After submitting our FAFSA for my son, we got back an EFC of 23207 on the SAR. I have been told by admissions that that is extremely high. The FAFSA says I have to include child support payments we received for him last year, even though the payments will end this year before the start of his freshman year. The amount was approximately $6,000. Also the FAFSA says I have to include UTMAaccounts in net worth of investments. My son has a $30,000 UTMA account that he is listed as secondary on and his grandfather is primary. My son does claim the dividends on his personal tax return, but we haven't decided if we will use any of that money toward college expenses. I contacted the school and they tell me I can submit a change of income form through the school for the child support issueand that I don't need to include the UTMA information at all on my FAFSA because my son is not primary on the account. The FAFSA form instructions say quite the opposite. Can I make the necessary correction on the FAFSA that they (admissions) say? I am trying to not get myself in trouble. What should I do? — Dave B.College admissions staff do not necessarily have the expertise to answer questions about financial aid. Address questions about financial aid to a college financial aid administrator, not a college admissions officer. College admissions staff also do not have the authority to make adjustments to data elements on the Free Application for Federal Studnet Aid (FAFSA). Congress specifically delegated the authority to make adjustments only to the college's financial aid administrators. Some colleges have set up one-stop shops that combine the customer service operations of admissions, financial aid, bursar and registrar. These streamlined hub operations can be convenient, saving the student from having to run around campus to visit multiple offices. They can answer simple questions about financial aid and hand out forms. But they don't always have the depth of expertise to answer technical questions about financial aid. Unfortunately, it isn't always possible to tell whether the answer to a question requires technical expertise. But if an answer conflicts with information available from other credible sources, such as the FAFSA instructions, and the front office staff are unable to resolve the conflict, ask to speak to a financial aid administrator. Tip: When asking a question about financial aid, write down the name and/or ID number of the person answering the question. This will allow supervisors to provide additional training to staff who answer quesions incorrectly. The college's change of income form is used to initiate a professional judgment review by a financial aid administrator. It is not uncommon for child support payments to end before or during enrollment. Most college financial aid administrators will make adjustments when the previous year's income is not reflective of ability to pay during the award year. The $6,000 in child support payments received may account for as much as $3,000 of the $23,000 EFC. But the admissions staff are wrong about the UTMA account. An UGMA or UTMA account is a custodial account, where the account is owned by a minor. As noted in the FAFSA instructions, custodial accounts must be reported as investments on the FAFSA and are reported as assets of the account owner, not the custodian. The titling of an UTMA account established by a grandparent for a grandchild will be "[Grandparent's Name] as custodian for [Grandchild's Name] under the [Grandchild's State of Residence] Uniform Transfer to Minors Act" or something similar. This is in contrast with a Totten Trust, which is typically titled as "[Grandparent's Name], in trust for [Grandchild's Name]". A Totten Trust is a revocable transfer that passes to the beneficiary without probate upon death of the account owner. The terms "primary" and "secondary" have no legal meaning when referring to the custodian and account owner of a custodial account and may be ambiguous as to which is which. Since families sometimes get confused about the difference between custodial accounts and Totten Trusts, an experienced financial aid administrator will always try to clarify who legally owns the account. In most cases the child is the account owner, especially when the parent refers to it as an UGMA or UTMA account or custodial account. When in doubt, a good rule of thumb is to follow the taxes. If the child reports the interest and dividends on his income tax return, the child is the account owner. A $30,000 custodial account contributes $6,000 of the $23,000 EFC. There are a few ways to reduce the impact of a custodial account on a student's EFC. But these strategies will not affect the student's eligibility for need-based financial aid for the fall, since the FAFSA has already been filed. The FAFSA uses a snapshot approach with regard to reporting assets, measuring the asset value as of the date the FAFSA was filed. The FAFSA may be changed to correct errors in the information reported as of the date the FAFSA was filed, but may not be be updated for subsequent changes in the nature or value of the assets. For example, if the applicant transposed two digits in the account balance, the applicant can correct the error on the FAFSA. But the applicant cannot update the asset value because some of the money was spent after the FAFSA was filed. So any steps taken now will affect the treatment on the subsequent year's FAFSA but not the current year's FAFSA. One solution is to spend down the balance in the UTMA account to pay for the student's college education. This will reduce the impact of the UTMA account on eligibility for need-based financial aid next year. The family should spend the student's assets to pay for the student's education before using any parent assets. If the family spends down the UTMA account balance to zero, it will reduce the EFC by as much as $6,000. Another solution is to roll the money into a custodial 529 college savings plan account. A custodial 529 plan is titled the same as the original UTMA account that was used to fund the 529 plan. Even though the student is the account owner (and beneficiary) of a custodial 529 plan, federal law treats such accounts as though they were parent assets on the FAFSA. This yields a much more favorable treatment on the FAFSA, reducing the impact of the $30,000 account from at most $6,000 to at most $1,700. (Note that some financial planners have encouraged families to set up 529 plans with a grandparent as the account owner, as opposed to the student or parent, because accounts owned by a grandparent are not reported as assets on the FAFSA. However, if a 529 plan is not reported as an asset on the FAFSA, any distributions from the 529 plan must be reported as untaxed income to the beneficiary on the subsequent year's FAFSA. That usually results in a much greater increase in the student's EFC than a 529 plan owned by the student or parent. If a 529 plan that is reported as an asset on the FAFSA, distributions are not reported as income on the FAFSA.) Addressing the child support and UTMA account issues will reduce the EFC to about $14,000. This is still too high an EFC for the student to qualify for a Pell Grant, but the student might qualify for a subsidized Stafford loan and perhaps some other aid from the college's own funds, depending on how much the college costs.
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