"Sheltering" assets

Discuss various money matters here. Loans (federal and private), scholarships, lottery winnings, or other school finance related information and queries.
CordeliusX
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"Sheltering" assets

Postby CordeliusX » Wed Feb 24, 2010 12:42 pm

I read a book on law admissions, mentioning assets can be sheltered by paying down a house mortgage or by giving $$ to parents who are expected to contribute to a lesser level.

I am assuming both are ethical. I am also curious how much of a difference this makes in terms of aid. I don't have a lot of cash, so I'm wondering if every penny counts, or its a difference of 50K that makes a noticeable impact on aid.

Likewise, I am contemplating putting money in a retirement account. I don't think this will influence my Need Access. I'm not sure if a few K stashed away will do anything, especially since only FAFSA seems to count this.

hsprophet
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Re: "Sheltering" assets

Postby hsprophet » Thu Feb 25, 2010 9:49 am

I really have no idea how much cash on hand affects aid, but I would think that it would take a lot.

Personally, I would keep the cash available instead of locking it into a retirement account or paying down your mortgage. You don't want to end up needing the money in school and not have access to it.

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Sauer Grapes
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Re: "Sheltering" assets

Postby Sauer Grapes » Thu Feb 25, 2010 9:58 am

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Last edited by Sauer Grapes on Sun Aug 22, 2010 9:27 pm, edited 1 time in total.

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chadwick218
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Re: "Sheltering" assets

Postby chadwick218 » Thu Feb 25, 2010 9:59 am

I worked for 5 years and had a nice little nest egg built up b/w IRAs and 401Ks. I received every penny of federal aid that I needed and found that it really didn't seem to make much of a difference. The university's scholarship policy was also merit based so my financial situation really didn't seem to factor in.

Flanker1067
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Re: "Sheltering" assets

Postby Flanker1067 » Thu Feb 25, 2010 10:04 am

Sauer Grapes wrote:I thought about doing this by giving the maximum "gift" amount to both of my parents and having my wife do the same, but in the long run I figured it wasn't worth it. Though about paying down her student loans, but again, figured I'd rather have the liquid assets. I also didn't want any C&F issues to result from it, although I doubt they would have.

I was rewarded with a EFC of a lot more than I can afford. Shame on us for saving for a house downpayment.


Ha, wow that is terrible. You spend all this time saving only to get screwed by law schools. Bad timing/luck.

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Sauer Grapes
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Re: "Sheltering" assets

Postby Sauer Grapes » Thu Feb 25, 2010 10:06 am

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Last edited by Sauer Grapes on Sun Aug 22, 2010 9:27 pm, edited 1 time in total.

secant
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Re: "Sheltering" assets

Postby secant » Thu Feb 25, 2010 11:04 am

Below is a link to the pdf that I used to see what drives the EFC calculation. I only went through C which is for independent students with kids. It looks to me like you are expected to annually contribute between 1.5% and 3.5% of some part of your assets (a larger percentage as your assets increase). This "part" is all of you non-retirement non-primary home assets less an asset protection allowance which is driven by your age and marital status and ranges from $0 if you are under 25 to $80k if you are 65+ and married.

This is only a part of your EFC. There is another income based amount which is also detailed in the pdf.

Hope this help.

http://www.ifap.ed.gov/efcformulaguide/attachments/111609EFCFormulaGuide20102011.pdf

CordeliusX
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Re: "Sheltering" assets

Postby CordeliusX » Mon Mar 01, 2010 3:21 pm

chadwick218 wrote:I worked for 5 years and had a nice little nest egg built up b/w IRAs and 401Ks. I received every penny of federal aid that I needed and found that it really didn't seem to make much of a difference. The university's scholarship policy was also merit based so my financial situation really didn't seem to factor in.


Sounds good. I'd prefer not to tap my retirement unless it's dire. Really just because I have the mindset of once it's in, it's in and can't be touched. Of course, I might need to out of necessity :oops:

I just hate dealing with money issues. I don't have a lot, but it seems like you need to be really poor or really rich not to get mildly screwed by the system

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jks289
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Re: "Sheltering" assets

Postby jks289 » Mon Mar 01, 2010 3:24 pm

CordeliusX wrote:I read a book on law admissions, mentioning assets can be sheltered by paying down a house mortgage or by giving $$ to parents who are expected to contribute to a lesser level.

