Just like proper tax planning can minimize your tax liability, it is possible to set up your financial situation in the most favorable terms legally allowable in order to lower your family’s EFC.

Certain assets are counted much more heavily in the financial aid formulas than others. Where you keep your money could mean the difference between getting $10,000 in financial aid or getting nothing. If you do not know how to legally and ethically position your money properly for purposes of financial aid, you could end up losing thousands in financial aid.

Here is one example.

Let us say you have $20,000 in a college investment account for one of your children.

The Department of Education is going to take 20% of that account, or $4,000 and add it as a part of your family’s EFC.                

Essentially causing your family to lose $4,000 of aid.

There are certain accounts that the EFC formula does not take into consideration.

Moving a child’s college fund into one of these “sheltered” accounts is perfectly legal and a great planning strategy.

A few of these “sheltered” accounts include IRA’s, annuities, and cash value life insurance. And if set up properly, can be accessed for college expenses.