college just before the academic year begins, hoping to avoid affecting the student's financial aid and scholarship opportunities. However, writer Brian Hershberg explains why this strategy won’t work.
P.J. Walsh, a certified financial planner based in Chicago, explains that the $5,000 gift given to a student must be reported on FAFSA as “money received or paid on the student’s behalf.” He clarifies, “The first $5,000 won’t impact the student’s first year of school, but it must be included as income on the following year’s FAFSA, which will influence the expected contribution for the student’s second year.”
One strategy some experts recommend is waiting until a student’s junior year to make a donation, after they have already completed the FAFSA for their final year of college.
For more details, visit the full article on the Wall Street Journal; link provided below.
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