It's Only Money live chat: Questions and answers about financial aid, college planning
11:55
The Oregonian: 
Welcome to our live chat on financial aid. It's Only Money columnist Brent Hunsberger and personal financial specialist Susan Yang will join us at noon. Until then, feel free to submit your questions and comments. Expect a short delay between the time you submit and the time you see the post in the chat.
Monday December 3, 2012 11:55 The Oregonian
12:01
itsonlymoney: 
HI folks,

Thanks for joining us. We've been slowed a bit by technical difficulties. Here's Susan Yang's profile http://susanyangcpa.com/SavingForCollege. She specializes in helping families plan for college.
Monday December 3, 2012 12:01 itsonlymoney
12:02
itsonlymoney: 
I'm going to start with a question e-mailed in by a reader who couldn't join the chat:

wggent asked: "When a grandparent (owner) has a 529 plan account, for a grandchild student beneficiary, how does that effect the FASFA reporting.?
I understand the 529 account is "shielded" (does not count) as the student asset, but what about funds used from the account to pay for tuition?
e.g. if funds were withdrawn from the account during one year, does it get reported on FAFSA for the next FAFSA year filing?"
Monday December 3, 2012 12:02 itsonlymoney
12:03
Susan Yang: 
Hi there, I am here, welcome.

Monday December 3, 2012 12:03 Susan Yang
12:05
itsonlymoney: 
wggent - it depends.
Monday December 3, 2012 12:05 itsonlymoney
12:06
itsonlymoney: 
wggent - Normally, yes, the money used to pay tuition would be reported as the student's income on the FAFSA the following year, according to Susan.
Monday December 3, 2012 12:06 itsonlymoney
12:06
[Comment From KerryKerry: ] 
We don't make a lot of money, but we are solidly in the middle class. We have, over the years, saved a cushion in our savings and checking accounts for a safety net. OUr son is going to college in 2 years. Will the money in savings and checking be counted? How can we protect it. Should we quickly invest it in our retirement? We are willing to use some of it for college, but not all of it.
Monday December 3, 2012 12:06 Kerry
12:07
itsonlymoney: 
wggent - One way around that is to pay the tuition directly to the institution; don't give it to the student or the parents.
Monday December 3, 2012 12:07 itsonlymoney
12:08
The Oregonian: 
Kerry, Susan will have a response for you shortly. In the meantime, here's one for Brent:
Monday December 3, 2012 12:08 The Oregonian
12:08
[Comment From GuestGuest: ] 
What is the best place to save/invest money for our student as well as ourselves? We are interested in keeping our EFC low.
Monday December 3, 2012 12:08 Guest
12:08
itsonlymoney: 
Guest - The best place to save for both your student and yourself is in a Roth IRA.
Monday December 3, 2012 12:08 itsonlymoney
12:08
Susan Yang: 
Depending on your age, there is a certain amount of that money that will be protected. for a couple at age of 50, about $45k can will not be assessesed.