I am assuming both are ethical. I am also curious how much of a difference this makes in terms of aid. I don't have a lot of cash, so I'm wondering if every penny counts, or its a difference of 50K that makes a noticeable impact on aid.

Likewise, I am contemplating putting money in a retirement account. I don't think this will influence my Need Access. I'm not sure if a few K stashed away will do anything, especially since only FAFSA seems to count this.


Transfering money for the purpose of defrauding a federally insured loan is not only unethical, I believe it is a felony (This is based on advice from our lawyer). Bad, bad news for C&F if you were caught. However common the pratice, certainly not ethical. I am not judging because I wondered the same thing, but was told in no ambigious terms it was a god awful idea.

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bees
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Re: "Sheltering" assets

Postby bees » Mon Mar 01, 2010 3:28 pm

jks289 wrote:
CordeliusX wrote:I read a book on law admissions, mentioning assets can be sheltered by paying down a house mortgage or by giving $$ to parents who are expected to contribute to a lesser level.

I am assuming both are ethical. I am also curious how much of a difference this makes in terms of aid. I don't have a lot of cash, so I'm wondering if every penny counts, or its a difference of 50K that makes a noticeable impact on aid.

Likewise, I am contemplating putting money in a retirement account. I don't think this will influence my Need Access. I'm not sure if a few K stashed away will do anything, especially since only FAFSA seems to count this.


Transfering money for the purpose of defrauding a federally insured loan is not only unethical, I believe it is a felony (This is based on advice from our lawyer). Bad, bad news for C&F if you were caught. However common the pratice, certainly not ethical. I am not judging because I wondered the same thing, but was told in no ambigious terms it was a god awful idea.


Yeah, the bolded was definitely funny.

CordeliusX
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Re: "Sheltering" assets

Postby CordeliusX » Mon Mar 01, 2010 3:30 pm

jks289 wrote:Transfering money for the purpose of defrauding a federally insured loan is not only unethical, I believe it is a felony (This is based on advice from our lawyer). Bad, bad news for C&F if you were caught. However common the pratice, certainly not ethical. I am not judging because I wondered the same thing, but was told in no ambigious terms it was a god awful idea.


:lol: Well this is what the book mentioned... guess I should reconsider it. That being said, I don't see how it could be proven what the intention was - let's say you owe someone 2000 or whatever... Mind you, I don't plan on doing it!
What is C&F?

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jks289
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Re: "Sheltering" assets

Postby jks289 » Mon Mar 01, 2010 3:30 pm

bees wrote:
jks289 wrote:
CordeliusX wrote:I read a book on law admissions, mentioning assets can be sheltered by paying down a house mortgage or by giving $$ to parents who are expected to contribute to a lesser level.

I am assuming both are ethical. I am also curious how much of a difference this makes in terms of aid. I don't have a lot of cash, so I'm wondering if every penny counts, or its a difference of 50K that makes a noticeable impact on aid.

Likewise, I am contemplating putting money in a retirement account. I don't think this will influence my Need Access. I'm not sure if a few K stashed away will do anything, especially since only FAFSA seems to count this.


Transfering money for the purpose of defrauding a federally insured loan is not only unethical, I believe it is a felony (This is based on advice from our lawyer). Bad, bad news for C&F if you were caught. However common the pratice, certainly not ethical. I am not judging because I wondered the same thing, but was told in no ambigious terms it was a god awful idea.


Yeah, the bolded was definitely funny.


To clarify, paying down a mortage is completely fine. We were told the only legal thing to do was spend it on a long term expense like housing. I was specifically referring to "transfering" the money to a parent or friend.

