photo by flickr user lendingmemo (cc license)
A recent Reuters piece details a few tricks that some families do in hopes of getting a better financial aid offers. However, unlike most news articles concerning financial aid tricks, these tricks are considered ill-advised. As the article states, “These methods carry significant risks and may not even work.”
The four tricks are as follows:
Trick: Lying about income
Problem: Likely to get caught, since colleges often check FAFSA against tax returns. Also lying on FAFSA can result in “a fine of up to $20,000 and up to five years in prison.”
Trick: Hiding assets
Problem: For most families, it’s unnecessary. Furthermore, it’s not likely to work. If you trigger a financial aid officers’ attention, they can ask you for several years worth of account statements and tax returns.
Trick: Buying annuities and life insurance to reduce assets
Problem: Income is the driving factor for financial aid offers, not assets. However, while the FAFSA doesn’t consider annuities, more colleges are counting them. And, if you find out the annuity didn’t help, you may have to consider a hefty penalty to get your money out early.
Trick: Saving in a grandparent’s name
Problem: While this can help for the first year, but that money will count as a student resource in the second year of school, undoing the benefit of this ‘trick.’ Experts say it’s typically best to save in the parent’s name because it doesn’t count as income for financial aid purposes.
If you’re looking for real financial aid application tips and tricks, we recommend using the Department of Education website or asking your questions to your school financial aid office. Also feel free to post your questions here as many of our members have experience that may be helpful to you.