If I open a savings account for my 16 yr old will that count against her for financial aid?

Answer 1

Probably. Perhaps this is stating the obvious, but: the mere presence of a savings account won't affect her eligibility for aid. The amount of money in an account in her name could have an affect on her eligibility, yes. Here's how:

To apply for financial aid, you will need to file the Free Application for Federal Student Aid (FAFSA). This form asks a variety of questions, which the government (and school) will use to determine your daughter's eligibility for financial aid. Among these questions will be one that asks (in essence) "How much money do you, the student, have in cash/savings/checking accounts?' and then "How much money do your parents have in their cash/savings/checking accounts." Your responses to the FAFSA questions will be plugged into a formula (known as FM or "federal methodology") that determines your family's ability to pay for your daugher's education. This formula will produce a number (known as an EFC or "Expected Family Contribution"). Speaking VERY generally, EFCs are made up of 4 things, as follows:

*Contribution from parents' assets
*Contribution from parents' income
*Contribution from student's assets
*Contribution from student's income

Each of these things is weighted ("held against" the student) a bit differently. Assets in the parents' names are fairly well protected because the government recognizes that some of this money is needed for living expenses and retirement. Parents' incomes are weighted a little more heavily. The student's income AND any assets in the student's name are counted against the student the most. The government does this, I believe, because they want education financing to be a high (if not THE highest) priority at this point in a student's life. They seem to presume that parents have been covering the student's living expenses and that education financing would be the most important cost thereafter.

About 20% of the student's assets at the time of FAFSA filing will be counted towards the EFC. So, if you have saved $1,000 in your daughter's savings account by the time you file the FAFSA, $200 of it will appear in the EFC. By contrast, if the same $1,000 was in your name, only $120 of it would be counted against the EFC. (Worse still, 50% of your daughter's income will be counted toward's that year's EFC.)

Answer 2

Students applying for financial aide are required to report any earnings during the reporting year (possible part time job) as well as any savings or assests in the students name. If you open a savings account for your daughter, it will be evaluated during the financial aide process. In mosts situations, a students' savings account must be well over $1,000 to affect the family contribution in any significant way. The idea is a portion of the savings account will be expected to be used for cost of college. If part of the reason for the savings account is to help will college related expenses, then you'll be fine. If you were hoping she would be able to use keep the savings for other purposes, you may decide against it.

Answer 3

The calculation of the expected student contribution is generally 35 percent of the student's assets and 50 percent of the student's prior year earnings.

Money for college in a parent's name is much better than money for college in a child's name...So, the less money the student has, the better.

Answer 4

yes it will affect th eamount of financila aid she would qualify for. When determining an amount they will ask about your daughters savings, if any. (canada)

Answer 5

Insomuch as all the money she has will be expected to be put forth towards tuition etc then yes.

Answer 6

It shouldnt.