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jks289
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Re: "Sheltering" assets

Postby jks289 » Mon Mar 01, 2010 3:31 pm

CordeliusX wrote:
jks289 wrote:Transfering money for the purpose of defrauding a federally insured loan is not only unethical, I believe it is a felony (This is based on advice from our lawyer). Bad, bad news for C&F if you were caught. However common the pratice, certainly not ethical. I am not judging because I wondered the same thing, but was told in no ambigious terms it was a god awful idea.


:lol: Well this is what the book mentioned... guess I should reconsider it. That being said, I don't see how it could be proven what the intention was - let's say you owe someone 2000 or whatever... Mind you, I don't plan on doing it!
What is C&F?


Character and Fitness. Before you are admitted to the bar they will do essentially a background check. Bank fraud (which is what this is) would probably be an automatic DQ, and you would not be able to become a lawyer.

Bank fraud is the easiest crime to prove and prosecute. I work in bankruptcy and when we nail someone on fraud, it is always through the bank stuff.
Last edited by jks289 on Mon Mar 01, 2010 3:33 pm, edited 1 time in total.

MellonCollie
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Re: "Sheltering" assets

Postby MellonCollie » Mon Mar 01, 2010 3:31 pm

jks289 wrote:
CordeliusX wrote:I read a book on law admissions, mentioning assets can be sheltered by paying down a house mortgage or by giving $$ to parents who are expected to contribute to a lesser level.

I am assuming both are ethical. I am also curious how much of a difference this makes in terms of aid. I don't have a lot of cash, so I'm wondering if every penny counts, or its a difference of 50K that makes a noticeable impact on aid.

Likewise, I am contemplating putting money in a retirement account. I don't think this will influence my Need Access. I'm not sure if a few K stashed away will do anything, especially since only FAFSA seems to count this.


Transfering money for the purpose of defrauding a federally insured loan is not only unethical, I believe it is a felony (This is based on advice from our lawyer). Bad, bad news for C&F if you were caught. However common the pratice, certainly not ethical. I am not judging because I wondered the same thing, but was told in no ambigious terms it was a god awful idea.


I've also decided that any kind of shenanigans just aren't worth it. I'm just making large purchases (hell, a complete business wardrobe including suits can cost a couple grand by itself) before reporting assets. Buy things that you think you'll need in school and beyond (clothes, car, etc.).

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glitter178
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Re: "Sheltering" assets

Postby glitter178 » Mon Mar 28, 2011 7:31 pm

I know this topic is old, but i was reading through different C&F posts and this one caught me most off guard. I'm not saying i did anything wrong, but i'm curious to know how CF would know, from what i've read in regards to what C&F checks for, that you played around with a few thousand dollars? As in, I get that they check your credit, but what are they checking that would make them aware of transactions such as these?

ETA: the way i posted this makes it look like i played around with money. i didn't... i don't have any. i am surprised they are looking / are able to look at this stuff.

thereelshaq
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Re: "Sheltering" assets

Postby thereelshaq » Wed May 04, 2011 5:44 pm

glitter178 wrote:I know this topic is old, but i was reading through different C&F posts and this one caught me most off guard. I'm not saying i did anything wrong, but i'm curious to know how CF would know, from what i've read in regards to what C&F checks for, that you played around with a few thousand dollars? As in, I get that they check your credit, but what are they checking that would make them aware of transactions such as these?

ETA: the way i posted this makes it look like i played around with money. i didn't... i don't have any. i am surprised they are looking / are able to look at this stuff.



Also curious about this. A *very* cursory search online (http://www.nycourts.gov/courts/ad1/comm ... ndex.shtml) leads me to believe this credit check/bank statement stuff is not true... the only financial questions, which are on page 9 of the application to the bar, do not seem to involve questions of that depth and/or invasiveness.

firemed
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Re: "Sheltering" assets

Postby firemed » Wed May 04, 2011 5:59 pm

jks289 wrote:
CordeliusX wrote:I read a book on law admissions, mentioning assets can be sheltered by paying down a house mortgage or by giving $$ to parents who are expected to contribute to a lesser level.

I am assuming both are ethical. I am also curious how much of a difference this makes in terms of aid. I don't have a lot of cash, so I'm wondering if every penny counts, or its a difference of 50K that makes a noticeable impact on aid.

