Tiny $ gifts to student receiving financial aid
July 29, 2023 9:15 AM Subscribe
My granddaughter is starting college in the fall. She will be receiving financial aid. I'd like to send her $20 now and then. Technically, is she required to report this as income? Will she and I go to hell if we deal in this financial transaction behind the back of the "God of Financial Aid"?
The 2023 exclusionary limit for reporting gift taxes is, wow, it went up to $17,000. I'm sure those $20s will be appreciated, and completely ignored by anyone other than your granddaughter. Unless this is a large gift sent before she filed the FAFSA, I think you are totally fine with anything that can (and likely will) be immediately spent.
I often think about my great-aunt who would occasionally send me letters with a dollar in the mail when I was young, and how much I would have liked to know her as an adult.
posted by I EAT TAPAS at 9:28 AM on July 29, 2023 [19 favorites]
I often think about my great-aunt who would occasionally send me letters with a dollar in the mail when I was young, and how much I would have liked to know her as an adult.
posted by I EAT TAPAS at 9:28 AM on July 29, 2023 [19 favorites]
I don't ever remember this being a thing.
Do you have any particular reason to be concerned about it? Has anyone warned you that this is a thing? Does anyone (parents, friends) have a reason for telling you that this is a thing?
posted by RonButNotStupid at 9:37 AM on July 29, 2023 [1 favorite]
Do you have any particular reason to be concerned about it? Has anyone warned you that this is a thing? Does anyone (parents, friends) have a reason for telling you that this is a thing?
posted by RonButNotStupid at 9:37 AM on July 29, 2023 [1 favorite]
RonButNotStupid, gifts must be counted on FAFSA, the Free Application for Federal Student Aid, as an asset which will reduce eligibility, unless the gift is spent before the application. Per my post, in addition, gifts over $17,000 must be reported on federal taxes.
But those are way larger amounts than a $20 here and there, which these days will buy a fancy lunch or a delivery pizza, and will be no problem.
posted by I EAT TAPAS at 9:49 AM on July 29, 2023 [3 favorites]
But those are way larger amounts than a $20 here and there, which these days will buy a fancy lunch or a delivery pizza, and will be no problem.
posted by I EAT TAPAS at 9:49 AM on July 29, 2023 [3 favorites]
That's what I mean. Admittedly my knowledge is more than a little dated, but at no point during any FAFSA counseling did someone say "be sure to keep a log of all the cash you get from birthday/Christmas cards so you can accurately report it on the FAFSA when the time comes". Of course gifts that can affect eligibility need to be reported, but I think for the vast majority of people already eligible for financial aid this is just a non-issue.
Though as with all assistance programs, there are would-be gatekeepers who get worked up about seeing people receiving aid have anything more than the bare minimum, which I was I asked if anyone had specifically mentioned that this might be a concern in relation to the occasional $20 gift.
posted by RonButNotStupid at 10:02 AM on July 29, 2023 [2 favorites]
Though as with all assistance programs, there are would-be gatekeepers who get worked up about seeing people receiving aid have anything more than the bare minimum, which I was I asked if anyone had specifically mentioned that this might be a concern in relation to the occasional $20 gift.
posted by RonButNotStupid at 10:02 AM on July 29, 2023 [2 favorites]
Technically, sure. But I personally believe that until and unless we have economic democracy, defrauding the government is a moral obligation and imperative of working people.
posted by rhymedirective at 10:09 AM on July 29, 2023 [17 favorites]
posted by rhymedirective at 10:09 AM on July 29, 2023 [17 favorites]
My great aunt sent me $10 in a card now and again, and it really made a difference. Did I tell the government? Hell no!
It's cash. Cash is invisible and isn't real unless it passes through a bank account or a register. Nobody is going to know or care. It would be a much bigger deal, ethically, if you were giving her or her parents thousands of dollars under the table.
