Rethink Holiday Cash Gifts Earmarked for Education

| From

LITTLETON, Colo., Dec. 15 (SEND2PRESS NEWSWIRE) -- Many people are worried about skyrocketing college costs. As a result, parents of high school seniors often suggest that grandparents make donations to junior's college fund in lieu of holiday gifts. Reduce My College Costs, LLC warns that this is not a wise solution.

Reduce My College CostsWhile many older generations want to help the younger set with the financial burden of education, their generosity may devastate their family's finances.

"What most parents - and even their financial planners - don't realize is that the timing of financial gifts is critical in determining how much their family pays for college," Marc R. Hill, CCPS, RFC(R), CCFC, CAFC, founder of Littleton, Colo.-based Reduce My College Costs, LLC, says. "Do it incorrectly, and not only will the child lose scholarships and other forms of gifted aid, but the family will also be expected to contribute more, financially, toward the child's education."

Hill explains that when cash gifts are given to high school seniors for Christmas or Hanukkah, the money is in the child's name and bank account when the family completes the Free Application for Federal Student Aid (FAFSA) in January. The FAFSA is used to determine the Expected Family Contribution (EFC), which is usually the minimum dollar amount a college expects a family to contribute toward their child's education in any given school year. Families with more money are expected to pay more for their child's education; families that are less well-off are not expected to contribute as much.

The EFC calculation is primarily based upon an assessment of parental and student income and asset values. The income and assets attributable to the student are assessed at a higher rate than those of the parents. Hence, grandma's gift is assessed at the maximum rate which is reflected by increasing the initial Expected Family Contribution.

A higher EFC also indicates a student does not need financial help in the form of scholarships and other types of gifted aid, which do not require repayment. Instead, the student will qualify only for loans and other forms of assistance that require repayment, which can result in thousands of dollars in interest charges.

So, what's the bottom line? According to Hill, "Between the increased EFC and lost gifted aid, the $5,000 gift given to a loved one during their senior year of high school could feasibly cost the child a total of $3,000 or more over the course of his or her college career. That means the value of the gift is really only $2,000. The good news is that these painful consequences can be avoided by ensuring that the gift is given at the right time - and in the right way."

A financial planner by training, Hill now works full-time as a publisher and coach to educate families about ways to dramatically cut college costs.

"Saving money is only one consideration when putting a child through college," Hill says. "To fully leverage educational investments, it is important to understand how the financial-aid formula will be affected by how and when investments are used. The choice made could cost or save families tens of thousands of dollars."

Hill publishes a free monthly e-newsletter, the "College Savings Tip Sheet." New subscribers receive two issues of Hill's monthly eight-page newsletter, "Affording College," as well as a special report: "The 3 Most Dangerous Mistakes Financial Planners Make with 529 Plans That Could Force You to Pay MORE for College!"

To learn more, visit: or call Marc R. Hill at: 866-675-5031 (toll free); or 303-954-0200 (office).

News Source:
Like, Share, Save this press release:
  TWEET   SHARE   G+   STUMBLE   LinkedIn   Instapaper   Buffer

The content of the above press release was provided by the “news source” (Reduce My College Costs, LLC) or authorized agency, who is solely responsible for its accuracy. Send2Press® is the originating wire service for this story and content is Copr. © 2008 Reduce My College Costs, LLC with newswire version Copr. © 2008 Send2Press (a service of Neotrope). All trademarks acknowledged.

Rights granted for reproduction by any legitimate news organization. However, if news is cloned/scraped verbatim, then original attribution must be maintained with link back to this page as “original syndication source.” Resale of this content for commercial purposes is prohibited without a license. Reproduction on any site selling a competitive service is also prohibited. Information is believed accurate, as provided by news source or authorized agency, however is not guaranteed, and you assume all risk for use of any information found herein/hereupon. This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.
STORY READS for this single page only, as of Oct 24 2016:
[ count retired 8.4.16 ]

back to top
REFERENCES: Reduce My College Costs, College Savings Tip Sheet, Reduce My College Costs LLC, Marc R. Hill, CCPS, RFC, CCFC, CAFC, financial planner, publisher and coach to educate families about ways to dramatically cut college costs, Free Application for Federal Student Aid, FAFSA, news, press release from Reduce My College Costs, LLC, Dec 15, 2008, Taxes and Accounting, , , , , Rethink Holiday Cash Gifts Earmarked for Education