I’m doing everything possible to lower my EFC. I have assets, UTMA, mutual funds, stocks and I know they hurt my chances of receiving free money (Federal or state grants). I was thinking of cashing in the assets and putting them in a safety deposit box. That way I won’t have to claim them on the FAFSA because they are no longer assets. I have two children who will be attending college. The age difference of the two is six years. Which means they won’t be in college (hopefully) at the same time. Is this legal to do? If not, what are the consequences if I do this. Are there fines, penalties, etc.? I’m exploring all my options and if this way is illegal, then obviously doing it is out of the question. BTW. Any suggestions how to lower your EFC when you have assets that count against you? — Rich N.
Failure to report assets on the Free Application for Federal Student Aid (FAFSA) is fraud. It doesn’t matter whether you keep the money in a safety deposit box or stuffed under your mattress. Failing to report the money is still fraud, since you will be making a false statement on the FAFSA in response to the question about the “total current balance of cash, savings and checking accounts.”
The penalties for providing false information on the FAFSA are severe. Per section 490(a) of the Higher Education Act of 1965 [20 USC 1097(a)], the penalties include a fine of up to $20,000 and/or up to 5 years in prison. These penalties apply both to attempts to receive and to the actual receipt of Title IV federal student aid through fraud, false statement or forgery. (The FAFSA also includes the following signing statement: “If you purposely give false or misleading information, you may be fined up to $20,000, sent to prison, or both.”) You will also be required to return all student aid, making it much more difficult for you to pay for college. Some colleges will expell students who submit falsified financial aid applications, as it is a violation of their honor code.
If you try to submit false information on the FAFSA, you probably won’t get away with it. The college financial aid administrator has much more experience in detecting discrepant information than you have in falsifying your FAFSA, so the odds are stacked against you. For example, cashing out your assets will generate capital gains that show up on your income tax returns. If your assets are inconsistent with your income or interest/dividend income is inconsistent with reported assets, the college might require you to submit several years of income tax returns and account statements. The verification process is not intended to be an audit, but if the college detects signs of fraud, they are required to notify the Inspector General at the US Department of Education (1-800-MIS-USED) for possible prosecution. The US Department of Education also has a variety of automated tools designed to detect fraud, and will be using a much more targeted process this year to select FAFSAs for verification.
It is also often pointless to try to hide assets. If parent assets are sufficient to eliminate eligibility for need-based aid, usually the parent income on its own is sufficient to prevent the student from qualifying for the Pell Grant and state grants. The need analysis formula is much more heavily weighted toward income than assets. You can see this by using a financial aid calculator to evaluate the impact of zeroing out the assets on the expected family contribution (EFC). Parent assets affect the EFC scores of only about 4% of dependent students.
The main type of assets that can have a big impact on aid eligibility are assets in the child’s name, such as the UTMA account, since 20% of the student’s assets will be added to the EFC. Parent assets are assessed at a much lower rate. To reduce the impact of the UTMA account, move the money into a custodial 529 college savings plan account. This is like a regular 529 plan account, but with the student as both account owner and beneficiary. The titling of the custodial 529 plan account is similar to that of the original UTMA account. The College Cost Reduction and Access Act of 2007 changed the treatment of student-owned qualified tuition plans (including 529 plans, prepaid tuition plans and Coverdell education savings accounts) to consider them as though they were parent assets starting with the 2009-10 award year. So shifting the money from the child’s name into a custodial 529 plan account is a legal way of reducing the impact of the assets on eligibility for need-based financial aid.
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All scholarships administered by the Middletown Community Foundation have a common application. These pages contain a lot of information, which we have attempted to break up into manageable sections. Please read all that pertain to your situation; many of your questions will be answered here.
We have scholarships for (1) High School Seniors who will be graduating in the spring and attending college in the fall, or students who graduated this past spring and who are taking a “gap year” before college (2) College Upperclassmen (Sophomores through Seniors) who are 24 years old or under and who currently do not receive a renewable scholarship through the Foundation, and (3) Non-Traditional Adult (Students who are 25 and above).
You may register at any time by following this link: https://mcfoundation.awardspring.com/. However, you should be aware that access to site information is not available until the application opens for a cycle.
The online initial application serves as a filter, which will automatically apply you to all scholarships for which you may be eligible, based on your answers. At times, the questions may seem redundant, but this is part of the filtering process. You should click “submit application” as soon as possible. DO NOT WAIT UNTIL THE DEADLINE. When you click “submit application” the first time, it just completes the filtering process. Many of our specific scholarships require additional uploads. After clicking submit and being filtered, you will see what these additional requirements are. You have not applied to all scholarships until you have uploaded the additional information required for specific scholarships and clicked “submit application” a second time. This second submission must also occur before the deadline.