Monday December 3, 2012 12:08 Susan Yang
12:09
itsonlymoney: 
Guest - If you take a distribution from Roth IRAs to pay for education before you're age 59.5 AND you've had the money in the Roth for 5 years, you don't have to pay a 10 percent penalty.
Monday December 3, 2012 12:09 itsonlymoney
12:09
Susan Yang: 
To preserve some cash for college bills, you may want put the money into a Roth account,
Monday December 3, 2012 12:09 Susan Yang
12:10
itsonlymoney: 
Guest - That's not the case with a traditional IRA.
Monday December 3, 2012 12:10 itsonlymoney
12:10
The Oregonian: 
Here's a question for Susan from Mike:
Monday December 3, 2012 12:10 The Oregonian
12:10
[Comment From MikeMike: ] 
Does the PROFILE usually give a higher expected family contribution than the FAFSA?
Monday December 3, 2012 12:10 Mike
12:11
itsonlymoney: 
Guest -- What's more, if you don't use the money for education, you simply hold on to it for yourself in retirement. And generally speaking, you should be saving for retirement before saving for college. You or your student can always borrow to pay for college. It's not as easy to borrow to finance your retirement.
Monday December 3, 2012 12:11 itsonlymoney
12:11
itsonlymoney: 
Guest -- Lastly, any money you contribute to a Roth can always be withdrawn tax- and penalty-free.
Monday December 3, 2012 12:11 itsonlymoney
12:12
Susan Yang: 
Mike, it depends on several factors: your home equity, your medical expenses over 3% of your AGI, whether you have spent money on private K-12.
Monday December 3, 2012 12:12 Susan Yang
12:13
The Oregonian: 
Brent, this one's for you:
Monday December 3, 2012 12:13 The Oregonian
12:13
[Comment From twoforonetwoforone: ] 
My husband (59) is sole income for our family. He has a 401K plan and a Roth. If I understand correctly, we can shelter part of his 401K in the EFC formula. Would it be wise to move part of that 401K over to our Roth since we don't have to add Roth contributions to the income we report on the FAFSA?
Monday December 3, 2012 12:13 twoforone
12:13
Susan Yang: 
Mike - so the answer varies, based on each family's finances, I have seen many Profile EFC lower than FAFSA.
Monday December 3, 2012 12:13 Susan Yang
12:13
itsonlymoney: 
twoforone - Susan can correct me if I'm wrong, but the FAFSA or EFC formula doesn't assess either type of plan -- the 401k or the Roth. So, it doesn't really matter.
Monday December 3, 2012 12:13 itsonlymoney
12:13
[Comment From KerryKerry: ] 
So 45k in checking and savings will not be included in the ability to pay?
Monday December 3, 2012 12:13 Kerry
12:14
Susan Yang: 
Kerry - it that is all you have outside your retirement accounts.
Monday December 3, 2012 12:14 Susan Yang
12:14
itsonlymoney: 
twoforone -- If I didn't understand the question correctly, let me know.
Monday December 3, 2012 12:14 itsonlymoney
12:14
The Oregonian: 
Brent: here's a question from Guest for you.
Monday December 3, 2012 12:14 The Oregonian
12:14
[Comment From GuestGuest: ] 
If my student is already in college does it make sense to put money in a 529 account before december 31st and then take it out next year to pay tuition?
Monday December 3, 2012 12:14 Guest
12:15
itsonlymoney: 
Guest -- Yes, absolutely. Perfectly OK. Claim your state tax deduction, too.
Monday December 3, 2012 12:15 itsonlymoney
12:15
Susan Yang: 
Kerry - of course we talking about FAFSA only. Profile will assess your home equity like cash in the bank by most colleges.
Monday December 3, 2012 12:15 Susan Yang
12:15
The Oregonian: 
Susan, a question about timing from Ann:
Monday December 3, 2012 12:15 The Oregonian
12:16
[Comment From AnnAnn: ] 
Can you explain the time line for submitting the FAFSA form? Should you be all ready to push the submit button on January 1?
Monday December 3, 2012 12:16 Ann
12:16
itsonlymoney: 
Guest -- Remember, for 2012, the total allowable annual state tax deduction for contributions is $4,345 for taxpayers who file a joint return and $2,170 for all others.
Monday December 3, 2012 12:16 itsonlymoney
12:16
[Comment From GuestGuest: ] 
Will it impact my tax credit?
Monday December 3, 2012 12:16 Guest
12:17
Susan Yang: 
Ann - Yes, FAFSA should be ready on 1-1-2013.
Monday December 3, 2012 12:17 Susan Yang
12:17
The Oregonian: 
This has been a running start, but we're caught up with questions in the queue. What else do you want to know?
Monday December 3, 2012 12:17 The Oregonian
12:18
Susan Yang: 
Ann - so it is a good idea to have all your financial numbers organized now, as if you were filing the taxes today.
Monday December 3, 2012 12:18 Susan Yang
12:18
itsonlymoney: 
Guest -- Also, you can carry forward your contribution as a deduction for up to 5 years. That means a couple can contribute $21,725 by Dec. 31 (5 x $4,345) and claim a $4,345 deduction each of the next five tax years.
Monday December 3, 2012 12:18 itsonlymoney
12:19
itsonlymoney: 
twoforone -- Susan will add to my previous answer
Monday December 3, 2012 12:19 itsonlymoney
12:20
[Comment From AnnAnn: ] 
Will do, thank you for your help.
Monday December 3, 2012 12:20 Ann
12:20
The Oregonian: 
Brent, here's a question from Mike for you.
Monday December 3, 2012 12:20 The Oregonian
12:20
[Comment From MikeMike: ] 
How helpful do you think schools' net price calculators are in helping families figure out how much those schools will cost?
Monday December 3, 2012 12:20 Mike
12:21
Susan Yang: 
Hi twoforone - if you have alreay have the money in 401K, you may not want to convert it to Roth because the converted amount will be taxable income in your AGI and that will reduce your AGI.
Monday December 3, 2012 12:21 Susan Yang
12:21
itsonlymoney: 
Mike -- The net price calculators really vary. Some schools used a calculator created by the federal government. They're not very accurate.
Monday December 3, 2012 12:21 itsonlymoney
12:21
The Oregonian: 
Susan, question from Angel for you.
Monday December 3, 2012 12:21 The Oregonian
12:21
[Comment From AngelAngel: ] 
when filling out FASA do I only put the taxes of the parent who put me as their dependent or would i have to put the information of both of my parents?
Monday December 3, 2012 12:21 Angel
12:22
itsonlymoney: 
Mike -- Other schools used third-party vendors, and others created their own. Generally speaking, the more questions the calculator asks, the better the estimate they spew out.
Monday December 3, 2012 12:22 itsonlymoney
12:22
Susan Yang: 
Angel, if you are a dependent, you need to report your income as well as your parents'.
Monday December 3, 2012 12:22 Susan Yang
12:23
Susan Yang: 
Angel - it is the parent with whom you live the most time. It does not matter who claims you as a dependent for tax purpose.
Monday December 3, 2012 12:23 Susan Yang
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