Also the FAFSA only considers like 5% of your assets for the EFC. So you're going to maybe give her $200 over the course of a year? They would only care about $10 of that and there's no reason to tell them that that won't complicate her life (claiming random cash on your taxes is a great way to get flagged for audit.) If you feel guilty, give 5% to a charity at the same time.
posted by blnkfrnk at 10:18 AM on July 29, 2023 [3 favorites]
It's cash. Cash is invisible and isn't real unless it passes through a bank account or a register. Nobody is going to know or care. It would be a much bigger deal, ethically, if you were giving her or her parents thousands of dollars under the table.
Also the FAFSA only considers like 5% of your assets for the EFC. So you're going to maybe give her $200 over the course of a year? They would only care about $10 of that and there's no reason to tell them that that won't complicate her life (claiming random cash on your taxes is a great way to get flagged for audit.) If you feel guilty, give 5% to a charity at the same time.
posted by blnkfrnk at 10:18 AM on July 29, 2023 [3 favorites]
This isn't "defrauding the government". We like to imagine that laws and policies are full of clear rules and flawless logic, but the truth is they're full of all sorts of mushy stuff like this. If you run into whatever FAFSA's audit system is, there will be a human on the other side of it who has the discretion to use their common sense. And if for some reason THAT doesn't happen, the human being on the other side of the appeal will. They will not care about $20 or the time her roommate bought her lunch.
posted by umwelt at 10:37 AM on July 29, 2023 [14 favorites]
posted by umwelt at 10:37 AM on July 29, 2023 [14 favorites]
I'm a parent of a kid in college right now, so I'm doing the FAFSA yearly, sending the school our tax returns, etc. Send the money.
posted by BlahLaLa at 11:58 AM on July 29, 2023 [1 favorite]
posted by BlahLaLa at 11:58 AM on July 29, 2023 [1 favorite]
It's been a while since I FAFSA'd but technically, she is supposed to report all income and assets annually on the FAFSA. Depending on if this is income (50%) or assets (20%) she would lower her eligibility by the amount of the gift.
However, ethically this is totally in line with grandma contributions (mine sent cookies and peanut butter), and I have no idea how you'd get caught by the FAFSA apparatus. I don't believe any circumventing of the system is ethical, but I'd draw the line around $500/year. Enough for grandma to buy the kid tickets home for Christmas or take the kid along on a family vacation. More than that and it starts to feel like meaningful support that should impact aid.
posted by Narrow Harbor at 12:41 PM on July 29, 2023 [1 favorite]
However, ethically this is totally in line with grandma contributions (mine sent cookies and peanut butter), and I have no idea how you'd get caught by the FAFSA apparatus. I don't believe any circumventing of the system is ethical, but I'd draw the line around $500/year. Enough for grandma to buy the kid tickets home for Christmas or take the kid along on a family vacation. More than that and it starts to feel like meaningful support that should impact aid.
posted by Narrow Harbor at 12:41 PM on July 29, 2023 [1 favorite]
This is not a legal answer, but my strong opinion Instate tuition costs ??,000 honestly I wouldn't fucking worry with the racket costs for education. If it's less than 10% of tuition, you aren't contributing to your grandchild's education your just helping them survive so do it with zero regrets in cash.
posted by AlexiaSky at 1:11 PM on July 29, 2023 [3 favorites]
posted by AlexiaSky at 1:11 PM on July 29, 2023 [3 favorites]
Cash is the thing to give college students. If anyone cared about a 20 here or there from a grandparent there would be tons of warnings about reporting it.
posted by martinX's bellbottoms at 4:07 PM on July 29, 2023 [3 favorites]
posted by martinX's bellbottoms at 4:07 PM on July 29, 2023 [3 favorites]
If you want to be squeaky clean, you need to follow the rules laid out by FASFA. Here is the 2021-22 handbook.
In the section on money received it says: Cash support includes money, gifts, housing, food, clothing, car payments or expenses, medical and dental care, college costs, and money paid to someone else or paid for on his or her behalf.
