Question for the Money Doctors
Question submitted on Jun 10, 2015.
Questiona teenager inherits a sum in excess of $10k and wants to save it without affecting his financial aid for college, what is your advice?
To minimize the effect the inheritance has on qualifying for need-based financial aid, you can use one of the following approaches:
1) Spend the money. Does the teenager need a car for college? Are they any other large expenses that could be paid down before the financial aid applications are submitted? Any money remaining from the inheritance at the time the financial aid process begins will be counted as a student asset, so try to reduce the balance if possible.
2) If your intention is to use the money for college, deposit the inheritance into a 529 college savings plan. The 529 account will be considered a parental asset and will carry far less weight in the calculation of your expected family contribution.
For additional information visit http://www.360financialliteracy.org/