Likewise, I am contemplating putting money in a retirement account. I don't think this will influence my Need Access. I'm not sure if a few K stashed away will do anything, especially since only FAFSA seems to count this.


Transfering money for the purpose of defrauding a federally insured loan is not only unethical, I believe it is a felony (This is based on advice from our lawyer). Bad, bad news for C&F if you were caught. However common the pratice, certainly not ethical. I am not judging because I wondered the same thing, but was told in no ambigious terms it was a god awful idea.



This is part of the reason I decided against selling my house. The money I would've made wouldn't have gone to a new house, or to my kid's college fund. Instead I would've been forced to use it to pay for school. When applied to the total cost of LS it is a paltry sum... but for putting down on another house or investing for my kid's future it is a good amount of money.

bigben
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Re: "Sheltering" assets

Postby bigben » Wed May 04, 2011 6:03 pm

People, all of this stuff rarely matters because there is very little true need-based aid given out. You can get the 8500 in subsidized Staffords. Big deal.

Awards that law schools give out are a shady mix of merit and need that is actually just merit. By merit I mean your numbers, diversity, etc. You can have 0 income and 0 assets to your name and still get nothing, even at T14s, and even if your parents have a low income. Happens all the time. When there are people like this getting nothing, and others are getting "need-based" aid, the aid is not truly need-based.

HYS might be an exception, but that's about it.

You pay for law school with loans, cash, and "merit" scholarships. Everyone can get federal loans up to the full COA if you want them.

thecynic69
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Re: "Sheltering" assets

Postby thecynic69 » Wed May 04, 2011 6:28 pm

bigben wrote:People, all of this stuff rarely matters because there is very little true need-based aid given out. You can get the 8500 in subsidized Staffords. Big deal.

Awards that law schools give out are a shady mix of merit and need that is actually just merit. By merit I mean your numbers, diversity, etc. You can have 0 income and 0 assets to your name and still get nothing, even at T14s, and even if your parents have a low income. Happens all the time. When there are people like this getting nothing, and others are getting "need-based" aid, the aid is not truly need-based.

HYS might be an exception, but that's about it.

You pay for law school with loans, cash, and "merit" scholarships. Everyone can get federal loans up to the full COA if you want them.


I can speak to Yale being different. The Yale need based grant is >30k a year, and then there are the low interest loans.

No clue how it works at other schools...

westbayguy
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Re: "Sheltering" assets

Postby westbayguy » Thu May 05, 2011 8:00 pm

thecynic69 wrote:
bigben wrote:People, all of this stuff rarely matters because there is very little true need-based aid given out. You can get the 8500 in subsidized Staffords. Big deal.

Awards that law schools give out are a shady mix of merit and need that is actually just merit. By merit I mean your numbers, diversity, etc. You can have 0 income and 0 assets to your name and still get nothing, even at T14s, and even if your parents have a low income. Happens all the time. When there are people like this getting nothing, and others are getting "need-based" aid, the aid is not truly need-based.

HYS might be an exception, but that's about it.

You pay for law school with loans, cash, and "merit" scholarships. Everyone can get federal loans up to the full COA if you want them.


I can speak to Yale being different. The Yale need based grant is >30k a year, and then there are the low interest loans.

No clue how it works at other schools...


Not everyone at YLS gets a 30k grant. First you get subsidized Stafford LOANS, and then are expected to take out unsubsidized Stafford LOANS- for a total of 21000 or so.

Above that you have a parent's EFC which can be pretty substantial (Unlike FAFSA, law schools (and Need Access) don't treat you as independent until you are 27 and then slowly phase out parental EFC (knowing full well most of us will be out before then)).

Then maybe you get a need based grant which may or may not bring you up to full cost of attending.

Any shortfall amount is supposed to be filled by parents, or your assets, or taking out loans (private of Grad Plus). The good/bad news is that you can borrow all amounts after Stafford, including the EFC and you r contribution. The bad news is that is how many YLS and other T1 students end up with 150000 in school debt.




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