However, reading further down, if you get "in-kind" gifts (in other words stuff, not cash) it says: In-kind support [which is not reported] is support other than money, for example, friends or relatives giving the student food or allowing him or her to live with them rent-free. although if the in-kind support significantly reduces the mandatory expenses, it might need to be reported. So, if you are going to be scrupulous, giving actual gifts would be better.
That said, as people noted above, the kind of cash gift that you are talking about is both small enough not to make any material difference plus untraceable (assuming you are talking about actual cash and not Venmo or its equivalent) However, if that still makes you nervous then maybe asking the student to keep an Amazon wish list that might inspire the occasional random gift from you would be more comfortable.
posted by metahawk at 4:54 PM on July 29, 2023 [1 favorite]
In the section on money received it says: Cash support includes money, gifts, housing, food, clothing, car payments or expenses, medical and dental care, college costs, and money paid to someone else or paid for on his or her behalf.
However, reading further down, if you get "in-kind" gifts (in other words stuff, not cash) it says: In-kind support [which is not reported] is support other than money, for example, friends or relatives giving the student food or allowing him or her to live with them rent-free. although if the in-kind support significantly reduces the mandatory expenses, it might need to be reported. So, if you are going to be scrupulous, giving actual gifts would be better.
That said, as people noted above, the kind of cash gift that you are talking about is both small enough not to make any material difference plus untraceable (assuming you are talking about actual cash and not Venmo or its equivalent) However, if that still makes you nervous then maybe asking the student to keep an Amazon wish list that might inspire the occasional random gift from you would be more comfortable.
posted by metahawk at 4:54 PM on July 29, 2023 [1 favorite]
Best answer: Maybe The Powers That Be are looking more closely now, but for all my time in college a couple of decades ago my father would send a greeting card with a small check for any vaguely recognizable holiday that you could buy a greeting card for. I had no idea I should report it, and did not do so, and it was fine. If it's cash, there's seriously no way anyone would notice it, regardless.
Sending money was how my father expressed his love, and I appreciated it way beyond the monetary value even as a broke student, so I hope you won't let ethical/paperwork concerns stop you.
(Irrelevantly, the epilogue to the story is that after I finished grad school, and would have had to start repaying my student loans, I completely unexpectedly got a letter from my father saying that he'd paid off my loans. It included two five dollar bills and a suggestion that I should take my husband out to dinner at McDonald's to celebrate. I miss him so much....)
posted by LadyOscar at 10:04 PM on July 29, 2023 [13 favorites]
Sending money was how my father expressed his love, and I appreciated it way beyond the monetary value even as a broke student, so I hope you won't let ethical/paperwork concerns stop you.
(Irrelevantly, the epilogue to the story is that after I finished grad school, and would have had to start repaying my student loans, I completely unexpectedly got a letter from my father saying that he'd paid off my loans. It included two five dollar bills and a suggestion that I should take my husband out to dinner at McDonald's to celebrate. I miss him so much....)
posted by LadyOscar at 10:04 PM on July 29, 2023 [13 favorites]
This thread is wild. Student loans are simultaneously so burdensome a sizable percent of the US population should be reimbursed for paying them at all, and also so accurately accounted for that a $20 from grandma is going to materially affect dispensation of a direct subsidized loan whose current maximum amount wouldn't have paid for my university housing costs 25 years ago, and if you got the max of $20k per year unsubsidized, $20 wouldn't even pay for the first month's interest charge.
No. If you are not giving enough to surpass the federal minimum wage for a full-time worker, you aren't giving enough to make a material difference and don't need to account for it on any document.
posted by The_Vegetables at 9:03 AM on July 31, 2023 [1 favorite]
No. If you are not giving enough to surpass the federal minimum wage for a full-time worker, you aren't giving enough to make a material difference and don't need to account for it on any document.
posted by The_Vegetables at 9:03 AM on July 31, 2023 [1 favorite]
This thread is closed to new comments.
posted by praemunire at 9:23 AM on July 29, 2023 [29 favorites]