18 Dec Should I move assets before we fill out the FAFSA?

Q. When my husband completes his associate’s degree he’ll transfer to a four-year institution. We’re considering student loans for the final two years when tuition will cost more. My husband will study full-time and greatly reduce his working hours and income. We own no home, and our current combined annual income is about $40,000 with no dependents. Semi-retired at age 68, I have retirement savings of about $500,000, jointly owned and our sole financial asset. On income alone, we likely qualify for financial aid. Can I transfer our joint savings accounts to new accounts that I solely own, with a payable on death provision to my spouse just in case? Is there some kind of look-back period on such actions as there is with Medicaid for nursing home residents?
— Spouse

A. Best of luck to your husband as he continues to pursue his college degree.

Financial aid is something you should look closely at.

The FAFSA — short for Free Application for Federal Student Aid — is used by students to apply for federal aid such as grants, loans and work-study programs, said Claudia Mott, a certified financial planner with Epona Financial Solutions in Basking Ridge.

She said many higher-education institutions will also use the FAFSA to award need-based aid.

“For a married couple, income for both spouses will need to be reported as well as assets that are held jointly and individually,” she said. “These resources may impact need-based aid such as that offered by a college or university, but it will not prevent your husband from getting federal loans.”

As to your question about moving joint assets to an individual account, there is no specific look-back period for FAFSA because both joint and individual assets are required to be reported on the application, Mott said.

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This story was originally published on Dec. 18, 2023.

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