A list of essay questions which may pertain to you is on the age-specific area of our website. You may begin working on them at any time. We STRONGLY suggest that you write all essays in MS Word or similar program. Take full advantage of spell check capabilities, and have someone proofread your essays. After all editing on your essays is complete, you can cut and paste them into the space provided in the application.
Honor Statement: We require backup documentation uploads for all self-reported academic and financial information. Your reported unweighted GPA will be compared to your transcript. Your ACT or SAT score will be compared with your student report. Your FAFSA EFC, should you qualify for a need based scholarship, will be compared with your FAFSA SAR EFC. We ask questions to certify eligibility for specific scholarship requirements (First in family to attend college? Appalachian descent? Participation in Big Brothers/Big Sisters program as a LITTLE brother or sister?), which we then verify before awarding. Students who misrepresent data or falsify supporting documentation will not be considered for any scholarship.
The upcoming application cycles are below:
High School Seniors: Application opens January 1, 2018 and closes February 14, 2018 promptly at 11:59 pm.
Upperclassmen and Non-Traditional Adults: (Application opens twice) November 1, 2017- December 1, 2017 11:59pm and June 1, 2018- July 1, 2018 11:59 pm. You must re-apply each cycle, which includes uploading your two letters of reference after you submit the initial application. Non-traditional Adults also have the option of turning in paper copies of the application- more information and a typeable PDF copy of the application is available within the Non-traditional adult scholarship page.
We have compiled FAQs here as well as for each scholarship category which can be accessed on the pertinent pages. Please read all that may apply to you. If you have any additional questions regarding deadlines, scholarship requirements or attachments, please contact the Middletown Community Foundation at 513-424-7369 or email email@example.com. For technical support with the application please use the “Support” button within the AwardSpring program to contact an AwardSpring technician.
How much will I receive? Scholarship awards range from one-time awards of $100 up to renewable awards worth $20,000+ over four years. If you win, it is important for your financial planning purposes to know whether you have received a one-time award or whether you have received a renewable award.
- All upperclass and non-traditional adult scholarships are one-time awards.
- For High School Seniors: All renewable award amounts are shown in 4-year totals, so a renewable scholarship might show up as a $20,000 award and would be paid out at $5,000 per year over 4 years. If you are awarded a scholarship “follow-up items” will appear on your Dashboard in AwardSpring. Information given within those follow-up items will tell you whether it is a one-time award or renewable.
What are my chances of winning a scholarship? The criteria for each of our almost 100 scholarships were set by the donor of that scholarship. It is the committee’s responsibility to award each scholarship to the candidate that best fits the criteria outlined by the original donor. No one can predict the how any one individual will do in the process. Every year we turn great applicants away because we have a better fit for each scholarship. Merit is the ultimate determination when there are multiple applicants for a scholarship and everything else is equal.
I am not sure if I will attend school. Can I decide after I receive a scholarship? Please don’t enter this process unless you are already enrolled or have already determined that you will be entering college. There are two reasons for this. First, our scholarships are not given in amounts that will have a significant impact on what you or your family are willing and able to afford. The first part of your college search should be an open and realistic conversation with your family about the cost of college and how that burden will be carried. Our scholarships are not designed to enable you to completely afford your education, only to help ease the burden a small bit. You should have at least narrowed your selection of schools down to one or two schools and know how you are going to pay for them, without the benefit of a scholarship. Second, if you are awarded a scholarship and decide not to attend school, it is too late for us to award that scholarship to another student-- you have essentially blocked another student in need from receiving a scholarship. Please, in fairness to all, do not apply if you are still in the “exploring my options” phase of your college search.
I am having trouble uploading documents. Can I just drop off copies or mail them in? Do not mail or drop off any information to the Middletown Community Foundation. It must all be contained in your online application for the program to work. The best formats for document uploads are PDF or Word. Do not attempt to upload documents (FAFSA SAR or ACT report) directly from another site… it does not work. Often it gives the appearance of working, but the link is broken when we try to access the document from our offices. Save the document to your computer or a flash drive as a PDF then upload that document from your computer. Pictures can be uploaded as Jpeg or PDF files. If one of your scholarships requires a video or audio file please leave yourself sufficient time—don’t start uploading a video or large file at 11pm on February 14th!
I am having trouble saving my application. The application should automatically save your answers as you go along. The website often gets “glitchy” when experiencing high traffic, for example, answers or uploads may not show as complete when they have actually been saved. First, we highly suggest that you compose all your essay answers in a word processing program, then cut and paste them into the available space. This will save you some frustration should the site act up. If you experience a problem, simply try closing out of your browser, then logging back into the site.
All notification and communication will come via email. Please be sure to use an email address which you check regularly and in which you have room to receive messages. Be sure to keep your email up to date!