So, a general strategy is to shelter assets into vehicles that are not considered "investments" as far as financial aid is concerned.
The typical options have been discussed, but I'll throw out another: A health savings account.
If you have the type of HSA that "rolls over", you may be able to shelter some tax-free money in this account. Right now my husband is depositing the maximum amount into ours each month, and we're spending less than that (obviously, one of us COULD become sick, and we COULD run through that money fast) . . . the result is that we're building up a healthy balance in our sick account.
Seems like a lot of work. Why not just pay an attorney $200 an legally emancipate the kids? Or perhaps that would impact tax deductions?
You can't just emancipate your kids because you feel like doing it. If your kids are going to continue living in your house /or if you're supporting them elsewhere, they cannot be emancipated.
For a teen to be emancipated, his parents need to be essentially non-existent; for example, in jail or on drugs. Or the teen can be in the military. Or a judge has to say that the teen would be better off saying goodbye to you forever.
So if you've got one kid a year or two older than the other, maybe encourage the older one to take a gap year to increase the overlap. Otherwise this doesn't really help you, sorry.
Encourage your oldest child to delay his education in hopes of getting more financial aid? Horrible advice.
I'm new to the FAFSA game, so perhaps I misunderstood the results I've been seeing. All of the simulated "awards" that I've seen based on income and assets have included some kind of federal workstudy as something the student was expected to contribute, and I assumed that meant they were going to pay the student to work and then the student would be expected to pay some of that income back to the school for tuition, so the workstudy job is effectively like a scholarship that you have to earn hourly.
I had a Work Study job back in the 80s, so my information may be outdated -- my own children, who are currently college students, do not qualify:
- When I filled out my FAFSA one of the questions was, "Are you interested in Work Study?" I always said yes. I always figured I had no right to ask for a Pell Grant (which I received), if I wasn't also willing to work.
- I was "awarded" X amount of money for Work Study. Perhaps it was $1000 per school year. This meant that I could earn UP TO $1000 during the school year. The jobs all paid minimum wage, so I'd do a little math and say, "I am allowed to work X number of hours per week/month." If I had worked 200 hours in the month of August, they'd have paid me -- but then I would've run out of hours in May, and even if I had worked, they wouldn't have paid me. Not once I'd earned the pre-approved $1000.
- Like all portions of financial aid, I could accept this or reject it.
- At the beginning of the semester, I'd go to the financial aid office, and they'd let me see the available jobs. Starting in my freshman year I started working for one of the academic departments. It was a good job, especially for a freshman, because it was so flexible: I always worked mid-day so the secretary could go to lunch. I was always busy, but never
stressful-busy. I ran errands -- buying lunch or running to the on-campus bank for the professors, returning their library books, and other such things. I made xerox copies of tests. I went to various departments and stood in various lines on behalf of the secretary. I didn't need a car, and I wasn't expected to dress nicely.
- These Work Study jobs had to go to Work Study students. If they were not filled, then the departments would just be short on workers.
- This Work Study did not count towards a single penny of my tuition; rather, I was paid monthly, and that was my pocket money. It was never more than pocket money -- just a little bit for food, change for the laundry machines, and a bit to save for next semester's books.
However, LOTS of other jobs -- non Work Study jobs -- were available on campus. These other jobs were mostly in Food Service and Housing. These tended to pay more and were open to ANY student, regardless of financial aid status. Eventually I was working my Work Study job PLUS two housing jobs.