In your example, the kid from the lower income home is already at a disadvantage money wise. Under the current system, he probably couldn’t afford college anyway so there is no motivation to do well in high school. Under Trent’s proposal, a kid like that could work hard and have the same chances as all the more priveliged kids. A slacker whose parents have a lot of money has just as much chance of attending school right now as a “poor kid” who works really hard and studies to get good grades.

I think Trent’s second post is testament to the fact that he is an honest blogger and willing to tackle the issue instead of jsut ignoring it. Whether or not it was bad advice, it is what he would do in that situation, which is all this blog claims to do. I don’t think he intended it to mean that Uncle Phil would pay for college later on, but similar to what Steven and Patrick said, this gift is an investment into a family that helps each other. The gift for college may come from Patrick, or another relative, or it may not come at all. I do, however, think it was a strange response to the question at hand.

Take fraudulent conveyance as an example. A “fraudulent conveyance” is when you transfer property so that your creditors don’t get it. It is illegal. It doesn’t matter if your uncle agrees to repay or if he just keeps it in his bank account or if he spends it on meth. IT IS ILLEGAL. Your creditors can sue your uncle to get the money back. Of course, if he’s spent it on meth, they won’t collect, but they will still have a judgment because the arrangement was illegal.

Now, doing the same thing, but instead of intending to defraud creditors, you’re intending to defraud the government for more financial aid? Still say it’s legal? Maybe, maybe not. Still think it’s ethical? Hmmm… Still believe it all comes down to “trust”? Trust has nothing to do with it.

This is not collusion, that’s absurd. This is perfectly legal. See my comment #31 above, it explains why.

I think if Trent’s critics step back and view the whole issue instead of picking on bits and pieces to suit their current arguments everyone would be a lot happier.

Trent has admitted a mistake when writing an article which in and of itself is more than he truly needed to do considering he has the almighty delete button at his disposal. If you note the bottom of every page (including this one) he isn’t a financial advisor, he’s simply someone who has a great blog full of useful advice that everyone here has chosen to read.

He’s not condoning anything illegal. Again, if you take the whole situation into view you’ll see that although stated oddly (or incorrectly) at first, his advice for getting the money “out of so-and-so’s name” is to gift it (which is usually tax free to a certain dollar amount) to a family member who needs it TODAY.

Why keep money in a child’s name when there is no reason for it to just sit there, unused, for 12 years IF there is someone in the family (whom you TRUST) who can use that money NOW. If in 12 years that money comes back in any form (Trent mentioned free room & board, sounds good to me!) then that again is a gift, not a scam.

I’m pretty sure that any child who writes an application essay to their school of choice detailing their views on charity citing this type of transaction wouldn’t have any “Feds” knocking on their door and in fact has a nice life-lesson about how “what goes around, comes around”. (Avoid cliche’s though kids!)

I’m actually pretty disappointed in the reactions of many in this case. With the immediate consequences of the internet it doesn’t really surprise me but I always imagined the readers of this blog to be above the typical “petty arguments” that litter the internet…. I guess not.

You give Uncle Jim some money because he is having a hard time. Now, you have student loans to pay off, but instead of helping you out, Uncle Jim sees you as a college graduate who can make more money and thus doesn’t need help. You notice this, and it starts to bother you a little. Every time Uncle Jim buys something you get a little more bitter and soon the relationship between you and Uncle Jim is torn apart.

In my own family we had a lawsuit over a business my dad and his brother’s owned together, we trusted my uncle and he trusted us. However when it came time to divide up the (small) assets and (large) debt, he felt he was shorted and sued. It tore our entire extended family apart, and some of my aunts and uncles still won’t speak to that uncle or his family.

Cementing relationships is a good thing, I’m not saying that it’s not, but you have to tread very carefully when you EXPECT the relationship to be rewarded in any way you can measure in dollars and cents.

One of my sons obtained an academic full ride to a smaller state university. He is absolutely grateful that I insisted that he use it instead of going to the world famous prestigious University just down the road from his school.

A whole nuther subject would be choosing where to go to school.

Another subject would be the above mentioned academic full ride which was not need based and did not require filing a FAFSA.

You quite obviously haven’t been stung hard enough in life.

Once you are,stung real good, you’ll get over that attitude FAST!

My giving days are over!

How would you identify these students? The vast majority of *students* are low income.

It sounds like rather than eliminating FAFSA and its associated problems, you’re just calling for more merit based aid.

I know this advice has already been labeled “bad” and everyone has their side about whether it is ethical or not. All that aside, I think there a fundamental flaw that is NOT the topic of this whole debate:

Why would you give away money just to have a better chance of getting back a FRACTION of that money. If I had $10k in the bank and applied for financial aid, I might get $2k in grants (this is completely feasible as this is about the situation I was in at one point in college). If I didn’t have that money, honestly, I think I would have gotten the same. If it DID make a different, maybe I would have gotten 1k more.

I would have just gave away 10k to make 1k.

The advice was on the specific topic of financial aid for college. I could be wrong, but from what I could tell going through the process, the income of your family makes a much bigger difference than the amount in the bank (unless you have a million dollar bank account or something), so dealing with 10k or so shouldn’t really make a big difference.

Also — You never really re-answered the original question with “good” advice. So Betsy, here’s my suggestion: Open an investment account for each child with you as custodian. Invest in some trusty mutual funds. When FAFSA time comes around, fill out the form honestly, and if you are truly poor, the government will probably give you some help. Depending on loan rates at the time, your children can choose to take out loans and have a solid investment account when they graduate, or pay for college with this money and graduate debt free. No need to “trust” anyone or use questionable methods.

It’s understandable that we would resent that tone, but I don’t think that’s how he intended it to come across.

@Gayle: I believe the PROFILE, which a lot of private universities use, does take into account the assets of the noncustodial parent. This really screws over children with a noncustodial rich parent they haven’t seen in, say, 15 years.

@the senior going to Hopkins: Talk to Hopkins and explain your family’s situation. If your family has expenses that are not accounted for by the financial aid forms, get your parents to itemize them, and send that list in. If you can, talk about how you’re desperate to go to Hopkins, but family will make you go to state school because of the expense. Expensive, elite private universities have much more discretion about their funds.

I was actually surprised that this was not Trent’s answer to the question. That was the first response I thought of also after reading the question submitted. Maybe I’m missing something regarding the FAFSA, but I was just there 3 years ago.

Related to this topic I’ve been doing some looking on the web and found this resource :
http://www.finaid.org/fafsa/maximize.phtml
They have lots of tips there on maximizing your financial aid.

Simply making sure the money is in the parents name rather than the child would help a lot towards financial aid. Parents are expected to contribute 6% of their assets and children are expected to spend 35% of theirs. It seems simply having the money in a CD in the parents naem “in trust for” the child or using a 529 would accomplish this. It would be a simple way to go.

Jim

As I said above, I believe you were responding to the first interpetation of the question, in which case your answer is reasonable, given your point of view. However, most everyone else understood the second interpretation of the question, in which case your response sounded either unethical or foolish, hence the debate. Hope that adds some clarity to the discussion. :-)