Consider spending the childs assessable assets for the benefit of the child on anticipated expenditures you have, such as a computer or car for college. If the child has no anticipated expenditures, the assessable assets could be repositioned into a non-assessable asset (e.g. annuity, life insurance, or qualified retirement accounts).

Specific Details

Jason has $17,000 in an UGMA account which will affect his financial aid eligibility. Jasons parents have anticipated purchasing a car for Jason to take to college for about $12,000 and a computer/printer for $2,000. Rather than paying for the items themselves (or taking a loan) Jasons parents will have him use his UGMA account to pay for these items totaling $14,000. Since Jason has a summer job, he will put the remaining $3,000 into a Roth IRA. Jason will have reduced his UGMA account to zero and increased his financial aid eligibility by $3,400 per year.

Potential Savings

If the child is in a financial aid asset assessment rate of 20%, you could increase your financial aid eligibility up to $20 for every $1,000 of asset reduction by spending down or repositioning the childs assets.