Expert: David Disraeli - 9/6/2009

Question
I had heard that parents should NOT claim their children when they are in college or even better stop doing so if they truly have jobs when they are seniors in High school as that after a year or two of being legally independant from their parents and combined with their parents no longer using them for "write offs" that the student will then qualify for and recieve more Federal and State money and recieve in faster as they will be looked upon as a TRUE independant and financially in need student and as such will receive the educational monies sooner and in greater number than their peers whos parents are not thinking ahead. I persoanlly experienced this I think when I got out of the Army in the late 80's and seemed to get WAY more Grant money that my fellow students who were the same age -20 or 21.

Is this still the case?


thanks

Answer
Hello,

No this is not the case.  The gov't has wised up concerning kids who try to claim "independent" status.  There are only a few ways:

1.  Be ex military
2.  Be 24
3.  Be married
4.  Prove you are an orphan.

Be aware that any students income is assessed 50 cents on the dollar once they ear over $3000 roughly so count the cost of having them work.  Also any money in their name is assessed at 20% against any aid dollars.  

This whole process is very tricky and not spelled out anywhere that I know of.  If you would like professional help getting every last dollar I can find an expert near you.  They are few, perhaps a few hundred in the country.  Also the high school counselors and college financial aid offices are not equipped to show you how to make assets disappear for aid purposes. These techniques are completely legal, and moral just like writing off your home mortgage interest.  Of course the IRS doesn't stop by the house at tax time to show you how to pay them less.

Neither do the schools show you how to get more money from them.  They only have x amount to give out.  There are other tricks as well like when to file the form, how to find out which schools tend to give more than others.  Of course all this may be moot if your income is too high.  One last note, expensive private schools may actually cost less!  They have large endowments besides Federal money.

Let me know if you want more help

David Disraeli CFP