Will son's college savings hurt his financial aid chances?

DEAR HARRY: We have a son who will be going to college in the fall of 2014. While he's already involved in preparing applications, our concern is paying for his education. Over the years (starting at his birth), he has received monetary gifts which we have put into custodial accounts. We are now worried that these accounts will be used to reduce any financial aid he may be granted. Can we move the money to one of our own accounts so it shows as ours rather than his?

What Harry says: I understand your concern. As his money, they will look for a 20 percent contribution to his college costs. As your money, it will only be hit for less than 6 percent. Bear in mind, also, that many schools will ignore certain of your assets in their determination. Your primary residence and retirement accounts, including IRAs, are usually on that list.

As to transferring the money: The die is already cast. I would urge you not to go that route even though the likelihood of your getting caught is small. Such a move could easily lead to a denial of aid and other problems. Perhaps the worst of these is a revocation of one or more letters of acceptance. One of the very few good things to come out of our recession is the increase in the number of colleges offering grants instead of loans. Look into these even if they are not among those he's presently considering.

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