Has anyone purchased an Annuity for the sole purpose of hiding money from Colleges on the FAFSA application?
November 20, 2009 by Annuity and Structured Settlement Tips
Filed under More Annuities Answers
Can you answer lone6star’s question about Annuities?:
In researching reasons to purchase anuities, no one has on their list of reasons, to hide money so it does not appear on the FAFSA college form. The less money you have the greater the possibility of you receiving more aid from a college for your child. An annuity is one item that does not need to be declared on the FAFSA form. Has anyone else done this and what were the results from the colleges as far as granting aid? Also what type of annuity(s) did you purchase?
Immediate Life Annuity
In researching reasons to purchase anuities, no one has on their list of reasons, to hide money so it does not appear on the FAFSA college form. The less money you have the greater the possibility of you receiving more aid from a college for your child. An annuity is one item that does not need to be declared on the FAFSA form. Has anyone else done this and what were the results from the colleges as far as granting aid? Also what type of annuity(s) did you purchase?
Immediate Life Annuity
Annuities Feedback: It is true that you do not have to include the value of annuities in parent asset questions of the fafsa. Remember this is also true of retirement plans and the equity in your house.
I think you need to realize the Dept of Ed calculates the majority of a students EFC based on income, not assets. Those with higher incomes do not qualify for federal grants but are offered federal loans only. It is my experience, that if the parent has enough money to have the option of investing in this manner, the annual household INCOME will still be too high to get them grants, and shifting and changing isn’t making much difference. However, every family situation is different so I’m certainly not telling you not to check it out.
Oh, and if you DO decide annuities are right for you and then have distributions during that year they would be included on line 16a of your Income tax return, thus being included in your AGI, thus being used in calculating the students EFC. (The value is not reported, just the pay out).
Hope this makes sense..